New York Cuts Near Term Cannabis Tax Projections

The New York State adult-use cannabis program has been pushed back to a later date and as a result, the state’s projections for early tax revenues have been adjusted as well. When adult-use sales or recreational marijuana was first legalized in the state, sales were originally planned to begin in April 2022. However, former Governor Andrew Cuomo stalled on making appointments to create the cannabis program and it wasn’t until the current Governor Kathy Hochul took over that the program got a jump start. Still, those delays have now affected the state budget. The program is slotted to receive $46 million as it ramps up.

Originally, Comptroller Thomas DiNapoli had estimated that in the fiscal year of 2021-2022 the state would bring in $20 million in marijuana tax revenue. that was then projected to grow to $115 million in the fiscal year of 2022-2023, $158 million in 2023-2024, and $245 million in 2024-2025.

The new state budget now calls for the state to collect $56 million in revenue in the fiscal year of 2023. The majority of that revenue will come in the form of licensing fees. After that, sales are expected to kick in, and in the fiscal year of 2024, New York projects $95 million in tax revenue. That will grow to $158 million in 2025, $245 million in 2026, $339 million in 2027, and $363 million in 2028.

According to the program’s current design, there will be a 9% state excise tax on cannabis. It will be divided with 40% going to education, 40% to community reinvestment and 20% to drug treatment. Another 4% tax will go to the counties, which will receive 25 %, while municipalities get 75% if they allow marijuana businesses. There’s also a separate potency-based tax on cannabis products.

The Governor has also set aside $200 million to assist social equity applicants. Last month, Sen. Jeremy Cooney (D) introduced that would include transgender and non-binary people in the cannabis social equity program. Cooney also proposed other cannabis legislation related to business tax benefits and licensing.

Opt-Outs

Many cities and towns in the state have opted out of the adult-use program. The Rockefeller Institute of Government has tracked the towns that have decided against the program for now. Currently, 765 out of 1,521 have decided against dispensaries and 869 have decided against consumption lounges. Many have stated that the lack of specific rules and regulations from the state has caused them to remain on the sidelines for now. They can opt-in at a later date.

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.


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