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New York Officials Say Marijuana Tax Revenue Will Help Fill Budget Gap From Declining Cigarette Sales

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New York officials are projecting that marijuana tax revenue will help keep the state’s budget afloat as cigarette sales continue to decline over the coming years.

In a first quarterly update for the 2022 fiscal year that was released this week by Budget Director Robert Mujica Jr., state analysts said that New York stands to generate about $20 million in revenue from adult-use cannabis business license fees next year. And as the market matures, marijuana tax revenue and license fees are expected to generate $245 million by fiscal year 2025.

At the same time, cigarette tax revenue is expected to continue to decline, dropping from $972 million in the 2022 fiscal year to $852 million in 2025.

The state said that “along with the second year of license fees, the State’s THC-based and retail excise taxes on the sale of adult-use cannabis products are projected to generate $115 million,” and those increases “are partially offset by a continued decline in taxable cigarette consumption.”

In other words, New York is seeing the same trend that’s playing out nationally. People are smoking fewer cigarettes while more adults are trying cannabis. And creating a regulated market for marijuana is helping to create an alternative revenue source for states that legalize.

Part of the reason behind that trend seems to be public perception. A 2018 Gallup poll found that 96 percent of Americans view cigarettes as either “very harmful” or “somewhat harmful,” compared to only 56 percent of respondents said the same about cannabis.

The following year, Gallup released a survey showing that adults between the ages of 18 and 29 are more likely to smoke marijuana as cigarettes, with consumption of the latter at a 75-year low.

Just last month, Gallup reported that overall, half of U.S. adults have tried cannabis and that “nearly as many Americans today say they smoke marijuana as say they smoke cigarettes.”

Nora Volkow, director of the National Institute on Drug Abuse (NIDA), recently talked to Marijuana Moment about another emerging drug trend with young adults. A large-scale survey found that alcohol consumption is declining at the same time that more people are consuming cannabis and psychedelics.

The New York comptroller released an initial budget analysis of the state’s legal cannabis market in May, two months after former Gov. Andrew Cuomo (D) signed the reform legislation into law. The figures in this new quarterly update are consistent with those projections.

Meanwhile, newly inaugurated Gov. Kathy Hochul (D) has made clear that she’s prioritizing the implementation of legalization in New York, making key regulatory appointments that were delayed under Cuomo and have since been confirmed by the Senate.

Leaders in both chambers of the legislature have also recently announced their picks to serve on the Cannabis Control Board. The governor has two more appointments to make that will not be subject to Senate approval.

Because the process has been drawn out, however, one GOP senator wants to give local jurisdictions another year to decide whether they will opt out of allowing marijuana businesses to operate in their area—a proposal that advocates say is unnecessary and would create undue complications for the industry.

Separately, another senator filed a bill in July to create a provisional marijuana licensing category so that farmers could begin cultivating and selling cannabis ahead of the formal rollout of the adult-use program.

In the interim before retail shops open, adults 21 and older can possess up to three ounces of cannabis or 24 grams of concentrates in New York—and they can also smoke marijuana in public anywhere tobacco can be smoked.

Adding pressure to get the market up and running is the fact that regulators in neighboring New Jersey recently released rules for its adult-use marijuana program, which is being implemented after voters approved a legalization referendum last year.

The first recreational marijuana retailers in New York may actually be located on Indian territory, with one tribe officially opening applications for prospective licensees last week.

Florida Marijuana Activists File New Legalization Initiative For 2022 Ballot Following Supreme Court Defeats

Photo courtesy of Martin Alonso.

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Congressman Files New Marijuana Banking Reform Amendment To Large-Scale House Bill

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The House sponsor of a bill to protect banks that work with state-legal marijuana businesses announced on Friday that he is seeking to attach an amendment containing the reform to a broader bill dealing with research and innovation in the tech and manufacturing sectors.

Rep. Ed Perlmutter (D-CO), sponsor of the Secure and Fair Enforcement (SAFE) Banking Act, has expressed interest in finding another vehicle to pursue his proposal after it was stripped from a separate defense bill late last year. The congressman’s legislation has cleared the House in five forms at this point, only to stall in the Senate.

His latest attempt to get the reform enacted is by filing an amendment with the SAFE Banking language to the America COMPETES Act, which does not deal specifically with cannabis issues as drafted but was introduced in the House this week.

“Cannabis-related businesses—big and small—and their employees are in desperate need of access to the banking system and access to capital in order to operate in an efficient, safe manner and compete in the growing global cannabis marketplace,” Perlmutter, who is retiring from Congress after this session and committed to passing his bill first, said in a press release.

“The SAFE Banking Act is the best opportunity to enact some type of federal cannabis reform this year and will serve as the first of many steps to help ensure cannabis businesses are treated the same as any other legal, legitimate business,” he said. “I will continue to pursue every possible avenue to get SAFE Banking over the finish line and signed into law.”

It remains to be seen whether the America COMPETES Act will serve as a more effective vehicle for the cannabis banking bill than the National Defense Authorization Act (NDAA), where the language was successfully attached on the House side but later removed amid bicameral negotiations. Perlmutter said at the time that Senate leadership, which is working on comprehensive legalization legislation, was to blame for the decision to remove his amendment from the proposal.

The new SAFE Banking Act amendment will still need to be made in order by the House Rules Committee in order to be formally be considered on the House floor when the body takes up the research and innovation package. The deadline to file amendments was Friday, and the panel is set to take them up starting on Tuesday.

Even some Republicans are scratching their heads about how Democrats have so far failed to pass the modest banking reform with majorities in both chambers and control of the White House. For example, Rep. Rand Paul (R-KY) criticized his Democratic colleagues over the issue last month.

In the interim, federal financial regulator Rodney Hood—a board member and former chairman of the federal National Credit Union Administration (NCUA)—recently said that marijuana legalization is not a question of “if” but “when,” and he’s again offering advice on how to navigate the federal-state conflict that has left many banks reluctant to work with cannabis businesses.

Ohio Lawmakers Will Be Forced To Consider Marijuana Legalization As State Validates Activist Signatures

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Ohio Lawmakers Will Be Forced To Consider Marijuana Legalization As State Validates Activist Signatures

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Ohio activists have collected enough signatures to force the legislature to take up the issue of marijuana legalization, the secretary of state’s office confirmed on Friday.

This comes about two weeks after the Coalition to Regulate Marijuana Like Alcohol (CTRMLA) submitted a final round of signatures for the measure. The petitions’ formal validation triggers the legislative review of legalization, but it does not require lawmakers to enact the reform.

The legislature now has four months to consider the campaign’s cannabis reform proposal. Lawmakers can adopt the measure, reject it or pass an amended version. If they do not pass the measure, organizers can then collect an additional 132,887 valid signatures from registered voters to place the issue on the ballot in November.

CTRMLA previously submitted petitions for the initiative but the state said they were short some 13,000 signatures, requiring activists to go back and make up the difference.

“We are ready and eager to work with Ohio legislators over the next four months to legalize the adult use of marijuana in Ohio,” CTRMLA spokesman Tom Haren said in a press release. “We are also fully prepared to collect additional signatures and take this issue directly to voters on November 8, 2022, if legislators fail to act.”

The measure that lawmakers will be required to consider would legalize possession of up to 2.5 ounces of cannabis for adults 21 and older, and they could also have up to 15 grams of marijuana concentrates. Individuals could grow up to six plants for personal use, with a maximum 12 plants per household.

A 10 percent sales tax would be imposed on cannabis sales, with revenue being divided up to support social equity and jobs programs (36 percent), localities that allow adult-use marijuana enterprises to operate in their area (36 percent), education and substance misuse programs (25 percent) and administrative costs of implementing the system (three percent).

A Division of Cannabis Control would be established under the state Department of Commerce. It would have authority to “license, regulate, investigate, and penalize adult use cannabis operators, adult use testing laboratories, and individuals required to be licensed.”

The measure gives current medical cannabis businesses a head start in the recreational market. Regulators would need to begin issuing adult-use licenses to qualified applicants who operate existing medical operations within nine months of enactment.

The division would also be required to issue 40 recreational cultivator licenses and 50 adult-use retailer licenses “with a preference to applications who are participants under the cannabis social equity and jobs program.” And it would authorize regulators to issue additional licenses for the recreational market two years after the first operator is approved.

Individual municipalities would be able to opt out of allowing new recreational cannabis companies from opening in their area, but they could not block existing medical marijuana firms even if they want to add co-located adult-use operations. Employers could also maintain policies prohibiting workers from consuming cannabis for adult use.

Further, regulators would be required to “enter into an agreement with the Department of Mental Health and Addiction Services” to provide “cannabis addiction services,” which would involve “education and treatment for individuals with addiction issues related to cannabis or other controlled substances including opioids.”

With respect to social equity, some advocate are concerned about the lack of specific language on automatic expungements to clear the records of people with convictions for offenses that would be made legal under the legislation. That said, it does include a provision requiring regulators to “study and fund” criminal justice reform initiatives including expungements.

Ohio voters rejected a 2015 legalization initiative that faced criticism from many reform advocates because of an oligopolistic model that would’ve granted exclusive control over cannabis production to the very funders who paid to put the measure on the ballot.

Activists suspended a campaign to place another measure on the 2020 ballot due to the coronavirus pandemic.

Aside from the new voter initiative, state lawmakers from both parties are separately working to advance marijuana reform.

A legalization bill that was the first of its kind to be introduced in the Ohio legislature last year would legalize the possession, sale and cultivation of cannabis by adults. It’s being championed by Reps. Casey Weinstein (D) and Terrence Upchurch (D).

A pair of Ohio Republican lawmakers similarly filed a bill to legalize marijuana in the state in December. Reps. Jamie Callender (R) and Ron Ferguson (R) first announced their plan to push the legislative reform proposal in October and circulated a co-sponsorship memo to build support for the measure.

There are also additional local reform efforts underway in Ohio for 2022.

After voters in seven cities approved ballot measures to decriminalize marijuana possession during last November’s election—which builds on a slew of previous local reforms in the state—campaigns are now looking to enact decriminalization in Marietta, Rushville, Rutland, Shawnee, McArthur and Laurelville.

Ohio marijuana activists already successfully proved that they turned in enough valid signatures to put a local decriminalization initiative before Kent voters after having missed the 2021 ballot due to a verification error on the part of county officials. That measure is now expected to go before voters this November.

Top Federal Drug Official Says Marijuana Use ‘Stable’ Among Youth At Prohibitionist-Hosted Panel Sponsored By D.A.R.E.

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Top Federal Drug Official Says Marijuana Use ‘Stable’ Among Youth At Prohibitionist-Hosted Panel Sponsored By D.A.R.E.

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A top federal drug official participated in a panel hosted by a prohibitionist group and sponsored by D.A.R.E.—and she again reiterated that data shows youth marijuana use has remained stable “despite the legalization in many states.”

While National Institute on Drug Abuse (NIDA) Director Nora Volkow expressed concerns about certain cannabis trends related to potency, commercialization and use by pregnant women, she affirmed that surveys funded by her own federal agency have demonstrated that adolescent marijuana use is “stable,” despite repeated arguments from prohibitionists that legalization would lead more young people to experiment with cannabis.

The event was hosted by Smart Approaches to Marijuana (SAM), an anti-legalization group. SAM President Kevin Sabet and the organization’s co-founder former Rep. Patrick Kennedy (D-RI) led the discussion.

Sabet said that data on youth use has showed varying results in states that have legalized cannabis and asked Volkow to weigh in on the issue. She replied that federal data “have not been able to see large differences in terms of prevalence” of cannabis consumption among young people in legal and non-legal states.

The official made similar comments in an interview with Marijuana Moment late last year.

That said, Volkow said that they have seen some differences when it comes to consumption rates among adolescents for edible cannabis products.

“But the effects are not large, and one of the things that also certainly surprised me [is] the rate overall, the prevalence rates of marijuana use among teenagers, have been stable despite the legalization in many states,” she said, adding that there are some concerns about increased frequency of use and limitations in data collection with respect to dosages being taken.

Volkow also commented on a recent federally funded survey that found illicit drug use by young people has taken a significant plunge in the last year, though she largely attributed that to the reduced social interaction resulting from COVID-19 policies across the country.

“Interestingly what we’ve observed during the COVID pandemic is, across schools in the United States, the prevalence of drug use has gone down,” she said, “which likely very much reflects the fact that kids don’t have the opportunity to interact with others, and drug taking at that stage is a peer pressure behavior.”

The official also briefly addressed the fact that she feels criminalizing people over drugs in the first place is the wrong policy approach—a point she’s made repeatedly in interviews and blog posts.

She said that “criminalization has created a system for that allows a structural racism to be implemented, you can control people, and that’s a horrible policy. This criminalization actually opens up our eyes that well, yes, we need to change that.”

However, she said that “liberalizing and making the drugs widely available, with no counter messaging,” is not the alternative she would recommend.

While the SAM-hosted event did not touch specifically on psychedelics policy, Volkow has also recently discussed that issues, especially as data has shown an increase in use of the substances among adults.

She said people are going to keep using substances such as psilocybin—especially as the reform movement expands and there’s increased attention being drawn to the potential therapeutic benefits—and so researchers and regulators will need to keep up.

Volkow also mentioned that NIDA is “pleased” the Drug Enforcement Administration recently announced plans to significantly increase the quota of certain psychedelic drugs to be produced for use in research.

USDA Teams Up With Cornell University For Hemp Education Webinar Series

Photo courtesy of Philip Steffan.

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