New York Will Generate More Than $1.25 Billion In Marijuana Revenue Over Next Six Years, Governor’s Budget Estimates
New York stands to generate more than $1.25 billion in marijuana tax revenue over the next six years, according to an estimate included in the governor’s executive budget that was released on Tuesday.
For fiscal year 2023, the state is projected to collect $56 million in revenue, most of which will come in the form of licensing fees. From there, the yearly revenue estimates quickly increase as sales are expected to come online and expand: $95 million in 2024, $158 million in 2025, $245 million in 2026, $339 million in 2027 and $363 million in 2028.
Revenue from the nine percent state excise tax on cannabis will go to education (40 percent), community reinvestment (40 percent) and drug treatment (20 percent). Another four percent tax will support counties (25 percent) and cities, towns and villages (75 percent) that allow marijuana businesses to operate in their jurisdiction. There’s also a separate potency-based tax on cannabis products when they are transferred from distributors to retailers.
The initial tax projections are lower than what state analysts put forward last year. First in May the comptroller said New York would take in $245 million in marijuana revenue for the 2024 fiscal year. Now the state says it expects exactly that much two years later.
The briefing book for the executive budget touts how Gov. Kathy Hochul (D) has “prioritized getting New York’s cannabis industry up and running” since marijuana was legalized under her predecessor last year. That includes appointing key regulators who’ve been “creating and implementing a comprehensive regulatory framework.”
Hochul’s proposal to create a $200 million private-public fund to support equity applicants seeking to enter the industry is also mentioned in the book.
“We have the means to immediately respond to the COVID-19 pandemic as well as embrace this once-in-a-generation opportunity for the future with a historic level of funding that is both socially responsible and fiscally prudent,” the governor said of her overall budget plan on Tuesday.
The Office of Cannabis Management is responsible for “developing a comprehensive regulatory structure to monitor and control the cultivation, processing, manufacturing, distribution, transportation, and sale of cannabis in New York State,” the governor’s new proposal says. The budget calls for $46 million in funding to support those efforts.
Advocates and stakeholders are eager to see the implementation of legal marijuana sales in the state. A deadline for local municipalities to opt out of allowing cannabis retailers and social consumption facilities to operate in their area recently passed, and hundreds of cities, towns and villages across the state have agreed to allow them.
New York also has a goal of issuing at least 50 percent of cannabis business licenses to social equity applicants, including people from communities disproportionately impacted by criminalization, distressed farmers and women- and veterans-owned companies.
Because the implementation process to allow retailers has been drawn out, one GOP senator said he wanted 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 said was unnecessary and would create undue complications for the industry. It did not advance in the legislature.
As the state prepares to launch the first retail marijuana shops, the law signed by former Gov. Andrew Cuomo (D) already permits adults 21 and older to possess and publicly consume cannabis. And other lawmakers are working to build upon the legalization policy.
For example, a New York senator filed a bill last month to make it so that gay, lesbian and bisexual people can qualify as social equity applicants under the state’s marijuana law.
Sen. Jeremy Cooney (D) introduced the legislation, shortly after filing a separate bill to include transgender and non-binary people in the cannabis social equity program. He’s also behind other recent marijuana reform proposals related to cannabis business tax benefits and licensing.
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In July, Cooney filed a bill 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.
Cooney is also sponsoring a newly filed bill to allow licensed cannabis companies to deduct certain business expenses on their state tax returns.
Hochul, who replaced Cuomo after he resigned amid a sexual harassment scandal, has repeatedly emphasized her interest in efficiently implementing the legalization law.
Meanwhile, New York’s Cannabis Control Board (CCB) held its first meeting in October, a key step toward implementing the state’s adult-use marijuana program.
Members of the board, who were appointed by the governor and legislative leaders, announced that medical marijuana dispensaries will be allowed to sell flower cannabis products to qualified patients. The $50 registration fee for patients and caregivers was also permanently waived.
In November, regulators also approved rules for the state’s cannabinoid hemp program, notably clarifying that flower from the crop can be sold but delta-8 THC products are currently prohibited from being marketed.
The state Department of Labor separately announced in recent guidance that New York employers are no longer allowed to drug test most workers for marijuana.
Meanwhile, a New York lawmaker introduced a bill in June that would require the state to establish an institute to research the therapeutic potential of psychedelics.
Another state legislator filed legislation last month to legalize psilocybin mushrooms for medical purposes and establish facilities where the psychedelic could be grown and administered to patients.
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