NY losing millions in taxes from lackluster legal Marijuana sales
New York isn’t high on the list of states making money when it comes to harvesting revenues from legal weed sales.
The Empire State is not even on track to make a predicted $56 million in its first year of legal weed sales – and that’s just a fraction of what other states made after legalization, according to a new report backed by New York medical marijuana operators.
“The current state of the cannabis market in New York is an unmitigated disaster,” said Rev. Kirsten Foy from the Coalition for Access to Regulated & Safe Cannabis.
The report highlights criticism from the medicinal marijuana industry that state cannabis laws are too restrictive for legal weed vendors while allowing an illegal market to flourish.
New York legalized recreational marijuana in the 2021 Marijuana Regulation & Taxation Act, which prioritized retail licenses for people who were previously hurt by prohibition such as those previously incarcerated for marijuana-related offences.
“Despite its enormous potential, regulators have neglected their responsibilities and their failure to act puts consumers at risk, restricts equity participation and the MRTA’s intended beneficiaries –disproportionately impacted communities – are missing out on millions of dollars of critical tax
revenue while putting consumers at risk,” Foy said.
Gov. Kathy Hochul earlier this year projected $1.25 billion in revenues from a legal weed market over the next six years with $56 million in revenues from the first year – $40 million of which would come from licensing fees rather than sales taxes.
But that $56 million goal might not get met considering just 15 dispensaries are up and running statewide after legal sales began in December 2022 while hundreds of illegal storefronts continue to flourish in New York City.
And in any case, the report notes New York remains far behind eight other, mostly smaller, states when it comes to first-year revenues:
- California raised $397 million in its first year.
- Illinois – $216 million
- Washington – $159 million
- Arizona – $153 million
- Nevada – $120 million
- Michigan – $82 million
- Oregon – $68 million
- Massachusetts – $62 million
New York will likely land just ahead of cowboy states like Colorado and Montana, which respectively raised $46 million and $42 million in their first years despite, having much smaller populations.
A spokesman for the state Office of Cannabis Management could not be reached for comment on Monday about the report.
The state agency and the Hochul administration have made several moves in recent months to address outstanding criticism.
Recent raids on illegal dispensaries came after the governor successfully secured changes in the state budget that empowered OCM and the state Department of Taxation and Finance to fine sativa-selling scofflaws up to $20,000 per day.
A regulatory change will allow ten medical marijuana operators to begin sales to the general public by the end of this year.
OCM has also floated offbeat ideas like allowing weed sales at farmers’ markets.
Chris Alexander, executive director of OCM, told WNYC last week that the agency is open to other changes to improve the nascent legal market.
“We know there are product issues in terms of making sure that the supply chain is flowing, but also the biggest really key solution is just opening up more dispensaries, which we remain diligently focused on and excited to see more of those open in the coming months,” he said.
