Cannabis tax reform bill awaits approval in closing hours of NY session

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Cannabis tax reform bill awaits approval in closing hours of NY session

Relief Nears for New York Cannabis Farmers as Electronic Tax Filing Bill Awaits Senate Vote.

As the New York State legislature gets set to close the books on its 2023-2024 session, relief for the licensed cannabis farmers is just a Senate vote away with a bill authorizing product producers to file electronic tax returns annually instead of quarterly.

It may not truly be what the farmers wanted — or even needed — to keep their heads above water, but it will help, said Matt Leonardo, attorney and lobbyist for the state Cannabis Farmers Alliance.

An Assembly version of the bill, A10196, sponsored by Assemblywoman Donna Lupardo (D-Binghamton), was approved last week. A companion bill sponsored by Sen. Jeremy Cooney (D-Rochester) is likely to be OK’d before the session officially ends on Thursday.

But there’s always a possibility that Cooney’s bill could fall through the cracks during the last-minute crush to wrap up business and get out of town.

According to Lupardo’s office, upward of 900 to 1,000 bills typically get sent to Gov. Kathy Hochul’s desk, but as of Tuesday morning a Senate source said that only 316 have been signed, sealed and delivered to Hochul.

Legislative staff said both houses would likely be in session throughout the day on Friday and even into the night to plow through the huge stack of bills yet to be acted on.

Cooney’s bill is “primed to pass,” Leonardo said, and should make it through.

Under the current system, where cannabis cultivators pay their excise taxes quarterly, it “often means taxes are being paid on products before those products have had the chance to be sold,” Cooney told NY Cannabis Insider.

“We need to pass my bill before the end of session to allow these businesses to file annually, similar to the alcohol excise tax,” he said.

Farmers would welcome — and certainly deserve — the break that ditching the quarterly payment system would provide, says CFA President Joe Calderone.

He further noted that this bill is important to “align cannabis with the alcohol industry and normalize cannabis as an industry by treating it similarly to other products made for adults.”

Farmers still haven’t got over getting stiffed by the Hochul administration, which refused to provide any relief funds for farmers burned by the disastrous dispensary rollout of 2022 and 2023, Calderone said.

Five million dollars in relief for retailers harmed by Office of Cannabis Management missteps was approved during the session, but farmers got nothing even though the Assembly allocated $80 million in grants and loans, and the state Senate proposed $128 million in grants, loans and tax credits.

Nick Fera, a cannabis farmer in Amsterdam, said the structure of the bill, which allows a farmer the option to file the taxes annually, would help with cash flow and business operations.

“By changing to an annual election, we will know our tax liability in advance,” he said, “and after we have been able to collect payments owed to us. It just makes sense.”

When farmers and wholesalers do pay their excise taxes this year, it will no longer be based on the potency tax system, which died on June 1.

The potency tax system, based on THC content, was implemented under Gov. Andrew Cuomo, and has been replaced by a flat 9% tax on wholesale cannabis sales.

That was quite a bit higher than what either Lupardo and Cooney proposed in one-house bills.

“I was disappointed,” Lupardo said. “I had argued for a tax no higher than 7 percent and would have preferred it to be 5 percent.”

“It should be 4 percent,” said Kate Miller, owner of Peregrine Toke in Sharon Springs. But scrapping the potency tax was a “step in the right direction. It was a devastating tax on small growers who didn’t have the bandwidth to spread out all of their costs.”

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Region: New York

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