New York state expects to take in $1.25 billion in marijuana tax revenue and fees over the first six years of retail sales. While the Empire State has yet to set a launch date for adult-use sales, the governor’s new executive budget forecasts some serious Cannabis cash coming in, beginning in 2023.
Gov. Kathy Hochul’s administration anticipates a slow start for the industry, estimating just $56 million in pot revenue for 2023. That money is expected to come primarily from fees associated with launching the industry.
Naturally, officials forecast the real money rolling in when retail sales are finally established in New York. The budget report estimates the state will rake in Cannabis revenues of $95 million in 2024, $158 million in 2025, $245 million in 2026, $339 million in 2027 and a whopping $363 million in 2028.
Ultimately, the state decided on a 13 percent excise tax on Cannabis sales, with 4 percent going to local jurisdictions in which sales are made and 9 percent going to state coffers. Of the 9 percent of tax revenue diverted to the state, 40 percent will be used for education, another 40 percent will go toward community reinvestment and the remaining 20 percent of revenue will be used for drug treatment.
Additionally, New York has established a separate sliding scale tax that is based on pot potency, with higher THC products taxed at a higher rate. However, this tax only applies to pot products exchanged between distributors and retailers.
While the governor’s budget estimates are lower than previous projections for New York’s Cannabis industry, the difference can be explained by the state’s delay in launching retail sales. Earlier estimates called for the state to take in $245 million in revenue in 2024. The new budget still anticipates $245 million in revenue, however it now expects to first hit that number two years later, in 2026.
Gov. Hochul has managed to appoint key regulatory personnel – a necessary step in implementing the state’s pot program – but officials are taking longer than expected to create the industry’s rules and regulations, causing further delays. Based on a recent estimate provided by New York’s Cannabis Control Board, which creates the rules for and oversees the operation of the state’s marijuana industry, retail sales won’t begin until mid-2023 at the earliest.