Legal marijuana sales have failed to make a real impact on tax revenues for New Yorkers, a report claims. The state hopes to make over $1.2billion from the industry in the next five years.
New York is on course to fall dramatically short of tax revenue targets from legal marijuana sales, a new study has suggested
Governor Kathy Hochul predicted that there would be $1.25billion in revenue for the Empire State over the six years following recreational marijuana use becoming legal in 2021.
The prediction meant New York expected to see around $56million in the first year, with $40million of that coming from licensing fees. In the years after, the hope is that sales of the drug from licensed operators will dramatically increase revenues as businesses adjust to the new rules.
A report, backed by medical marijuana operators, argues that restrictions on marijuana usage are too tight.
The report says that a slow pace of handing licenses to stores has allowed an “illicit market to thrive”, claiming only 13 legal adult-use dispensaries are functioning in the state.
It blames the Office of Cannabis Management (OCM) for failing in its attempt to open 120 Conditional Adult-Use Retail Dispensaries (CAURDs).
According to the OCM website, just 15 dispensaries are currently open in New York, following the beginning of legal sales in December last year.
Last month, Hochul’s budget for the 2024 fiscal year said there were to be more powers for the OCM to reign in unlicensed marijuana dispensaries, which are draining potential tax revenues.
There have also been raids on illegal dispensaries following the changes and a further ten medical marijuana operators are to begin sales to the general public by the end of 2023.
Chris Alexander, executive director of OCM, told WNYC last week: “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.”
Rev. Kirsten Foy from the Coalition for Access to Regulated & Safe Cannabis. told the New York Post that “The current state of the cannabis market in New York is an unmitigated disaster.”
“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.
The Mirror has approached Governor Hochul’s office for comment.
New York’s goal of $56 million in its first year of legal sales is well below what other states managed.
California brought in $397 million in its first year, Illinois $216million, Washington $159million and Arizona $153million.
Nevada, Michigan and Oregon also had far higher tax revenues brought in.
Even Massachusetts, which has a far lower population than New York, brought in $62 million.
