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HALF OF NEW YORK OPTS OUT OF POT INDUSTRY A
bout half of New York state’s towns have opted out of the nascent Cannabis industry, according to the Rockefeller Institute of Government. New York’s adult-use marijuana law, passed by the state legislature and signed into law by then-Governor Andrew Cuomo in the spring of 2021, established a December 31, 2021 deadline for jurisdictions to opt out of the recreational pot industry. Ultimately, about 49 percent of the state’s 1,521 towns decided against allowing dispensaries in their jurisdiction and 55 percent chose not to allow consumption sites. While significant, there were far fewer opt outs in New York than in neighboring New Jersey, which reported 70 percent of its towns chose to ban the Cannabis industry. According to industry insiders, most New York municipalities chose to opt out because they wanted more information about the state’s pot program before allowing it to move forward in their jurisdiction. So far, the state has failed to explain how local governments can regulate aspects of the industry like advertising and hours of operation for retailers. Towns that chose to opt out are giving up their share of the tax revenue generated by legal Cannabis – local jurisdictions will receive 4 percent of the 13 percent excise tax on pot sales, with the other 9 percent going to the state. Towns that simply did nothing were automatically enrolled in the Cannabis industry. Experts expect New York to become the second largest marijuana market in the country, after California, with projected sales estimated to bring in around $4.2 billion. However, towns that opted out are passing up on more than just pot tax revenue. Foot traffic is expected to rise in jurisdictions that allow retail pot sales or consumption sites, leading to an increase in business revenue
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in those towns. Likewise, real estate prices are expected to increase in those jurisdictions as home values rise. Fortunately, the pot industry bans don’t last forever and towns can opt back in to the industry through a vote by local government. Additionally, opt outs only apply to dispensaries and consumption sites. Jurisdictions can’t opt out of marijuana cultivation and manufacturing by licensed businesses, and adults may legally possess and consume Cannabis regardless of their town’s opt out status.
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SERIOUS CANNABIS CASH
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ew 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
FEB. 2022
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 mid2023 at the earliest.
