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Legal Weed Sales in New York State Could Exceed $3 Billion Annually

The NYC Comptroller's Office released a new report estimating that if the state legalizes cannabis, the market could exceed $3 billion annually and bring in upwards of $400 million in tax revenue.

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A new report by New York City Comptroller Scott Stringer has estimated that legal cannabis could bring the state $436 million a year in tax revenue. The report also predicts that the adult-use cannabis market could hit $3.1 billion annually, with $1.1 billion of that coming from New York City alone. Retail pot taxes could bring New York City an additional $336 million a year, with another $570 million going to other local governments throughout the state.

Stringer's figures are pretty close to those prepared by Joel Giambra, an independent running in this year's race for governor. Giambra estimated that a 13% excise tax on legal weed could bring the state $500 million a year. New York has been slow to embrace cannabis reform, but after Giambra and Sex and the City actress Cynthia Nixon both promised to legalize weed if elected governor, incumbent Governor Andrew Cuomo announced that he was finally willing to accept the inevitability of cannabis policy reform.

The Comptroller report notes that every state bordering New York, with the exception of Pennsylvania, has legalized, or is likely to legalize adult-use cannabis sales in the near future, and a recent poll by Quinnipiac University has found that 63% of all New Yorkers are in favor of legalization. Cuomo and other formerly anti-cannabis politicians are finally seeing the writing on the wall, and the state's Democratic Party has even officially endorsed cannabis legalization.

Stringer's report explains that New York's existing excise tax regime may not be the best choice for cannabis. Combined New York City and state taxes on alcohol amount to only 26 cents per gallon of beer, but every individual pack of cigarettes sold in NYC carries a total tax of $5.85. The tobacco tax is so high that New York is currently home to the largest cigarette black market in the country, and an estimated 55% of all cigarettes consumed in the state were smuggled in.

The Comptroller's office looked to other canna-legal states to devise a recommended tax program for New York that would provide sufficient revenue to local governments while also keeping retail prices competitive. The report recommends that the state charge a 10% excise tax, which would "ensure that taxes at the state level are both proportional to price levels and low enough to avoid upstate smuggling with Massachusetts, where adult-use marijuana sales face a retail excise tax of 10.75%."

The report also recommends that New York City and other localities should be allowed to charge up to 25% in additional taxes. This tax range would allow local governments to have enough revenue to fund programs to address any social or public health issues pertaining to cannabis legalization. Local governments could also have the flexibility to raise pot taxes if overall prices began to fall, or lower them if legal weed became cheaper in a neighboring state, like New Jersey.

The report also notes that legalization has benefits that extend beyond simple financial rewards. "In states where adult marijuana use has been legalized, there have been declines in teenage usage of marijuana, and public health and safety concerns have been addressed," the report explains.

"Finally, misdemeanor marijuana arrests continue to fall most heavily on young black and Latino New Yorkers, despite a higher reported usage rate among white youth. Erasing the harmful repercussions, including the stigma of a criminal record, would open doors that have been closed to too many for too long, yielding incalculable human, economic, and societal benefits."

(h/t NORML)