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 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.
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.”