New York Expects $1.2 Billion In Cannabis Tax Revenue In The Next Five YearsJanuary 25, 2022
New York governor Kathy Hochul presented the state’s fiscal 2023 spending plan in recent days, which included a detailed look at the expectations for the recreational cannabis market in the Empire State. This year, fiscal 2023, the state expects to collect $56 million in tax revenue, coming primarily from licensing fees before sales get up and running. Next year, assuming sales are live, will see inaugural cannabis tax revenue of $95 million. That figure is expected to nearly double to $158 million in 2024, followed by $245 million in 2025, $339 million in 2026, and $363 million in 2027. All told that equals more than $1.2 billion over the next half decade.
Those numbers are a boon to advocates like David Holland, who is president of the NYC Cannabis Industry Association, the executive and legal director of the New York branch of NORML, and legal advisor for the Last Prisoner Project, among other roles. “It’s probably the most progressive, and one of the most forward thinking cannabis plans in the country,” he told SND, speaking about New York’s legalization plan.
While delays in getting regulated sales off the ground have been a source of dismay for some in the business, Holland said he appreciates the size of the task regulators are working through to establish a comprehensive framework for cannabis business. “It takes a lot to write the rules and regulations,” he said. “We’re not even a year out so it’s going as fast as it can. And the whisper word from people in the know is that they’re doing a very comprehensive job and they’re doing it as fast as they can. But they didn’t have a chance to really dig in and go full force until after Governor Hochul was appointed and was able to make the appointments to the heads of the cannabis agencies.”
Holland also expects a healthy mix of companies in the market, with large scale producers operating alongside smaller craft producers. “I think there will be room for all,” he said. “There will always be those craft growers and people growing on a smaller scale than a hundred thousand or half a million square feet. They have been the market, and they have very loyal customer bases. So I’m not sure how deep the penetration of large scale operators will be, at least initially.” He also compared cannabis to wine or craft beer, where consumers are interested in sampling many different experiences rather than sticking with a known quantity.
Holland expects somewhere between 500 to 2,000 licenses to be released initially, which he hopes will keep the market steady and insulate it from the boom and bust cycles that other states and Canada have experienced, in which overproduction drives down prices and revenue. He also notes the provision for home-growing in the Empire State’s law, which sets it apart from many others, allowing New Yorkers 21 years and older to grow up to six plants in their home for personal use. “It’s an interesting approach,” he said. “It will take a few years for it to really take shape, but I’m very optimistic they’ve picked the right people to lead the program, who are committed to the issues that matter to a lot of folks in the industry.”—Danny SullivanSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning. You will also receive the Cannabis edition as part of your subscription.