New York’s Adult-Use Cannabis Program Falls Short of Tax Revenue Targets, Report Reveals

NEW YORK– New York’s nascent adult-use cannabis program has faced significant challenges in meeting its projected tax revenue targets, according to a recent report released by the Coalition for Access to Regulated & Safe Cannabis (CARSC). Representing licensed registered medical cannabis operators and equity applicants excluded from the market, CARSC sheds light on the program’s shortcomings and its impact on tax revenues.

At the beginning of 2023, the state of New York anticipated generating $56 million in tax revenues from its first year of legal adult-use sales. Licensing fees paid by growers and sellers were expected to contribute a substantial portion, amounting to $40 million. However, the report highlights that the program is unlikely to achieve this projection, raising concerns about its effectiveness.

Rev. Kirsten Foy, a prominent voice within the coalition, expressed disappointment over the program’s underperformance. Foy pointed out that even if New York were to reach its $56 million target, it would still fall short of other states’ tax revenues in their inaugural year of adult-use cannabis sales, such as Massachusetts, Oregon, and Michigan.

Comparing New York to Montana, which has less than half the population of Queens, Foy highlighted Montana’s ability to generate nearly $42 million in tax revenue during its first year of adult-use cannabis sales. Foy attributed this disparity to the Office of Cannabis Management’s (OCM) slow pace of licensing, which has allowed the illicit market to flourish while hindering vetted social equity applicants and registered organizations from competing effectively.

The consequences of the program’s struggles are particularly felt by social equity applicants, who are meant to benefit from the tax revenue. However, due to the program’s inefficiencies, they find themselves ill-equipped to compete with the illicit market, exacerbating the disparity. Foy described the current state of New York’s cannabis market as an “unmitigated disaster” and criticized regulators for neglecting their responsibilities, which not only limits equity participation but also puts consumers at risk.

The report emphasizes the urgent need for regulatory action to address these issues. It highlights the detrimental effects of the program’s failure on disproportionately impacted communities, who are missing out on millions of dollars in critical tax revenue. Without swift intervention, consumers remain vulnerable, and the potential benefits of a well-functioning cannabis market in New York will remain unrealized.

The challenges faced by New York’s adult-use cannabis program underscore the importance of robust and efficient regulation to ensure a thriving industry that fulfills its revenue potential while promoting equity and consumer safety. As stakeholders and policymakers grapple with these issues, finding effective solutions becomes paramount for the future of cannabis in the state.