Legal Weed Could Raise at Least $248 Million in New York

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Gerald B. Silverman

Legalizing recreational use of marijuana would generate between $248 million and $677 million in tax revenue for New York state and local governments, according to a report from the state Department of Health.

The report said a 7 percent marijuana tax would bring in $248 million to $493 million, depending on the sale price of the marijuana. A 15 percent tax would bring in $340 million to $677 million.

The New York market for marijuana, if legalized, would be among the largest in the U.S. The illegal market is estimated at $1.7 billion to $3.5 billion, according to the report.

Legalizing marijuana is expected to be a top issue when the Legislature opens its 2019 session in January.

The July 13 report comes about one month after the state health commissioner recommended that the state legalize marijuana for recreational use. It’s currently permitted only for medical use.

The revenue estimates were done in conjunction with the Department of Taxation and Finance.

The report evaluated different taxing schemes and concluded that “a retail price-based tax has proven most effective, as it is easier to administer and less problematic than a producer or wholesale level tax, but it is a more unstable revenue source.”

Nearby Massachusetts, meanwhile, has been slow to roll out its legalized marijuana scheme. The state’s Cannabis Control Commission has missed a provisional July 1 date to allow the legal sale of recreational marijuana, but has issued only two provisional licenses. Nine states and Washington, DC, have legalized marijuana for recreational use.

To contact the reporter on this story: Gerald B. Silverman in Albany, N.Y. at gsilverman@bloomberglaw.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

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