Under Governor Andrew Cuomo’s latest budget proposal, New York would tax cannabis based on its potency if cannabis were legalized in the state. If enacted, New York would be the first state in the nation to tax cannabis based on THC content.
Cuomo has tried to push forward a bill to legalize cannabis in New York for the past two years. The budget proposal for the 2021-2022 fiscal year includes an excise tax on cannabis. Cuomo believes the tax revenue from cannabis could grow to over $300 million annually. New York legislators believe they can get recreational cannabis legalized by April of this year.
The excise tax consists of two parts: a wholesale THC-based tax and a retail price-based tax. If Cuomo’s proposal is enacted, smokable parts of the cannabis plant would be taxed at 0.7 cents per milligram of THC, concentrates at one cent per milligram and edible products at four cents per milligram. A second layer of taxation would have all products taxed at 10.25 percent of retail price. State and local taxes would also be applied to all sales.
“This should have been passed years ago,” Cuomo said. “I think too many people have been imprisoned, incarcerated, punished. It’s exaggerated the injustice of the justice system…This is a year where we need the funding, and a lot of New Yorkers are struggling, and I think this year will give us momentum to get us over the goal line.”
Cannabis industry officials have warned the proposal would mean New York would have one of the highest tax rates in the nation, potentially giving a reason for some consumers to get their cannabis from illicit locations.“We definitely want to make sure that taxes are not so prohibitive that it pushes the market back underground,” said Aaron Smith, executive director of the National Cannabis Industry Association (NCIA). “I hope that we can come to a place where it’s taxed in a manner that it’s somewhat similar to alcohol.”
