Governor Andrew Cuomo has voiced support for legalizing recreational marijuana use. Earlier this month, he called it the “right policy” and said “the state is going to be desperate for funding.” But a CBC report says “state leaders should be cautious about relying on these potential revenues to help close budget gaps.”
Patrick Orecki, who authored the report, says there are two main phases after legalization. The first is working out the regulatory structure.
“What we’ve seen is that that takes generally over a year to get from legalization to a functioning commercial market. Those times have been trimmed quite a bit, frankly, as more states have implemented and states can draw on what has happened around the country. So about one year is reasonable there,” Orecki said.
Once the commercial market is in operation, it takes time for people to start using dispensaries to buy products.
“That generally takes about two to three years consistently for customers to move to those marketplaces and for those marketplaces to yield substantial tax revenues for the state,” Orecki said.
Orecki says, in the past, the Governor’s Administration has forecasted about $300 million in revenue from the legalization of recreational marijuana annually once established, but it can be reliant on different factors like tax framework structure.
“California is generating the most revenue of any state because of its size, especially, but it has experienced a lot slower maturation of that revenue source than some other states did. They’ve had a fairly sticky illicit market where people are still just using the same channels that they use to purchase marijuana previously. So every state’s experience is absolutely different in it,” Orecki said.
According to the CBC, California brought in about $764,000,000 from recreational marijuana revenues from July 2019 to June 2020.