Marijuana legalization advocates critical of Governor’s proposed taxation plan

NY Capitol News

ALBANY, N.Y. (NEWS10) — The Cuomo Administration has provided details for its plan to regulate and tax adult-use recreational cannabis in its budget plan. The Governor says it could generate $350 million in revenue a year once matured. But, some who support marijuana legalization are uneasy about the tax structure.

The Governor’s Cannabis Regulation and Taxation Act would impose three taxes on adult use of cannabis. The first would be a wholesale THC-based potency tax that would be put on the sale from a distributor to a person selling the products at retail. Some advocates of cannabis legalization say it poses concerns.

“One, it’s not a common system and so we don’t really see how they will keep track of every single product, it seems like it’s going to be overburdensome to regulate and collect taxes. And, number two, the rates are pretty high which would kind of leave New York as one of the higher taxed adult use cannabis states,” said Allan Gandelman, President of New York Cannabis Growers & Processors Association.

Secondly, there’s a 10.25 percent final sale tax. And third, the products would be subject to state and local sales tax. 

David Holland with Empire State NORML which seeks to legalize cannabis says if the overall tax rate becomes too high, people could resort to the unregulated marketplace. “The legacy market may continue on if it turns out to be cheaper and less difficult to access than a state legalized market and that’s one of the dangers of over-taxation,” Holland said.

 Advocates also say that more could be done to promote social equity. The Governor says $100 million will go to a social equity fund.

“I think a lot more of the tax revenue should be allocated to the social equity piece, and it should all be done on the front end. I don’t think we should spread it out over 5 years, and keep increasing it, because what’s going to happen is large corporations are going to move into the state very quickly, some are already here and they will capture the entire market,” said Gandelman.

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