(This story has been updated to reflect that Curaleaf Holdings has been approved to enter the New York adult-use market.)
New York’s governor is proposing the elimination of the state’s potency tax on marijuana products, a potential win for the industry.
Under the state’s 2021 legalization law – the Marihuana Regulation and Taxation Act (MRTA) – distributors must pay half a cent per milligram of total THC for flower, eight-tenths of 1 cent per milligram for concentrates and 3 cents per milligram for edibles.
That’s in addition to the 9% sales tax and municipal taxes of 4% for retail sales.
Gov. Kathy Hochul proposed in her recently released executive budget the replacement of the potency taxes with a wholesale tax of 9%.
The change will simplify the tax structure and save operators money, industry experts told MJBizDaily.
“Generally, taxes are one of the biggest impediments to accomplishing a true legacy-to-legal transition and pose the greatest disadvantage for legal operators in their ongoing efforts to compete with the illicit market,” Lauren Rudick, founder and managing principal at Rudick Law Group in New York City, said via email.
“The potential cost savings for cannabis operators that will result from this change will not only lower the barrier to entry for those looking to open dispensaries, but they will also allow licensees to create more intergenerational wealth through their businesses, something that echoes the true essence of the MRTA.”
The governor’s proposal comes amid growing momentum in the New York market, which has struggled significantly since the launch of adult-use sales a little more than a year ago.
Lawsuits, major policy shifts, funding shortfalls for social equity licensees, municipal optouts and challenges securing real estate have stymied growth for operators and the New York market at large.
On Thursday, the state Cannabis Control Board (CCB) approved New York-based Curaleaf Holdings to enter the adult-use market.
That comes on the heels of the CCB last week saying subsidiaries of MSOs Green Thumb Industries and iAnthus Capital also can enter the recreational market, according to Green Market report.
The CCB in December approved six registered organizations – New York’s version of MSOs – to expand operations from the medical market to recreational in a controversial policy shift.
Those moves come after the state’s Office of Cannabis Management proposed in June that MSOs could enter the adult-use market by year-end, effectively eliminating a three-year waiting period for New York’s 10 vertically integrated medical marijuana providers, which were all registered organizations.
New York regulators have issued conditional retail licenses to about 50 operators, doubling the total in the past month or so.
Chris Casacchia can be reached at firstname.lastname@example.org.