A marijuana industry official cautioned New York officials that recreational marijuana taxes need to be low enough to curtail illicit sales.
New York Gov. Andrew Cuomo unveiled more details this week about his recreational marijuana legalization plan, which is designed to help offset a coronavirus-fueled, multibillion-dollar budget deficit.
“We definitely want to make sure that taxes are not so prohibitive that it pushes the market back underground,” Aaron Smith, executive director of the National Cannabis Industry Association (NCIA), told Fox Business News.
“I hope that we can come to a place where it’s taxed in a manner that it’s somewhat similar to alcohol.”
Cannabis products would be taxed at the retail level at 10.25%, according to Cuomo’s proposal, which is below a previous plan calling for a 20% statewide tax.
But counting local and state taxes, Cuomo’s proposal would translate into a retail tax of around 18% on marijuana products.
There also reportedly would be a wholesale tax determined by product potency.
Other industry experts also have expressed concern about the ability of New York’s medical marijuana market to meet pent-up demand as the state transitions to adult use.
New York has a restrictive MMJ market with only 10 vertical operators, each of which is allowed to open only four dispensaries.
Lack of adequate supply will translate into higher prices and drive buyers to the illicit market, experts warn.
Marijuana Business Daily projects a New York adult-use market eventually will become the biggest on the East Coast, generating $2.3 billion in annual revenue by its fourth year.