New York Could Be Earning Millions in Marijuana Tax Revenue

New York legalized medical marijuana in 2014 and, following Gov. Andrew Cuomo’s request for a study, analysts predict the state may legalize recreational marijuana.1 Using Colorado’s marijuana revenue per capita, how much could New York earn in recreational sales and tax revenue?

Gross sales, 2016-17 fiscal year

Colorado

  • Medical marijuana: $440.9M
  • Recreational marijuana: $928.1M

New York

  • Actual medical marijuana: $8.4M
  • Projected recreational marijuana: $3.3B

Current dispensaries per 100 thousand people

  • New York: 0.1
  • Colorado: 8.9

Gross sales per 100 thousand people

Colorado

  • Medical marijuana: $7.9M
  • Recreational marijuana: $16.6M

New York

  • Actual medical marijuana: $.04M
  • Projected recreational marijuana: $16.6M

Tax revenue

Colorado

  • Medical marijuana:
    • Tax rate: 3%
    • Tax revenue: $12.8M
  • Recreational marijuana:
    • Tax rate: 15%
    • Tax revenue: $139.2M

New York

  • Actual medical marijuana:
    • Tax rate: 7%
    • Tax revenue: $.6M
  • Projected recreational marijuana:
    • Estimated tax rate: 15%
    • Projected tax revenue: $492.9M

Increased Recreational Marijuana Revenue Over Time

When states legalize marijuana, they undergo a transitional period of setting up infrastructure, building consumer awareness of the new dispensary system and finding the right tax rate to compete with black market prices.2 Sales and tax revenue in states such as Colorado have gradually increased in the years after legalization of recreational marijuana. 

Gross sales

Years following recreational legalizationColoradoNew York (Projected)
1$303.2M$1.1B
2$577.5M$2.0B
3$861.6M$3.1B
4$1.1B$3.9B

Tax revenue

Years following recreational legalizationColoradoNew York (Projected)
1$45.5M$161.0M
2$86.6M$306.7M
3$129.2M$457.5M
4$163.7M$579.5M

States allocate marijuana tax revenue to key infrastructure and services. In the 2016-17 fiscal year, the major recipients of marijuana tax fund revenues in Colorado were:

Marijuana Excise Tax3

  • $45.7M on public education

Marijuana Tax Cash Fund4

  • $8M on education
  • $6M on substance abuse services
  • $3M on mental health services for juvenile and adult offenders

Created by MBA@Syracuse, the online MBA program from Syracuse University

Sources:
1 https://www.vice.com/en_us/article/vby543/new-york-is-closer-than-ever-to-legalizing-weedarrow_upwardReturn to footnote reference
2 https://taxfoundation.org/marijuana-taxes-lessons-colorado-washington/arrow_upwardReturn to footnote reference
3https://www.cde.state.co.us/communications/20160902marijuanarevenuearrow_upwardReturn to footnote reference
4 http://leg.colorado.gov/sites/default/files/fy17-18apprept.pdfarrow_upwardReturn to footnote reference