New York Losing Millions In Taxes From Legal Marijuana Sales While Illegal Market Booms: Report

"An unmitigated disaster."
Demonstrators march in the annual NYC Cannabis Parade & Rally in support of the legalization of marijuana for recreational and medical use, on May 1, 2021 in New York City. - New York Governor Andrew Cuomo signed legislation legalizing recreational marijuana on March 31, 2021, with a large chunk of tax revenues from sales set to go to minority communities. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
ANGELA WEISS/AFP via Getty Images

New York is losing millions of dollars in tax revenue from its anemic legal marijuana sales while an illegal market thrives, according to a new report backed by medical marijuana operators.

Legal marijuana sales were expected to pull in $56 million in tax revenue for New York in its first year of legal weed, but the state is not on track to make that goal, according to the Coalition for Access to Regulated & Safe Cannabis.

So far, New York has raised only $16.5 million in retail revenue since opening its first legal dispensary in December, the report notes.

Only 15 dispensaries are currently up and running, according to New York’s Office of Cannabis Management. Meanwhile, New York City alone has hundreds of illegal pot dealers that operate under the radar of the state regulators.

Recreational marijuana has been legal in New York since 2021, when the Marijuana Regulation & Taxation Act went into effect.

“The current state of the cannabis market in New York is an unmitigated disaster,” said Reverend Kirsten Foy of the Coalition for Access to Regulated & Safe Cannabis.

“Despite its enormous potential, regulators have neglected their responsibilities and their failure to act puts consumers at risk, restricts equity participation and the MRTA’s intended beneficiaries –disproportionately impacted communities – are missing out on millions of dollars of critical tax revenue while putting consumers at risk,” Foy said.

Even if New York were to come from behind and make its $56 million in tax revenue goal this year, it would still lag far behind other states that have legalized marijuana recently.


California raked in $397 million in tax revenue in its first year of legal marijuana sales. In 2022, California topped $1 billion.

At least seven states pulled in more than New York’s goal during their first year — Illinois generated more than $216 million, Washington generated more than $159 million, Arizona made more than $153 million, Nevada made more than $120 million, Michigan made nearly $82 million, Oregon made over $68 million, and Massachusetts made over $62 million.

Colorado, one of the first two states to legalize marijuana along with Washington, made $46 million in tax revenue in 2012, its first year. Even Montana, which has a population of just over a million people compared to New York state’s 19 million, made $42 million in tax revenue in its first year of legal marijuana sales.

Democratic New York Governor Kathy Hochul expected to pull in a whopping $1.25 billion in tax revenue from legal marijuana sales over the next six years, she indicated earlier this year in her 2023 budget plan.

The state’s Office of Cannabis Management has proposed several ideas to fix the slow rollout of the legal cannabis market, including allowing farmers to sell cannabis at farmer’s markets.

“We know there are product issues in terms of making sure that the supply chain is flowing, but also the biggest really key solution is just opening up more dispensaries, which we remain diligently focused on and excited to see more of those open in the coming months,” said Chris Alexander, the agency’s executive director.

New York State regulators have also raided unlicensed weed shops in Manhattan.

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