By Sarah Bueker, CSG Policy Analyst
As the New York State Government debates the Cannabis Regulation and Tax Act that would legalize Adult-Use marijuana, many supporters point to the economic impacts and potential tax revenue. We can look to other states to provide a base level expectation but realize that New York is unique in commercial activity and culture which could lead to an adult-use marijuana market that shatters expectations.
In 2012, Colorado and Washington became the first two U.S. states to legalize the recreational use of cannabis.Since then nearly every state in America has passed some form of legislation relaxing the restrictions on cannabis and cannabis derived products. This includes measures allowing medical marijuana, decriminalization, industrial hemp, cannabidiol, and adult use recreational marijuana. While the medical benefits, effects, and uses are still being studied, cannabis has had an undeniable effect on state and national economies. The introduction of legalized cannabis has sparked the creation of billion-dollar industries in states.
There’s a reason cannabis has been dubbed the Green Gold Rush. Last year in Colorado, medical and recreational sales topped at $1.1 billion, marking a five-fold increase since 2014.
Of that, Colorado state collected $263.7 million in tax revenue from the state’s 1,582 active retail marijuana businesses under 38,868 occupational marijuana licenses. According to the state’s annual report, retail marijuana sales have continued to increase steadily, while medical marijuana sales have remained constant at around $10 million in state revenue.
The legal cannabis industry presents the possibility of opportunities for business owners, investors, farmers, processors, laborers, among others to benefit from cannabis’ growing promise to vitalize state and local economies. The proposed New York cannabis regulations would allow for a diverse industry with product manufacturers, distributors, retailers, and growers all occupying market niches. Cannabis industry projections predict the cannabis industry’s growth to amount to total market sales exceeding $26.3 billion by 2025 and the possibility of nearly 300,000 jobs by 2020 in the United States. Currently, the cannabis industry is one of the fastest growing job markets in the country and many of these are high paying and technical positions.
This emergent market would touch nearly every corner of the state—users would no longer fear prosecution, a multimillion-dollar market would allow entrepreneurs to enter the market, and for New York State to collect taxes and create programs that benefit all New Yorkers. Based on Colorado’s market, New York State’s adult-use cannabis market would be an approximate 3.725 million users in New Yorkers out of the 14.9 million adult residents of the state. Based on that estimate, New Yorkers would consume an approximate 734 tons of cannabis per year. This could result in over a billion-dollar total industry across the state. While the regulatory structures to support this industry are being built, it’s an undeniable truth that cannabis will shift the economic and agricultural landscape of New York State.