New York is implementing a novel way of taxing cannabis, one that could result in very, very expensive weed.
Buying legal marijuana in New York will soon be a reality, with the state legalizing recreational use in 2021. Now, new reports say that the Empire State could impose a potency tax, elevating weed prices to up to $70 for an eighth.
Per Syracuse.com, the law would tax distributors different amounts depending on the milligrams of THC present in the compound. Distributors would be taxed half a cent in flower, eight-tenths of a cent in concentrates, and three cents in edibles.
Last year, New York announced its complex tax cannabis plan that, while not the highest in the country, could be the most complex. Instead of tying wholesale tax to factors such as weight or volume, New York would link the tax to the amount of THC in a product.
New York is the first state to tax cannabis this way, with many industry experts calling the plan overly complicated. “I mean it’s great that we finally have marijuana legalization, but this THC-based tax is something that could create a lot of problems,” said Kaelan Castetter, of Castetter Cannabis Group. She argues that this complex plan could put a new industry in a tough spot since it’s just starting out, while also coping with a pandemic. She predicts the tax could elevate costs, something that appears to be the case as we near the opening of legal cannabis businesses.
Still, not everyone is upset by New York’s new taxes. “It is an interesting approach,” cannabis law specialist Rob DiPisa told Syracuse.com. “Clearly New York is paying attention to the way that THC now drives the value and the growth in the industry. It may be the first, but I can see this becoming a trend in other states.”
Others think the tax could push cannabis workers to make strains and cannabis products that aren’t so reliant on THC, giving other compounds a chance, and showing people that there’s much more to cannabis than that single element.
Legal cannabis sales could start by the end of the year, following a program that plans to provide cannabis licenses to people affected by marijuana-related convictions.