New York City’s legal marijuana market could generate $1.2 billion in sales and $47 million in tax revenue for city coffers when fully operational — but the high times might not happen until after 2030.
The long wait for the bud bucks to finally bloom is due to the current slow rollout of the opening of pot stores, of which only a handful of legal shops have opened, a new analysis released Thursday reveals.
“The rollout of the legal cannabis market has been slowed, however, by several challenges: illicit sales by unlicensed businesses, siting and funding issues for dispensary owners, and multiple lawsuits that have halted market growth in its tracks. As a result, the specific timeline for market maturation is unclear,” the city Independent Budget Office said in its report.
“It is exciting to contemplate a new source of revenue from legal cannabis sales, but it’s also important to take a realistic look at when and whether NY can count on this fiscal boost,” said IBO Director Louisa Chafee.
There are just 23 licensed cannabis retail stores that have opened in the state, 9 of them in the five boroughs.
A court injunction has recently froze licensing, after a judge concluded the Office of Cannabis Management likely broke the law by giving convicted pot dealers preference over disabled vets and other social equity applicants in the awarding of licenses.
The city collects a 4% cannabis excise tax on each sale of ganga. The state collects a 9% excise tax plus a potency tax on the distribution of cannabis.
The sales and tax revenue estimates are based on scenarios on how many licensed cannabis stores open each year and the ongoing impact of the blatant illicit market
The City’s Office of Management and Budget (OMB) predicts by 2027, the city will collect $38 million in cannabis tax revenue based on $950 million in sales.
IBO said that such market growth is possible — only if an average of 24 dispensaries opens per year, with each store making an average of $8.1 million in annual sales.
But IBO also said that if the current slow growth patterns continue the city will not reach $950 million in annual sales until after 2030.
Meanwhile, the city sheriff’s office said there’s a massive illicit weed market, with 1,500 unlicensed pot smoke shops operating in Gotham.
With the backing of Gov. Kathy Hochul and Mayor Eric Adams, the state legislature and City Council recently passed tougher laws that have beefed up enforcement against illicit operators, but the IBO said it’s too soon to determine what impact they will have.
IBO said an estimated 1,500 unlicensed weed stores may hold as much as $484 million worth of untaxed cannabis products in total.
“If all those products were sold legally, the sales would generate $19.4 million in tax revenue for New York City. The NYC City Council recently passed legislation aimed at deterring the illegal smoke shops,” the analysis said.
IBO also said it reviewed sales and revenue from the legal marijuana markets in California, Colorado, Massachusetts, Oregon and Washington State — where pot has been legal for more than five years — to project sales in the Baked Apple.
It also based sales and tax revenue on the number of pot shops expected to open in the city.
As of July, 241 out of 463 cannabis retail dispensary licenses have been awarded to dealers in the five boroughs, or 52 percent.
Taking 52 percent of total statewide retail sales each year, IBO estimated the total citywide sales in each year of the forecast.
“IBO determined New York City could eventually see sales that could yield between $833.6 million and $1.2 billion in annual taxable sales. A market of this scale would yield between $33 million to $47 million in annual city revenue. However, New York State’s unique requirements for retail licenses have resulted in a slower rollout of the legal market,” the analysis said.
Despite the slow legal pot sales, New York City is already considered the largest consumer of weed of any municipality on the globe.
Denizens of the five boroughs inhale or consume 62.3 metric tons of pot per year, a figure that translates to a staggering 62 million grams, or 6.9 grams a year consumed by the city’s typical resident, according to one cannabis tracker.
