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New York Officials Prepare For New Marijuana Era

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Cities and counties across New York are trying to gauge the economic impact of legal recreational marijuana.

Governor Andrew Cuomo, a Democrat, says annual tax revenues could eventually total $300 million. The tax breakout: 9% statewide sales tax, an added 4% county and local tax and another tax based on the potency level of marijuana’s active ingredient, THC.

Under the new law, sales of marijuana will be taxed at a rate of 14%, although there have been estimates the total tax rate will come out to about 20%.

40% of state marijuana tax revenue is to go toward grants for communities disproportionately affected by prior drug laws; 40% toward schools and education, with 20% earmarked for drug treatment and education programs.

The trade publication Marijuana Business Daily estimates New York could become the East Coast’s largest recreational marijuana marketplace — generating a potential $2.3 billion in annual sales by its fourth year.

 Albany Mayor Kathy Sheehan, also a Democrat, says the law is about both social justice and economic justice. She adds the city has time to work out an equitable plan to regulate sales through dispensaries or other retail outlets.

"Acknowledging and recognizing that if there is a dispensary, that the sales tax breakdown of the local portion should go 3% to the municipality and 1% of the county. And that's in recognition of the fact that the city is the one that's going to be responsible for zoning, code compliance, anything around the law enforcement side."

Democratic Albany County Executive Dan McCoy is concerned about the law’s revenue formula for counties:

"9% goes to the state, and then 1% comes to us and 3% goes to the town or city."

McCoy says that isn’t enough to cover county bills for services like mental health and anti-addiction programs that are not eligible for state reimbursement.  "What my problem is, is I have to deliver these services, and here we go from the Senate and Assembly giving me another unfunded mandate that I'm gonna have to pay for and stay under the tax cap."

Capital Region Democratic state Assemblyman John McDonald, who represents the 108th district, expects all issues surrounding the law will be worked out in time.

"One cannot ignore the firm reality that every state around the state of New York is, or will be shortly, allowing for the selling of adult-use marijuana. And therefore, we have to be realistic. Individuals are going to go and buy that product, one way or the other."

State Senator Michelle Hinchey is a first-term Democrat from Saugerties:

"The legalization of marijuana opens tremendous economic opportunities for districts like mine in the 46th and upstate New York in general, from job development to new businesses, to bolstering our main street, as well as what it means for our agriculture community and our small farmers. This opens up markets and give them a whole new revenue stream, not to mention the new revenue that our local governments will be seeing.

Early next year, New Yorkers 21 and over will be able to buy smoke-able and edible forms of marijuana in retail stores. they will also be able to grow up to six cannabis plants per person, and 12 per household, at home. Sheehan says the city of Albany will be taking a close look at how the 15 states that legalized marijuana before New York handled it.

"... and make sure that we're doing this in a way that makes sense for our residents and our taxpayers. And that, you know, we have the ability to be good stewards of those taxpayer dollars. I do think, you know, and look, I think, you know, the city and the county work very closely together on many, many issues. And I also think that the costs associated with the implementation of this legislation is going to fall mainly to municipalities who are seeking to locate the these types of facilities within their boundaries. And again, that has everything to do with planning, with zoning, with code enforcement, with law enforcement."

Officials say legal sales will likely begin the day the tax structure of the law takes effect, April 1, 2022.

Dave Lucas is WAMC’s Capital Region Bureau Chief. Born and raised in Albany, he’s been involved in nearly every aspect of local radio since 1981. Before joining WAMC, Dave was a reporter and anchor at WGY in Schenectady. Prior to that he hosted talk shows on WYJB and WROW, including the 1999 series of overnight radio broadcasts tracking the JonBenet Ramsey murder case with a cast of callers and characters from all over the world via the internet. In 2012, Dave received a Communicator Award of Distinction for his WAMC news story "Fail: The NYS Flood Panel," which explores whether the damage from Hurricane Irene and Tropical Storm Lee could have been prevented or at least curbed. Dave began his radio career as a “morning personality” at WABY in Albany.
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