While Pennsylvania debates marijuana legalization, neighboring states like New York brag about the tax revenues.
New York legalized medical cannabis in 2014 and recreational use for adults age 21 and older followed in 2021. Legal sales began at the end of 2022, and tax revenue from licenses alone have so far been notable.
The Office of Cannabis Management, in its inaugural annual report, revealed revenues from cannabis tax, application fees, and license fees totaled nearly $16 million in fiscal year 2021-22.
The vast majority of that, however, came from its medical cannabis program, with slightly less than $1 million from hemp and adult-use cannabis.
By the end of September 2022, revenue reached $7.5 million.
Almost 4,000 medical practitioners can prescribe medical cannabis, with more than 124,000 New Yorkers registered for medical cannabis. Adult-use licenses have lagged behind the older medical program. The Cannabis Control Board has approved more than 300 licenses for cultivators and processors, and provisionally approved only 36 licenses for retail dispensaries — though it has received more than 900 applications.
As the cannabis industry ramps up, tax revenue from legal sales could reach into the billions. New York City Comptroller Scott Stringer estimated sales in the adult-use market would generate $3.1 billion in revenue statewide and $1.1 billion in New York City alone.
“This market could conservatively yield annual tax revenues of as much as $1.3 billion total at the State and City levels,” Stringer wrote.
State projections from January 2022 expect $1.25 billion in tax revenue over the next six years. Colorado, which legalized recreational marijuana in 2014, has collected $1.8 billion in state tax revenue and another $238 million in local sales tax since legalization.
“At the center of all this work is our focus on equity and inclusivity,” Cannabis Control Board Chair Tremaine Wright wrote in the report. “The market we’re building will support equity applicants to ensure they’re not only ready to open a business, but also positioned for the type of long-term success that builds generational wealth.”
The tax revenue that collected in New York from recreational-use sales will be dedicated three ways: 40% to the State Lottery Fund for educational purposes; 40% to the Community Grants Reinvestment Fund (directed to non-profits and local governments by the State Cannabis Advisory Board); and 20% to the Drug Treatment and Public Education Fund.
Medical cannabis tax revenues flow to five different funds. Some 90% goes to the New York State Cannabis Revenue Fund and local governments.
Pennsylvania’s medical marijuana program was created in 2016 and has many more residents approved — more than 1 million — but lawmakers have taken a cautious approach to recreational use.
Though some estimates have pegged annual tax revenue up to $6 billion if the commonwealth embraces legalization, federal law that prohibits users from qualifying for a concealed carry license could violate Second Amendment rights.
Maryland, New Jersey and New York have embraced legalization, which could also lower tax revenues if Pennsylvania residents choose to cross state lines to buy marijuana legally. A last-minute effort from state Republicans in December to encourage retiring Sen. Pat Toomey, R-PA, to reform federal cannabis law failed. Until federal law changes, legalization efforts may remain stalled in Pennsylvania, despite some bipartisan support.