No one can deny that this coronavirus has dramatically changed our world. Within three short weeks, schools, parks and public spaces along with many companies and stores all closed. Common outdoor …
No one can deny that this coronavirus has dramatically changed our world. Within three short weeks, schools, parks and public spaces along with many companies and stores all closed. Common outdoor dress now includes gloves and face-coverings of some kind and social distancing is the new norm.
As Americans braced for these necessary limits, they stocked up on supplies. Items purchased in bulk included toilet paper, food products, hand sanitizer, liquor and also cannabis. Cannabis medical dispensaries were not only among the stores deemed essential, but they also saw a significant increase in sales as buyers turned to cannabis both medicinally and recreationally. While not all New Yorkers turn to cannabis for relief, expansion of cannabis laws could provide a much-needed economic boost for New York.
States where cannabis is medically legal saw a 40 percent increase in sales within the first three weeks and several states where adult-use is legal saw a 50 percent increase in recreational sales. Similar to other essential retailers, dispensaries provided home delivery, curbside pick-up and offered hours reserved for senior customers. One online retailer of accessory cannabis items reported a 200 percent increase in sales from this time last year. People across the country are turning to cannabis to help manage stress and anxiety, and for an additional enjoyment. New York is no exception; it too has seen a 50 percent increase in sales of legal medical cannabis, including an increase in both sales and customers in its adult-use black market.
Gov. Cuomo has shown exemplary leadership associated with the pandemic. However, reports on the state budget show a significant deficit that will only grow. Already facing the need to rectify a $6 billion deficit pre-pandemic, the state now will struggle to address a $10 to $15 billion need in unallocated budget cuts to manage the current situation. At a time when New York is scrambling to procure resources, it is also facing a significant loss in tax revenue.
If this didn’t all sound like enough, New York will also need to borrow against its decision to delay the date for state filing for last year with revenues now pushed to July. However, according to a statement by Robert Mujica, director of the budget, the state is hoping to avoid tapping into the credit market to offset long term budget gaps. Add to this mix unemployment claims and other state assistance, and we have a perfect storm that will follow on the coattails of COVID-19. Without a federal rescue package, the state will be left with little options.
Enter the possibility of legalizing adult-use cannabis. Past reports have estimated the legal, adult-use of the cannabis market at $3.1 billion per year in New York State. In turn, a conservative estimate of annual tax revenue that the cannabis market will yield an anticipated $1.3 billion total at the state and city levels.
Gov. Cuomo proposed the Cannabis Regulation and Taxation Act in the pre-pandemic budget and stated that pushing cannabis reform through the budget is the surest way for it to succeed. Those that opposed expanded legalization may be pleased that it dropped out of the final budget adopted post-pandemic outbreak.
However, where will these gaps in the budget be closed? Pulling from school aid? Medicare? Raising taxes at a time of increasing unemployment? Cannabis legalization offers a real solution with long term benefits, and the good news is that it can still get done in 2020 when the legislature considers the Marijuana Regulation and Taxation Act, sponsored by Sen. Liz Krueger and Assemblymember Crystal Peoples-Stokes.
Although certain aspects of the bill still require clarification, such as how best to structure the cannabis tax while balancing it with access issues, the state cannot ignore the potential revenue. As we begin to emerge from the crisis, we must prepare for what happens next. A wise first step would be to build on the Hemp Law created by Sen. Jen Metzger and Assemblymember Donna Lupardo. The innovative framework for production standards and safety criteria will serve well as a basis for addressing issues in legalizing adult use. If we learned anything from COVID-19, it is deliberate actions can make a difference in long term outcomes.
Nicole Ricci is a policy analyst and external affairs representative for the cannabis industry.
Andrew M. Rosner is the vice president of the New York State Cannabis Growers and Processors Association, Inc. and owner of HR Botanicals, LLC.
No comments on this item Please log in to comment by clicking here