New York Poised to Steal New Jersey Cannabis Revenue

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By Dan Sears

In New York, recreational cannabis could generate between $248 million and $677 million in new tax revenue in its first year alone.
In New York, recreational cannabis could generate between $248 million and $677 million in new tax revenue in its first year alone. David McNew/Getty Images

While the New Jersey State Legislature was fumbling the ball towards the legalization of cannabis, New York Gov. Andrew Cuomo was not about to lose all of that tax revenue to a state with a population less than the City of New York. Cuomo took advantage of New Jersey’s political infighting since Gov. Phil Murphy took office and announced that cannabis would be one of New York’s top priorities in the first 100 days of 2019.

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Politicians often announce lofty initiatives at the start of a new year, but Cuomo’s push to legalize recreational marijuana was significant. To start, it represented a reversal in his personal stance on marijuana. More importantly, for New Jersey, it put economic pressure on the State Legislature to stop its internal bickering long enough to finalize and pass cannabis legislation.

New York Moving Towards Legalization

Cuomo previously referred to marijuana as a “gateway drug” and even resisted efforts to legalize medical marijuana. However, he has likely recognized that he was fighting the inevitable. An estimated 63 percent of New Yorkers favor legalization.

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This summer, the New York Department of Health also issued a report that concluded that the benefits of taxing and regulating marijuana outweighed any negative effects. It also found that recreational cannabis could generate between $248 million and $677 million in new tax revenue in its first year alone.

The November election boosted the likelihood that New York would legalize recreational cannabis. When the New York Legislature convenes, it will be the first time in a decade that Democrats have controlled both houses. Of course, party control doesn’t always guarantee success—New Jersey Democrats have failed to get on the same page on several key issues, including recreational cannabis. 

In his recent speech, Cuomo said it was time to legalize recreational use of marijuana “once and for all.” However, he did not give additional details. If New York legalizes recreational cannabis, it will become the 11th state (and second-largest behind California) to take that step.

Following Cuomo’s announcement, rumors have been circulating that he may include full marijuana legalization in his forthcoming budget proposal. If that happens, “the state could have a fiscal framework for the program as soon as April,” according to a Crain’s report. Notably, New York has previously addressed controversial measures, such as raising the minimum wage and, most recently, combating sexual harassment in the workplace, via the budget process.

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New Jersey’s Delays May Hurt Revenue

Legal cannabis represents a much-needed revenue source for New Jersey. “This will stimulate the economy of New Jersey like nothing ever has before,” marijuana legalization champion Sen. Nicholas Scutari (D-Union) recently stated. “We’re on the precipice of a historic event here, starting something and creating jobs like no other legislature has done before. We have that opportunity.”

According to experts, New Jersey’s cannabis industry could rake in billions, particularly given its proximity to other large cities like New York City and Philadelphia. However, there is only so much to go around. If legislative delays and a burdensome regulatory scheme prevent New Jersey cannabis businesses from getting off the ground, the state may lose out to its neighbors. In addition to New York, Pennsylvania is also exploring marijuana legalization.

Delaying the passage of the legalization bill into 2019, and over-regulating it, had the potential of seriously undercutting state revenue. Gov. Phil Murphy and Democratic lawmakers needed to quickly hash out their differences and make the long-debated New Jersey recreational cannabis industry a reality.

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Donald Scarinci is a managing partner at Scarinci Hollenbeck—read his full bio here.

New York Poised to Steal New Jersey Cannabis Revenue

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