New York Set to Hobble ‘Legal’ Cannabis with Taxes and Regulations
Politicians who fail to learn from their stupid decisions are doomed to repeat them, and prohibitionist policies seem to offer the toughest lessons of all. Time and again, government officials impose bans on things they don’t like only to drive the public to illegal sellers. Politicians then grudgingly “legalize” the market but burden it with taxes and red tape that keep the black market thriving. New York seems ready to recreate all of the mistakes of the past with a “legal” recreational market so hobbled that it will offer uncompetitive prices to consumers and daunting barriers to vendors.
“Since June 1, the New York’s Cannabis Control Board has issued 162 recreational cultivation licenses,” Bloomberg Tax recently noted. “Those fortunate enough to obtain one of New York’s recreational cannabis licenses will be forced to contend with a gauntlet of state and local taxes.”
The analysis, prepared by three accountants, detailed a long list of sales taxes, corporate taxes, and “recently enacted adult-use cannabis taxes.” Given the number of jurisdictions involved and uncertainty as to how they’ll apply to businesses that won’t be able to open their doors until the end of the year, at soonest, the authors declined to guess at the final tax burden. But it will be high, and compliance a guessing game with penalties awaiting those who cross the authorities. It’s a good bet that many entrepreneurs accustomed to operating in the illicit market will remain underground rather than risk the costs and hassles of legal operation as envisioned by Empire State officials. After all, technical legalization hobbled by stiff taxes and regulation has already stumbled elsewhere.
“The state has taxed marijuana three separate times as it travels from farm to consumer. Many counties and cities impose their own taxes, at varying levels, on top of the state levies,” The Washington Post reported this month of California’s byzantine system which favors large corporate operations with the ability to navigate the rules. “California’s cannabis taxes come on top of licensing fees and regulatory permits, which can cost tens of thousands of dollars annually for growers, burying those who used to work without regulation in red tape and state invoices.”
That explicit prohibition is only one legal barrier driving buyers and sellers to black markets seems to be a revelation to regulators of newly sort-of-legal cannabis market
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