Reports Show Conflicting Predictions Over Legal Marijuana Revenues In NY

“Depending who you ask, tax revenues from legalizing marijuana in New York could raise revenues of $25 to $400 million in New York City alone, according to reports from the city’s Independent Budget Office and former City Comptroller John Liu.

The New York City Independent Budget Office report released last November estimates that legal marijuana could net the city $25 million in tax and sales revenues. Their report uses the legalization measures outlined in Sen. Liz Krueger’s (D-Manhattan) bill (S.6005) which would see a 4.5 percent sales tax on sales of recreational marijuana. The bill estimates New York would see $5 million to $22 million in revenues, based on figures from Colorado’s legal marijuana market.

The former city comptroller’s report, from August 2013, also bases much of its estimation on tax revenues but the IBO’s Chief of Staff Doug Turetsky said that Liu’s report assumes higher consumption, a shift away from the black market and indirect revenues.

“The [comptroller’s] report presented a preliminary estimate of the fiscal impact statewide from legalization and considered not just potential tax revenue but also savings,” Turetsky testified during a Dec. 17 hearing on legalization. “The savings derive from avoided police, judicial and correctional spending from marijuana-related arrests and incarcerations. Indirect revenues also would be realized from taxes on salaries from the jobs created in starting a new retail market.”

Liu’s report estimates $31 million in savings to the city derived from legalization by cutting low-level marijuana arrests. New York City saw more than 50,000 misdemeanor pot arrests in both 2010 and 2011 and about 39,000 in 2012, according to the report.

Julie Netherland, the Drug Policy Alliance’s New York deputy state director, says there are “a lot of variables” in determining which amount of revenue is a more likely outcome.

“The most recent numbers out of Colorado is $45 million in taxes and revenues since they launched their program and it is a much less populace state than New York,” she said. “I would anticipate New York would be much closer to the higher number than the lower number.”

Colorado’s recent figures also do not take into account the indirect revenues Liu accounted for in his report. Netherland said that the potential savings from policing and jailing low level marijuana offenders would be significant in New York because the state spends $75 million a year in New York City alone arresting people on low level marijuana charges.

New York City is notorious for their “stop and frisk” policies by which many of these arrests are made. Stop and frisk allows police to stop a person on the street and search them, forcing them to empty their pockets. If they are in possession of marijuana, once taken out of their pockets it becomes “in plain view” and an arrestable offense.

Netherland agreed that the larger estimate might be a better benchmark due to the rural makeup of upstate New York, home to the majority of the state’s agriculture industry. Although she says without a comprehensive study of the impact to the farming industry it is not exactly clear what economic boon legalization would have to the region.

Steve Ammerman, manager of public affairs for the New York Farm Bureau, said that while legalizing marijuana “is in the public discussion” they do not have a position on the matter unless it were introduced and voted on by the legislature. He noted that in the legal states there are regulations as to how marijuana is grown and he wasn’t sure whether the plant would be allowed on open farmland. Krueger’s bill does not specify whether marijuana would be allowed to be grown in that manner.

Kate Gurnett, press secretary for the state Comptroller’s Office, said the office does not have “any data or reports on the potential fiscal impact” of legalization in the state.

Photo Credit: Nana B Agyei

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