Reefer riches hit a pot hole
ALBANY — An independent fiscal watchdog report seeks to harsh the buzz of those who think the state stands to make major bucks off the legalization of marijuana.
The Citizens Budget Commission also warns against earmarking pot revenue for such purposes as fixing the subways.
“It will take years to fully realize a robust legal recreational marijuana market and associated tax revenue,” the commission says in its report released Thursday. “If New York does implement such a program, the associated revenue must be cautiously forecast, transparently disbursed, and utilized for general state operating purposes.”
Gov. Cuomo earlier this year formed a committee to help develop legislation to legalize pot that he hopes could come up for a vote at some point during the 2019 legislative session. Lawmakers say they expect the governor might include the measure in his proposed state budget due to be unveiled in January.
The report, written by research associate Patrick Orecki, notes that there is significant revenue potential for the state should it legalize pot, but cites other states in showing that it can take years to get a successful legalization program up and running to full capacity.
In Oregon, growers grew too fast, causing oversupply that drove prices and tax revenues to the state down.
In California, a rocky rollout, high taxation, and an entrenched black market caused the state to fall more than $100 million short of its initial projection of $185 million in revenue.
The commission said that while other states had fewer problems getting their programs up and running, it typically takes at least two years between the passage of a pot legalization bill and the writing of rules, regulations and oversight.
It also takes time, the report said, for growers and distributors to get established.
The New York Health Department has suggested legalizing marijuana in the state could generate nearly $700 million a year in tax revenue.
The commission notes that “it takes time to pass legislation, write regulations, implement the program, and collect tax revenue.”
But the state’s pot program has the potential to generate significant revenue even while likely lowering the money the state collects from alcohol sales tax.
Before New York has even passed a bill to legalize pot, transit advocates and some politicians suggested using the revenue generated by sales to fund mass transit improvements.
Others, including the bill sponsors, have said half the revenue should go to help minority communities most severely impacted by the laws making pot illegal.
But the CBC says that “the revenue should not be committed to a specific purpose” except maybe health programs "in recognition of potential social and health impacts that may stem from increased use due to legalization.”
The watchdog group says “marijuana revenue will be recurring and reliable when the market is mature and should be used for recurring operating budget purposes.”
State Sen. Diane Savino, the Staten Island Democrat who successfully pushed the bill to create New York’s medical marijuana program.agreef it will take time for the state to benefit from any revenue.