Jason Klimek, Cannabis Team co-leader was interviewed in the Green Market Report article “Experts Predict New York Cannabis Taxes Will Undercut Legal Market” about the prices of legal recreational cannabis across New York State. The article heavily quotes the white paper titled “New York’s THC-Potency Excise Tax Analysis and Recommendations,” which was co-authored by Jason and James Mann.
About the price gap between cannabis sold by legal entities versus cannabis sold by unlicensed dealers and its effect on the legal cannabis industry in New York State, Jason said, “It just creates a scenario where small businesses, women- and minority-owned businesses, really struggle to compete.” He continued, “That’s really what it comes down to: allowing these entrepreneurs to compete against a very, very entrenched illicit market.”
Increased legal cannabis prices due to steep taxes puts the success of New York State’s social equity applicants, including retailers, growers, and other business types, at risk. Legal cannabis prices will depend on the THC percentages found in products due to New York State’s tax rates being linked to THC levels. It will also have a 13 percent state retail tax. According to Jason, the legal cannabis industry likely will not be sustainable in the long term if tax rates don’t come down, resulting in customers returning to purchasing illicit cannabis.
If the cannabis tax system is restructured, the legal cannabis industry will have a much higher chance of long-term sustainability. Jason and James’s white paper showed that in multiple states, tax revenues increased when cannabis prices were lowered.
Jason said, “If we can lower that tax rate to allow our companies to compete with the illicit market, we’re going to see that tax revenue increase over time, because you’ll be able to pull more people from the illicit market.”
Click here to read the full article as well as read Jason and James’s draft white paper.