Adult Use Taxes

Adult-Use Cannabis Taxation: There is no NYS or local sales tax on adult-use cannabis; however, there are two types of taxes on adult-use cannabis on Distributors and Retailers:

(1) Distributor Tax based on the milligrams (mg) of total THC in the following products:

• Edibles (e.g. food and beverages) are taxed at $0.03 per mg of total THC

• Concentrates (e.g. vaporization oil and resin) are taxed at $0.008 per mg of total THC

• Cannabis flower (e.g. loose flower or pre-rolls) are taxed at $.0005 per mg total THC

The mg per total THC tax accrues when cannabis is sold from a distributor to a retailer and is paid to NYS (except when distributor is also the licensed retailer (Microbusiness), the tax accrues at the retail sale).

(2) Retailer Tax = 13%: (i) 9% NYS excise tax imposed on the sale of cannabis products by a retailer to a cannabis consumer; and, (ii) 4% local excise tax imposed on the sale of cannabis products by a retailer to a cannabis consumer (75% locality and 25% County – effectively 3% to locality and 1% to County). (If a town and a village within the town both allow adult-use sales, the revenue shall be distributed based upon a distribution agreement between the town and village; if no agreement, then 50%/50% split.)

Registration Department of Taxation and Finance: All licensees required to collect adult-use cannabis tax under the MRTA are required to register with NYS DTF; registration fee of $600.

Illicit Cannabis Tax Penalty: Imposed on any person knowingly in possession of cannabis for which a tax should have been paid but was not. Penalties are based on the amount and type of cannabis product and are increased for a second or subsequent violation within 3 years.

13% > 9%. Medical Cannabis Taxation and Revenue: Under the MRTA, medical cannabis will continue to be subject to a 7% excise tax. The medical cannabis tax is charged against, and paid by, the Registered Organization and cannot be added as a separate charge or line item on any sales slip, invoice, or receipt of the price given to the retail customer. The medical cannabis tax revenue is dedicated to the Medical Cannabis Trust Fund as follows:

• 45% of the monies shall be transferred to the NYS Cannabis Revenue Fund described in more detail above.

• 22.5% of the monies shall be transferred to the counties in NYS in which the medical cannabis was manufactured and allocated in proportion to the gross sales originating from medical cannabis manufactured in each such county

• 22.5% of the moneys shall be transferred to the counties in NYS in which the medical cannabis was dispensed and allocated in proportion to the gross sales occurring in each such county

• 5% of the monies shall be transferred to OASAS, which shall use that revenue for additional drug abuse prevention, counseling, and treatment services

• 5% of the revenue shall be transferred to the Division of Criminal Justice Services, which shall use that revenue for a program of discretionary grants to state and local law enforcement agencies that demonstrate a need relating to implementing the law

NY Tax Law 496-c prescribes the penalties in trafficking illicit cannabis:

§ 496-c. Illicit cannabis penalty.

(a) In addition to any other civil or criminal penalties that may apply, any person knowingly in possession of or knowingly having control over illicit cannabis, as defined in § 492 of this article, after notice and an opportunity for a hearing, shall be liable for a civil penalty of not less than $200 per ounce of illicit cannabis flower, $5 per milligram of the total weight of any illicit cannabis edible product, $50 per gram of the total weight of any product containing illicit cannabis concentrate, and $500 per 10 illicit cannabis plant, but not to exceed $400 per ounce of illicit cannabis flower, $10 per milligram of the total weight of any illicit cannabis edible product, $100 per gram of the total weight of any product containing illicit cannabis concentrate, and $1000 per illicit cannabis plant for a first violation, and for a second and subsequent violation within three years following a prior violation shall be liable for a civil penalty of not less than $400 per ounce of illicit cannabis flower, $10 per milligram of the total weight of any illicit cannabis edible product, $100 per gram of the total weight of any product containing illicit cannabis concentrate, and $1000 per illicit cannabis plant, but not to exceed $500 per ounce of illicit cannabis flower, $20 per milligram of the total weight of any illicit cannabis edible product, $200 per gram of the total weight of any product containing illicit cannabis concentrate, and $2000 per illicit cannabis plant.

(b) No enforcement action taken under this section shall be construed to limit any other criminal or civil liability of anyone in possession of illicit cannabis.

(c) The penalty imposed by this section shall not apply to persons lawfully in possession of less than two ounces of adult-use cannabis or ten grams of concentrated cannabis in accordance with the cannabis law or penal law.