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New York’s licensed cannabis industry is poised to reach new heights in 2025 following a milestone year in 2024, surpassing $1 billion USD in total revenue. But to reach its full potential, the state must first tackle a major hurdle—one that disproportionately impacts small and independent operators.
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The issue is simple but significant: the quarterly wholesale tax payment schedule currently required of cultivators and processors. This quarterly system forces businesses to pay taxes on revenue before they’ve even received payments from the period’s sales. For an industry still navigating the complexities of legalization, this creates an almost guaranteed cash flow crunch. And with the quarterly payment schedule paired with the weighty 9 percent tax rate, even the most successful companies find themselves strapped for cash, unable to reinvest in their growth or operation expansion or even weather unforeseen expenses.
In 2024, New York had an opportunity to address this issue by passing a bill that would shift the filing of wholesale taxes from a quarterly cycle to an annual one. Unfortunately, despite receiving overwhelming support from both the state assembly and senate, Governor Kathy Hochul vetoed the bill, A.10196/S.9359. While we understand that budgetary concerns played a role in this decision, the veto represents a missed opportunity for a key piece of tax reform that would have made a real difference for New York’s cannabis businesses.
The current system is unfair, unsustainable, and out of step with how other industries are treated. The alcohol industry, for instance, even pays taxes on an annual basis and submits monthly revenue reports to the state for transparency’s sake. Cannabis operators should not be held to a different, more burdensome standard.
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In an industry already facing liquidity issues and regulatory and tax burdens, including an inability to deduct operating costs, adding this additional financial pressure risks pushing many businesses towards insolvency and creates the necessity for the state to impose tax liens, adding administrative burdens and expenses. According to inside sources, almost 30 percent of New York cannabis operators have a tax lien.
However, there is a reasonable and transparent compromise that we think both lawmakers and the industry at large should be able to align on: currently, the tax is filed and paid 20 days after the close of each quarter. All we are asking now is for 30 more days after the close of each quarter to file and pay; this change can be implemented either via the state’s budget process or via a new bill mandating payment 30 days after each quarter’s period of sales. This change would allow distributors more time to collect payments from their buyers and then use that money to pay their state taxes.
This approach is not only practical—it’s also in the best interest of New York’s economy. The cannabis industry is expected to generate more than $160 million in tax revenue for the state this fiscal year, but if we continue to force businesses into cash flow predicaments, we risk stalling growth and innovation – especially for small, independent businesses founded in the State. To truly thrive and to create the equitable market that New York lawmakers say they envision, cannabis businesses need a tax system that fosters consistency and fairness.
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At Jaunty, we’re working with a coalition of industry leaders to raise awareness about this issue and push for meaningful reform in 2025. We know that this tax reform is not just about making life easier for businesses—it’s about creating a sustainable, scalable cannabis industry in New York. One that can compete on a level playing field with other industries, attract investment, and provide much-needed jobs and economic growth.
The road ahead won’t be easy, but we believe that by advocating for sensible tax reform, we can help build an industry that works for everyone. We urge Governor Hochul and the state legislature to take action in 2025, pass the necessary tax reforms, and ensure that New York’s cannabis industry remains strong, fair, and capable of achieving its full potential.