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Law New York

And further on that subject of fucking up a program rollout with true 'elan, I bring you more from NY state. Now, Hochul is in charge but it appears that, as with many politicians, the buck stops somewhere else. This looks like nothing less than a search for a scapegoat. I'll tell you who is responsible...she is.


New York governor orders probe of Marijuana licensing program 'disaster' amid black market surge


Unlicensed NY storefronts prompted Gov. Kathy Hochul to request online platforms like Google to stop listing them.​


New York will evaluate its troubled recreational marijuana licensing program after lawsuits and bureaucratic stumbles severely hampered the legal market and allowed black-market sellers to flourish, Gov. Kathy Hochul ordered Monday.


The review will focus on ways the state can speed up license processing times and allow businesses to open faster, as well as a top-down assessment of the Office of Cannabis Management's structure and systems.


Hochul, a Democrat, has described the state's recreational marijuana rollout as a " disaster." Just over 80 legal shops have opened since sales began at the end of 2022.


The state's legalization law reserved the first round of retail licenses for nonprofits and people with prior marijuana convictions. It also set up a $200 million " social equity " fund to help applicants open up shops, all in an effort to help those harmed by the war on drugs get a foothold of the state's marketplace.


But the permitting process was soon beset by legal challenges and the so-called equity fund struggled to get off the ground, stalling growth of the legal market.


In the meantime, unlicensed storefronts opened up all over the state, especially in New York City, with the problem becoming so pronounced that Hochul last month asked such online entities as Google and Yelp to stop listing them online.


Still, state regulators have had trouble dealing with the overwhelming volume of applications. The Office of Cannabis Management has just 32 people reviewing license applications but has received about 7,000 applications since last fall, a spokesman said.


The assessment of the program was also announced days after a top official at the cannabis agency was put on administrative leave following a report from New York Cannabis Insider that alleged the agency had selectively enforced rules to punish a marijuana processor.


The state's review will embed Jeanette Moy, the commissioner of the state's Office of General Services, and other state government officials, in the cannabis management agency for at least 30 days. The group also will come up with plans to improve how the agency functions and set performance metrics moving forward, according to a news release.


"We have built a cannabis market based on equity, and there is a lot to be proud of," said Chris Alexander, executive director of the Office of Cannabis Management. "At the same time, there is more we can do to improve OCM’s operations and we know Commissioner Moy, a proven leader in government, will help us get where we need to be."
 
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And here is the key (to me) statement in this article:

"The existing “quarterly payment system” is problematic for two main reasons: it requires businesses to pay taxes in advance, before collecting payments for the tax period, and it imposes a tax nearing 25% of sales on an industry yet to establish stable profit margins"​
NY's rollout of a cannabis program should be a good candidate for a political science PhD thesis on how to utterly fuck up a goverment regulated program. And, much like CA, one of NY's most significant problems is due directly to that state's politician's greed for tax dollars to redistribute to favored programs and demographics. They thought that MJ was going to be the goose that laid the golden egg and bail them out of their irresponsible spending deficits. Fucking idiots, one and all.


NY’s quarterly tax payments for Cannabis businesses ‘threatens the viability’ of all operators


Urgent Need for Reform: New York's Cannabis Tax Payment System.​


As the April 1 state budget deadline looms in Albany, all cannabis tax discussions have been on the THC potency tax repeal-and-replace proposals.


We are thankful that the governor and legislature have all offered substantial replacement options for the THC potency tax. However there is a separate cannabis tax issue that needs to be addressed.


The existing “quarterly payment system” is problematic for two main reasons: it requires businesses to pay taxes in advance, before collecting payments for the tax period, and it imposes a tax nearing 25% of sales on an industry yet to establish stable profit margins, unheard of in any other new industry.


On behalf of the entire New York cannabis industry — from cultivators to processors to dispensaries — we argue that a healthy, balanced industry should be treated similarly to the local New York alcohol sector, paying taxes annually at a more manageable rate.


With these critical adjustments, the nascent cannabis sector could provide substantial employment, contribute its fair share in taxes, and offer returns to its investors to continue to grow sustainably.


Considering the current 110-day Excise Tax cycle, cannabis producers in New York must pay taxes before receiving payment for that period’s sales. Often, they secure only 50% of the necessary sales revenue by the due date, given that most stores pay about 45-50 days post-delivery.


This timing means that about one-third to half of the period’s sales revenue is still pending when taxes are due, forcing businesses to rely on profit margins to cover the tax — which with the current market size and lack of scale is often in the range 5-10% of sales for New York operators.


Take, for example, total sales of $250,000 over December, January, and February. The Excise Tax due would be approximately $62,500, breaking down to about $20,800 monthly. However, the profit from December and January – if it exists – likely only totals approximately $16,700, insufficient to cover February’s $20,800 Excise Tax, thereby necessitating external financing.


This leads New York operators into further predatory debt as there is no conventional financing for cannabis companies, perpetuating a vicious cycle that worsens as the market expands. The lack of external financing options for the cannabis sector intensifies this problem, with tax authorities sometimes seizing producers’ property for unpaid taxes.


Several businesses, including ours, have faced property liens from New York tax authorities for taxes due on revenues not yet received, due to the short collection period. Although we managed to temporarily resolve this issue through a payment plan, it is not a sustainable solution.


This tax structure threatens the viability of nearly all operators in the industry, highlighting the critical need for reform in the tax payment cycle. Even with a proposed excise tax reduction to 9%, the problem remains significant and requires immediate attention.


We are thankful that Senator Jeremy Cooney is understanding of this issue and is working to address it in Albany.
 
I really don't cherry pick negative articles about NY's MJ program. I derive most of my posts from some sort of MJ article clipping service type emails/websites. Its just that NY and "how to utterly fuck up an MJ program rollout" is in the news almost daily. Wow...

As for Hochul's recent criticism of the regulating authority over this program seems like finger pointing and CYA to me. It seems many current politicians have revised Truman's famous quote to now be "the buck stops anywhere but with me". sigh

New York’s Scorecard: 85 Legal Shops, 2000 Illegal Ones


Challenges Mount for New York's Cannabis Rollout Amid Illegal Dispensary Proliferation.


The lack of legal dispensaries and the overwhelming proliferation of illegal ones are the biggest concerns of the rollout three years after legalization.


After three years of fits and starts, the rollout of New York’s recreational cannabis market gained speed in 2024, most notably with the opening of about 50 licensed dispensaries so far this year.


But the licensed retailers, who number about 85 in total, are far outnumbered by more than 2,000 rogue head shops, the target of complaints that they siphon customers, sell to children and attract criminals.


The quick and brazen takeover has left many people frustrated with the government’s slower and stricter approach to expanding the legal market and has emerged as the most pressing challenge facing the rollout, as the authorities struggle to keep the state’s promise to deliver a $5 billion market to diverse small businesses and people harmed by past anti-marijuana policies.


“They need to get a handle on that quickly,” said James Stephenson, a co-founder and chief executive of oHHo, a wellness brand that depends on dispensaries to sell its cannabis-infused chocolates, gummies and seltzers. “You can’t have one set of people playing by the rules.”


While the illicit shops multiplied, legal dispensary openings stalled for months because of lawsuits, the rule-making process and the state’s broken promise to finance the leasing and renovations of the first 150 licensed dispensaries. Just 10 stores are in operation with the state’s help, while another 375 dispensaries, licensed for nine months or more, have yet to open their doors.


Gov. Kathy Hochul, who has increasingly voiced her disappointment, recently ordered a review of the Office of Cannabis Management, the agency handling the rollout. She has also proposed legislation expanding the power of local authorities to punish unlicensed shops and complicit landlords, as well as a measure to slash taxes that drive up the price of legal products. The changes have broad support in the State Legislature.
 

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