Recreational marijuana revenue stream set to flow — to those who chose to receive it

The legalization of recreational marijuana has arrived in New York State.

The oversight commission and Office of Cannabis Management opened in Albany in October. The tax rates and initial revenue recipients have been determined and once OCM establishes industry regulations — it expects to have those regulations done by the end of March — the long-awaited business of selling recreational marijuana will begin in New York State.

Municipalities had until the end of 2021 to specifically opt out of allowing dispensaries and consumption sites. If they don’t opt in or out, they’re in. Opt-in and opt-out clarification can be found at www.cannabis.ny.gov.

The opt-in perspective

In Monroe County, the city of Rochester, the towns of Irondequoit, Penfield and Wheatland and the village of Brockport specifically opted in by Dec. 31.

As cannabis business advisor Michael Doyle points out, many municipal leaders were caught off guard by the sudden legality of a plant that’s been demonized and outlawed since before the movie “Reefer Madness” came out in 1936.

Doyle describes his business, Cannasigliere, as specializing in providing individuals and groups across the state with the know how to approach post-prohibition opportunities.

His exhaustive research includes discussing the various and often misguided reasons municipal leaders give for not opting in. He also kept track of the decisions made by every municipality in the state.

His efforts helped convince Brockport Mayor Margay Blackman that opting in was the right choice for her village.

“I also looked at in a broad perspective that this is a new industry that’s come to New York State and there are various possibilities for the development of this industry. There is probably money out there that can help municipalities,” Blackman says.

Just how much money this new revenue stream can produce is largely unknown, but some municipalities such as Ithaca and Jamestown have attempted to quantify it and the results are favorable to say the least.

A 4 percent portion of the marijuana sales tax goes to local governments that opt in. As Doyle and the OCB explain, that revenue will not be available to communities that have no sales.

Aside from the direct revenue local, county and state government receives, ancillary benefits include the creation of local jobs in the industry, more local spending and a profitable crop for farmers.

Irondequoit town councilwoman Patrina Freeman said she looked at local municipalities in Massachusetts and across the country before voting to opt in. She spoke on her own behalf of the board that voted to opt in, 3-1.

“By and large, what I discovered was that the economic impact was most favorable, providing much needed additional tax revenue, economic development, and job sector growth, especially in municipalities that were thoughtful in their approach to opting in; working with all community stakeholders to develop a plan that works best for their city or town,” Freeman says.

Mayor Blackman looked at other places that have passed it as well. “In Canada, they use vacant or abandoned buildings for grow facilities. I would love to see that here in Brockport.”

Repurposed bank facilities already work well as safe secure dispensaries.

Many left trying to decide

The OCM has been open since early October to answer questions anyone has about the law, the tax structure and revenue distribution.

Many municipalities want to see how it goes first, a decision that could backfire if the OCB decides to limit the number of licenses it issues.

Freeman Klopott, director of communications for the Office of Cannabis Management, says the office “is focused on ensuring the industry is developed with equity at the forefront and will be working closely with communities in every corner of New York State to help them understand the opportunities and how they can seize them to create jobs and grow their economies.”

Michelle Fields, a New York City-based attorney on the Board of Directors for the New York City Cannabis Industry Association says: “When a community opts out of consumption lounges and dispensaries, they are opting out due to being misinformed, not leveraging their border control power, and denying their residents first-mover advantage in New York’s multibillion dollar industry,”

REDCO, an economic development nonprofit, was among those taking a wait and see approach toward cannabis business development despite the challenge of trying to spur economic growth in the midst of a pandemic that’s put an enormous economic strain on small business survival and development.

“You can’t ignore it. We just know we couldn’t look at it before the end of last year. It’s something we have to look into. We recognize that it’s a growing industry, but we’re not making a decision until we’re better informed,” says REDCO Director of Marketing Scott Hollenbeck.

Some municipalities and economic development organizations just say no in NIMBY — not in my back yard — terms. In Monroe County, most municipalities opted out before the Dec. 31 deadline, though some are considering referendums for this year.

Time will tell if they’ll be missing out on revenue that could help reeling state and local governments recover a lot or a little from the economic impact of COVID.

Hope for success  

“My sincere hope is that this new industry will help spur economic recovery due to the pandemic, offset any law enforcement costs associated with driving under the influence and in particular provide funds to pay for DUI testing once an accurate test is developed and bring new jobs to the area to help lower unemployment rates,” Irondequoit’s Freeman says.

Freeman said input from residents and public safety representatives was important in her decision to vote to opt in along with the Marijuana Regulation and Taxation Act provision to bring a measure of social justice to black and brown communities disproportionately affected by a ban on legalized marijuana sales in municipalities due to systemic racism.

Mayor Brockman is confidant law enforcement can recognize and deal with criminal issues such as driving under the influence. Cannabis sale revenue helps pay for law enforcement.

Economic development in many forms is what the OCM expects to see here and around the state.

“The new cannabis industry will bring thousands of jobs throughout the state — across the supply chain and ancillary businesses — and will generate billions of dollars in sales,” says Klopott.

New York State residents have heard similar prognostications before but even if marijuana revenue isn’t an economic panacea it’s still encouraging news to COVID-beleaguered state and local economies.

Todd Etshman is a Rochester-area freelance writer.