In the early hours of March 31, New York Governor Andrew Cuomo signed a bill passed by the state legislature legalizing the recreational use of marijuana. To many, the push toward legalization was driven in large part by public policy considerations. However, the implications with regard to the wider economy and the commercial real estate sector, in particular, should not be overlooked.
As of May 2021, 36 states have legalized cannabis for medicinal purposes, and 18 states have legalized it for recreational use. These developments include New York, which has voted to legalize recreational use; however, the details of the rollout are not yet defined, and sales of recreational marijuana are expected to be a year away. The numbers touted by Cuomo’s office are significant. The state estimates that the legalization measure could bring in up to 60,000 jobs and add up to $350 million a year to the state coffers. Not to harsh anyone’s mellow, but legal weed will be heavily taxed. Right now, you can only use marijuana legally but not sell it. Once sales in New York State become legalized, there will be a combined 13% tax rate comprised of a 9% state tax and a 4% local tax. In Colorado, the marijuana industry, which was legalized in 2014 and had annual sales of $683,000 in 2014, has grown to $2.2 billion in 2020. Colorado tax revenue has increased each year since legalization in 2014 from approximately $67 million in 2014 to $387 million in 2020. Sales are expected to continue to grow, with $143 million already generated as of April 2021.
