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This guest column is from Nicolas Guarino, founder and CEO of Naturae, a licensed cannabis processor and manufacturer in New York State. The views and opinions expressed in this article are those of the author, and do not necessarily reflect the views or positions of NY Cannabis Insider.
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…
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