New York State Tries to Bolster Medical Marijuana Sales

(Winter 2017) A combination of issues has merged to create a lackluster start for New York’s medical marijuana program. It was conservatively structured, with only five for-profit manufacturers and a total of 20 dispensary locations. Additionally, physicians have been reluctant to get involved; only about 1% of the state’s physicians have signed up as licensed practitioners. And another potentially restrictive drawback, like Ohio, New York does not permit the drug to be smoked.

However, since the beginning of New York’s program in 2016, its largest obstacle has been sluggish sales due to low demand. Of the 200,000 patients able to sign up, only about 9% have done so. With low patient participation, New York State’s five approved medical marijuana firms only grossed a combined total of $16 million between April 2016 and August 2017. Even as these companies worry about their profitability, New York announced it would add another five medical marijuana manufacturers to the mix. The state’s decision resulted in a lawsuit from the existing manufacturers, charging that their operations are still unprofitable and would be further diluted by more competition.

The low sales, which New York taxes at 7%, have brought in considerably less revenue for government coffers than the state had originally predicted. Of the four million dollars in taxes it had expected to collect from marijuana proceeds during 2016-2017, the state garnered just $585,000.

New York’s tax revenue received from the industry pales in comparison to that of other states with more lenient medical marijuana laws. For example, Colorado currently allows approximately 500 dispensaries and levies just under a 3% tax on medical marijuana resulting in the collection of over $12 million in 2016 from medical marijuana taxes — indicating that medical marijuana sales totaled $419 million. California is even more liberal in its medical marijuana laws, having approved approximately 1,000 dispensaries that logged combined taxable receipts of about $575 million in the first half of 2016.

New York has made some adjustments, though, and is noticing an uptick in medical marijuana sales and licensed users. The Empire State’s Health Department expanded its program’s list of approved prescribing medical professionals as well as covered conditions to include chronic pain in March of 2017. This addition doubled the ranks of the state’s certified medical marijuana users. New York is now also permitting nurse practitioners to certify marijuana patients. Five months into the new fiscal year, New York saw $574,000 in medical marijuana taxes, which almost rivaled the entirety of the previous fiscal year’s sales tax generated by the program.

Now the state has added post-traumatic stress disorder (PTSD) as another condition treatable with medical marijuana. PTSD can manifest after an individual experiences an extremely distressing event. It is often linked to veterans, but PTSD affects first responders and survivors of accidents, domestic violence and rape. Those with the disorder may suffer from flashbacks, insomnia, nightmares and bouts of aggression. It’s thought that approximately 19,000 New York State residents who suffer from PTSD could benefit from medical marijuana.

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