New York has two types of taxes that are imposed on its adult-use cannabis products:
- Potency Tax (an excise tax on adult-use cannabis products)
- Adult-Use Retail Tax
In this article, we will be talking about the Potency Tax.
What is the Potency Tax, and why is it significant?
The Potency tax is fairly unique; CT, IL, and NY are currently the states that have this tax.
The Potency Tax means that based on the Total THC of the cannabis item, the taxes applied to that item will be variable.
The tax is imposed at the following rates:
- five-tenths of one cent ($0.005) per milligram of the amount of total THC for cannabis flower;
- eight-tenths of one cent ($0.008) per milligram of the amount of total THC for concentrated cannabis; and
- three cents ($0.03) per milligram of the amount of total THC for cannabis edible product.
Who is it paid by?
The Potency Tax is an excise tax paid by the retailer to the distributor.
What is the Latest on the Potency Tax?
On April 16, Kathy Hochul (Governor of New York), announced a $237 billion budget for the state of New York.
This includes a bill that repeals the potency tax and replaces it with a phased-in wholesale tax. The proposed tax rates are below:
- A 5% rate on the wholesale price from now until the end of 2027.
- Increases to 7% for sales from January 1, 2028, to December 31, 2030.
- Further increases to 9% starting from January 1, 2031.
This is expected to take effect on June 1, 2024.
The latest Canix has heard is that all signs point to this going into effect on June 1, though we will update this article as we receive more information.
How Does Canix Treat Potency Tax?
Due to the changing nature around Potency tax, Canix currently does not calculate this for New York operators.
Canix is committed to supporting it's New York operators. If you're in New York and need to calculate Potency Tax, please reach out to our support team - Submit a Support Ticket