Legalization of Marijuana in NY: Pros and Cons!
After much debate on the legalization of Marijuana, the New York State has finally passed the historic legislation to not only decriminalize the drug but to tax and regulate it as well. The two policy reforms- the Fairness and Equity Act (FEA) and Marijuana Regulation and Tax Act (MRTA) were formally signed upon by the state legislature this year.
FEA is aimed towards ending racially bias marijuana arrests, fixing the laws of decriminalization regarding possession of small amount of marijuana. The proposal provides ghastly repercussions of such arrests and addresses the devastating collateral consequences related to them. It’s expected to safeguard the Black and Latino New Yorkers from such incidents by ensuring that possession of small amounts of the drug is not a criminal penalty.
MRTA endorses the council’s intent of legalization by ending prohibition and creating a structure to regulate, control and tax marijuana in a manner similar to previously legalized drugs; tobacco and wine. The council hopes to generate millions of dollars in revenue while saving millions in criminal justice resources.
Pros and Cons of Legalizing Marijuana
The legalization of marijuana has been a hot topic lately with people arguing that such measures would only increase drug usage in the society and will have adverse effects on the youth. While the Federal law still proposes marijuana as a class 1 drug (having no redeeming medical worth), the legalization has been limited to states only- for now at least. Therefore, marijuana entrepreneurs lack the access to banking and other financial services forcing them to operate using huge sums of cash only.
New York has become the 23rd state to legalize marijuana for its legal recreational and medical consumption. A bill has already been introduced that allows banks and credit unions to take marijuana clients without any fear of legal prosecution. Nevertheless, the taxes are above the roof and prove intimidating for marijuana consumers and suppliers. State-legal cannabis cultivators and dispensaries are paying effective tax rates of 50 to 85 percent, making business hardly profitable at the moment for most investors.
“The businesses that are getting penalized the most by this provision are the ones that are trying the hardest to do the right thing,” NCIA Deputy Director Taylor West said in a press statement. Marijuana consumer spending is hard to quantify as Americans tend to spend tens of billions of dollars on its legal/illegal consumption. However, a rough estimate of 50$ to 60$ billion dollars is provided by the authorities. Only a handful of companies are given the license to deal with marijuana in New York and open limited numbers of dispensaries. Still, the Karnes project estimates to provide $239 million revenue by 2016 and more than $1.2 billion by the end of 2020.
Marijuana’s money making potential is enormous and has indeed caught the eye of the investors and businessmen. Most of these marijuana dispensaries are bringing in $3000- $5000 per square feet a year, amounting on average a revenue of 15-20 million dollars a year. Also, FBI estimates that over 350,000 NYC residents have been convicted for the possession of marijuana, putting the substantial burden on the government resources. The legalization will cut these costs because in the end it is your tax money being used to detain these people.
With financial stakes so high, the marijuana industry is ought to bring in more jobs. Dispensary operators, marketing people, vendors, and transporters are just to name a few of them. However, with only cash trading in the industry, the security risks are substantial in this line of work. No matter how much cash inflow legalization of pot will bring, the health risks associated with the drug cannot be overlooked upon.