Taxes, Fees, and Regulatory Reporting
New York dispensaries operate under four overlapping layers of financial compliance: OCM fees, New York State taxes, New York City taxes, and federal taxes under Internal Revenue Code Section 280E.
Most operators fall out of compliance not because of intent, but because requirements are split across multiple agencies, each with its own deadlines, filing systems, and enforcement authority.
This page explains the taxes you owe, the reports you must file, and the timelines that keep a New York dispensary compliant throughout the year.
State Cannabis Taxes (New York)
New York imposes two primary taxes on adult-use cannabis sales.
Retail Cannabis Tax (15 percent)
- Flat 15 percent tax on the retail price of cannabis products
- Collected by the retailer and remitted to New York State
- Calculated on the final price before sales tax
- Must appear as a separate line item on customer receipts
- Reported to the New York State Department of Taxation and Finance
- Paid monthly or quarterly depending on sales volume
Late or missing payments result in penalties and interest.
New York State Sales Tax (13 percent total)
Adult-use cannabis is subject to a combined sales tax of:
- 9 percent New York State
- 4 percent local jurisdiction
Retailers must:
- Collect sales tax on every transaction
- File returns monthly or quarterly
- Remit payments on time
- Maintain supporting records for at least five years
Receipts must clearly separate cannabis tax and sales tax.
New York City Local Taxes
Dispensaries operating in New York City are subject to additional municipal taxes.
New York City Business Taxes
- Unincorporated Business Tax for partnerships and LLCs
- General Corporation Tax for corporations
These obligations are often overlooked until the Department of Finance issues a notice.
New York City Filing Requirements
- Estimated tax payments
- Annual tax returns
- Business registration updates
- Address and ownership change filings
New York City audits cannabis businesses aggressively.
Federal Taxes (Internal Revenue Code Section 280E)
Because cannabis remains illegal at the federal level, Section 280E applies.
Dispensaries cannot deduct operating expenses, including:
- Rent
- Payroll
- Security
- Utilities
- Marketing
- Software
- Delivery
- Insurance
Only Cost of Goods Sold (COGS) is deductible, including:
- Product acquisition cost
- Transportation related to inventory acquisition
- Documented inventory shrinkage
The result is a significantly higher effective federal tax rate compared to non-cannabis retailers.
Sales Tax Compliance Requirements
Dispensaries must:
- Register for a Certificate of Authority
- Collect sales tax at the point of sale
- File returns based on assigned frequency
- File part-quarterly returns if required
- Produce records immediately upon audit request
Receipts must display:
- Product price
- Retail cannabis tax
- State and local sales tax
- Final total
OCM Fees and License-Related Payments
Application and License Fees
- Application fee paid at submission
- License fee paid upon approval
License fees are based on:
- License type
- Equity status
- Revenue
- Renewal classification
Premises and Ownership Changes
Fees may be triggered by:
- Location changes
- Layout modifications
- Ownership or control changes
Renewal Fees
- Due every two years
- Based on revenue and license type
Other Possible Payments
- Fingerprinting
- Background checks
- Corporate filings
- License amendments
All required fees must be paid before approval or renewal.
Required Regulatory Reports
Monthly and Quarterly Reporting
- New York State cannabis tax filings
- New York State sales tax returns
- METRC reporting (real-time)
- Waste and destruction logs
- Delivery logs
- Incident reports when applicable
Annual Reporting
- Corporate tax returns
- Ownership disclosures
- Employee demographic reporting under MRTA Section 88
- OCM annual submissions
- New York City tax filings
- Employment filings (W-2s and 1099s)
- Insurance and workers’ compensation renewals
Event-Based Reporting
OCM notification is required when:
- Ownership or control changes
- Loans or investments are received
- Security breaches occur
- Theft or loss occurs
- Cannabis is destroyed
- Fire or facility emergencies occur
Failure to notify is a violation.
Recordkeeping Requirements
All tax and reporting records must be retained for at least five years, including:
- Tax payments
- Cannabis and sales tax filings
- METRC logs
- POS exports
- Receipts
- Bank statements
- Payroll records
- OCM and DTF correspondence
- Filing confirmations
- License amendments
Failure to produce records during an audit is itself a violation.
Common Violations
Operators are frequently cited for:
- Late or missing tax filings
- Incorrect tax calculations on receipts
- Mislabeling cannabis tax versus sales tax
- Charging incorrect tax rates
- Failing to remit collected taxes
- METRC discrepancies
- Incomplete financial records
- Unreported income
- Improper Section 280E deductions
- Undisclosed financial activity
Most violations stem from documentation failures, not intent.
Why This Matters
Tax and reporting violations lead to:
- Fines
- Interest
- Audits
- License delays
- Enforcement actions
- Banking disruptions
- Personal liability exposure
Year-round compliance protects both the business and the license.
Related Pages
Source Material
- MRTA Section 85
- MRTA Sections 87 through 89
- New York Tax Law (Cannabis Taxes)
- New York State Department of Taxation and Finance
- New York City Department of Finance (UBT and GCT)
- IRS Section 280E Guidance
