On March 30, the New York State Assembly and State Senate both overwhelmingly passed the Marijuana Regulation & Taxation Act, decriminalizing the use of adult-use marijuana and establishing an office for the regulation of cannabis. The Act permits adults 21 and over to purchase marijuana and grow the plant in their home. By decriminalizing marijuana, the Act is being heralded as criminal justice reform. According to the bill’s sponsor, Senator Liz Kruger, “New York’s program will not just talk the talk on racial justice, it will walk the walk.” Other key provisions of the law include:

• 13 percent excise tax on retail sales: 9 percent to the state, 4 percent to the municipality
• 40 percent of cannabis tax revenues to be spent on education, 40 percent for community reinvestment grants for communities harmed by marijuana prohibition, and 20 percent to drug treatment and public education programs
• Marijuana arrests and convictions legalized under the law to be expunged, and law enforcement prevented from using the odor of marijuana as a pretext for a search
• The opportunity for New Yorkers currently working in the illegal market to obtain one of ten different licenses to work in the new cannabis economy

That new cannabis economy is projected to create $350 million in taxes each year as well as 30,000 to 60,000 jobs statewide.

“The New York approach is interesting and very smart, I think, in terms of taking an assertive criminal justice position as part of the deal,” noted Christopher T. Marrie, HBK Principal and National Co-director, HBK Cannabis Solutions. “That is an element missing in the federal position on legalizing cannabis. It’s going to be difficult to do it without tying it to criminal justice reform.”

Marrie pointed out that, “New York was a very tight market, allowing the sale of extracts only, not flower. It will be interesting to see how the transition unfolds.”

That is expected to take about 18 months, Marrie said. “In the meantime, the State has likely created a huge black market. It’s legalized but not regulated. That’s what happened in Michigan where it was legalized in 2008 but not regulated until 2017. It wound up being regulated differently in every municipality.

“New York City will be a huge market,” Marrie proposed. “Some retailers in the big cities, like Chicago and Philadelphia, are doing more than $25 million in annual sales.”

Marrie also said that he expects the tax rates in New York will increase as marijuana is commoditized. “I expect to see the tax rate rise to 20 or 21 percent,” he said.

The new law comes in response to what has become a huge issue in the state. According to reports, in the 1990s and early 2000s, more than 800,000 New Yorkers were arrested or ticketed for marijuana, more than anywhere else in the world.

Now more than ever compliance matters. We continue our 100 Day Dealership Action Plan series this week we focus on compliance guidelines to keep your dealership safe and protect your future.

Amy Reynallt stops to give us an update on the PPP Loan Necessity Questionnaire and other hot topics.

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Watch Rex Collins and special guests Ben DiGirolamo and Amy Dalen from HBK Tax Advisory Group wrap up our dealership specific tax review. We examine how to integrate new changes with the prior tax laws to give dealers ideas on how to make the most of old and new provisions to preserve cash and lower tax expenses. This webinar is full of tax planning tips for dealerships and not limited to what has changed (or might change).

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(What a Dealer Should do Before and After the Lockdowns Begin)

Headlines from across the country indicate a return to normal is still a long way away. With the surge in COVID-19 is another shutdown on the horizon? Part one in a series to prepare your dealership in for another lockdown.

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The federal government has announced an additional tranche of $20 billion in COVID relief funding for certain medical providers as part of a Phase 3 General Distributions. The Department of Health and Human Services (HHS) is encouraging all providers who believe they are eligible for the funds to apply as soon as possible to expedite their review and payments.

Phase 3 is targeted for providers who may have already received CARES Act Provider Relief Fund (PRF) payments and are looking to supplement the approximately 2 percent of revenues they have already received in anticipation of further revenue declines.

At this time it is our understanding the funding will not be distributed until after the application deadline of November 6 and HHS has the opportunity to review applications and calculate payments. Any funds not used to bring providers up to a 2 percent of revenue level will then be distributed in the form of an “equitable add-on payment” based on:

• A provider’s or practice’s decrease in patient care revenues
• A provider’s or practice’s increase in operating expenses from patient care (includes expenses incurred related to COVID)
• Payments received through the previous PRF funding rounds

Depending on geography, various private physician practices and dentists continue to see declined volumes and depressed financials. As well, facility and living assistance providers continue to encounter decreased censuses and revenue. While the deadline for applications is November 6, we are encouraging providers who continue to see decreases in patient-related revenue or increases in patient-related expenses to consider applying for the additional relief as soon as possible.

Should you have any questions on this round of PRF funding or previous rounds, please do not hesitate to reach out to a member of our HBK Healthcare Solutions team.

HBK’s Healthcare Solutions team, Kyle Courthamel, Michael Byrwa and Matthew Hendricks discuss the various HHS COVID-19 stimulus funding packages and how our firm is assisting healthcare clients in the accounting, reporting, compliance, planning and preparation for audit aspects of the funds.

What You Can Learn:
How to report the use of the funds to HHS/HRSA
What the HHS funds can be used for
What clients need to do now in advance of the reporting deadline
Tax and strategic planning opportunities surrounding the reporting requirements

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Coronavirus digital fraud is on the rise and dealers are being victimized by scammers, frauds and con artists. • New identity scams and cyber threats to watch out for • Best practices to prevent fraud

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As we approach 2021, manufacturers are beginning to plan for the year ahead. However, with the uncertainties in today’s economic climate, how do manufacturers develop planning tools to make good business decisions? Jim Dascenzo, CPA and Amy Reynallt, MBA of HBK Manufacturing Solutions provide an overview of forecasting, budgeting, and business planning tips that will address this question and more.

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Dealers have spent months documenting and tracking PPP expenses and are ready to submit their PPP Forgiveness Applications.

What if the forgiveness is denied? What then? Listen in to find out what solutions and options are available to Dealers.

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