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Cannabis Stocks Tank, But Legalization Push Continues

New York has approved adult-use cannabis in the state, despite not having cannabis infrastructure ready to facilitate sales, Rhode Island has not yet approved the legalization of recreational use.
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Cannabis stocks are taking a bath along with the wider market amid Monday's selloff.

The AdvisorShares Pure Cannabis ETF  (YOLO) - Get AdvisorShares Pure Cannabis ETF Report is down 6.5%, the Cannabis ETF  (THCX) - Get Cannabis ETF Report is down nearly 8%, and Amplify Seymour Cannabis ETF  (CNBS) - Get Amplify Seymour Cannabis ETF Report is down about 7%. 

That's the macro outlook, but as most cannabis investors know, what is happening at the state and local level is what's most important for the sector until federal legalization is on the table years from now. 

In the meantime, here's a look at some state-level initiatives that could have near- and long-term effects on the cannabis sector, according to Cowen Research. 

New York Future Revenue Projections

New York state is expecting cannabis tax revenues of $1.26 billion between fiscal 2023 and 2028, according to the 2023 budget published by the office of Governor Kathy Hochul. 

The revenue is expected to come from a 9% excise tax and an additional tax of mg of THC sold. New York is projecting $56 million in cannabis revenue in fiscal 2023, of which $40 million is expected to be from licensing. 

Once the market matures that number is expected to jump to $95 million in fiscal 2024, $158 million in 2025, $245 million in 2026, $339 million in 2027 and $363 million in 2028. 

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In the month of December, New York reported tax receipts of $1.3 million for medical-use cannabis. For the fourth quarter, the state had total tax receipts of $3.3 million, which, at a 7% 

Mississippi Passes Revised Cannabis Legislation

Mississippi's House of Representatives voted 104 to 14 to pass an amended version of the Mississippi Medical Cannabis Act that was passed in the state senate last week. 

Amendments in the lower house bill included reducing the maximum monthly allowed limit from 3.5 oz to 3.0 oz and an expansion of zoned areas allowed for cannabis cultivation and processing. 

The amended bill now heads back to the state's senate for approval. 

Rhode Island Gov. Adds Cannabis Revenue Budget

Governor Daniel McKee (D) submitted a nearly $18 billion fiscal year budget that incorporated adult-use cannabis legalization as part of the plan. 

Under the Governor's proposal, Rhode Island would apply a weight-based excise tax on cultivation, a 10% retail excise tax and a sales tax on cannabis transactions. 

According to Cowen analyst Vivien Azer, the main hang-up on legalization in the state has been the choice of which governing authority will oversee the adult-use program.