What New York’s New Cannabis Discount Rules Mean for Retailers

For nearly three years, New York’s legal cannabis dispensaries operated at a significant disadvantage. Regulations barred licensed retailers from offering common retail incentives like discounts, loyalty programs, and bundled pricing, while products carried one of the highest tax burdens in the region, a 13% retail excise tax plus a 9% distributor excise tax. Combined with a widespread unlicensed market, especially in New York City, the pressure on compliant operators has been intense.

That began to change in late 2025, when the New York Cannabis Control Board approved new rules allowing licensed dispensaries to use traditional promotions and loyalty tools, so long as they operate within a clearly defined compliance framework.

At Verdant Strategies, we view this update as a material shift in how cannabis retailers must approach pricing, financial planning, and compliance coordination. Keep reading to learn more about the New York cannabis discount and loyalty program rules!

What Changed: New York Now Allows Retail Cannabis Discounts

In November 2025, the New York Cannabis Control Board adopted amendments to Parts 128 and 129 of Title 9 of the New York Code of Rules and Regulations (NYCRR). These amendments, which took effect in December 2025 and early 2026, authorize licensed adult-use dispensaries to offer a range of traditional retail promotions that had previously been prohibited.

Newly Permitted Promotional Tools Include:

• Product discounts and temporary sales (such as weekend or holiday sales)
• Bundled pricing across product categories
• Points-based reward systems and loyalty programs
• Customer incentives commonly used in other regulated retail sectors

These changes apply only to licensed adult-use retailers and do not extend to unlicensed or illicit operators.

From a strategic standpoint, this brings New York cannabis retail closer to parity with established markets on the West Coast while still maintaining strict guardrails around taxation, advertising, and pricing integrity.

Why New York Adopted Retail Discount Rules

1. Aligning Cannabis With Traditional Retail Practices

For years, licensed cannabis retailers were forced to operate under rules that limited their ability to engage customers the way every other retail business does. Allowing promotions helps normalize cannabis as a regulated consumer product category and removes outdated restrictions that penalized compliant operators.

2. Strengthening the Legal Market Against Illicit Competition

The unlicensed cannabis market remains one of New York’s biggest challenges. In a single year, nearly 1,400 unlicensed shops were shut down during Operation Padlock to Protect—more than double the number of licensed dispensaries statewide as of 2025. Authorities seized over $95 million in illegal product, and those figures reflect enforcement only within New York City.

Discounts and loyalty programs give legal retailers a long-missing tool to retain customers, compete on value, and build repeat business, rather than losing market share to unregulated sellers.

3. Supporting Growth, Loyalty, & Repeat Revenue

From a financial perspective, incentives drive customer lifetime value. Promotions are not just about short-term sales spikes; they are a lever for predictable, repeat revenue when designed responsibly.

Verdant insight: Pricing strategy, loyalty programs, and discounting must be modeled as part of a retailer’s long-term financial plan, not treated as isolated marketing tactics. This means forecasting how promotions impact margins, cash flow, and tax obligations over time. When discounts and loyalty incentives are planned alongside excise tax exposure, inventory turnover, and customer lifetime value, retailers can drive repeat business without eroding profitability or creating compliance risk.

Cannabis Excise Tax in New York: Mechanics & Implications

Adult-Use Cannabis Taxes

• 9% distributor excise tax on wholesale transfers
• 13% retail excise tax on consumer sales

Medical Cannabis Taxes

• 3.15% excise tax on gross receipts

The Key Financial Reality

Excise tax is calculated on the gross sale price before discounts. Promotions do not reduce the tax base. This means retailers must remit excise tax as if the product sold at full price, even when a discount is applied at checkout.

Verdant insight: Discounts benefit customers and help drive volume, but they do not lower tax liability. Retailers must account for this in pricing models, margin analysis, and cash flow forecasting.

The Rules of Promotions: Compliance Requirements Retailers Must Follow

While this update opens meaningful opportunity, it also introduces new compliance obligations that touch finance, operations, marketing, and POS systems.

1. Minimum “Market Value” Requirement

Cannabis cannot be sold below its defined “market value,” which is set at 1.5 times the wholesale price paid by the retailer.

2. Tax Must Be Calculated on the Pre-Discount Price

Retailers must ensure POS systems calculate excise tax on the undiscounted price to avoid undermining state and local tax collections.

3. Advertising Restrictions

Discounts and promotions may only be advertised through:

• Age-gated electronic communications
• Mailers
• Licensee or approved third-party websites intended for individuals 21+

4. Packaging Restrictions

Promotional messaging may not be affixed to cannabis product packaging or labels.

Verdant insight: These requirements demand tight coordination between finance, compliance, marketing, and technology teams. Misalignment creates audit risk.

Strategic Implications for Financial Planning & Forecasting

Retail discounts introduce complexity that must be managed intentionally:

• Revenue forecasts should reflect promotional elasticity
• Margins must account for unchanged tax obligations
• POS accounting codes and reporting structures may need updates
• Cash flow projections should distinguish between promotional and full-price sales

At Verdant Strategies, we help operators integrate discounting into:

• Budgeting and financial models
• Compliance reporting and audit readiness
• Long-term pricing strategy and profitability analysis

Key Takeaways:

1. Can licensed NY dispensaries offer discounts and loyalty programs?
   Yes. As of late 2025/early 2026, adult-use retailers may offer discounts, bundled pricing, loyalty programs, and temporary sales under updated NYCCB rules.
2. Why did New York allow cannabis discounts?
   To help licensed retailers compete with illicit sellers, align cannabis with standard retail practices, and support customer retention and repeat revenue.
3. Do discounts reduce excise tax liability?
   No. Excise tax must be calculated on the gross, pre-discount sale price. Promotions do not lower the tax base.
4. How low can products be discounted?
   Cannabis may not be sold below “market value,” defined as 1.5× the wholesale price paid by the retailer.
5. What compliance requirements apply to promotions?
   Retailers must calculate tax pre-discount, restrict advertising to 21+ channels, and avoid placing promotional messaging on product packaging.
6. What should operators do now?
   Update POS tax logic, align pricing and finance teams, train staff on compliant promotions, and model discounts into margins, cash flow, and forecasts.

Bottom Line: A More Competitive, But More Complex Market

With 2026 marking the first full year of authorized discounts and loyalty programs, New York cannabis retail is entering its most competitive phase yet. Early data already shows significant year-over-year sales growth, and with tax rates unchanged, the state is positioned to capture increased revenue alongside stronger retail performance.

However, success will favor operators who approach promotions strategically, not reactively. Discounts create opportunity, but only when aligned with compliance, tax planning, and financial strategy.

If you’re navigating these changes and want clarity on how to structure pricing, promotions, and compliance without putting your business at risk, Verdant Strategies is here to help. Contact us today!