| Telegram & Gazette
WORCESTER — Recreational marijuana shops in the state have surpassed $1 billion in gross sales, the state Cannabis Control Commission announced earlier this month, just under two years from the first sales.
In other words, people sure like their pot.
“This sales milestone represents licensees’ ability to successfully support a safe, accessible and effective adult-use industry, and I am pleased the resulting tax benefits will have a significant impact on communities throughout the Commonwealth,” Commission Chairman Steven J. Hoffman said in a statement.
Indeed, that revenue is welcomed.
“We’ve been very fortunate that we’ve had Caroline’s Cannabis operating in the town of Uxbridge. Caroline’s been a great neighbor and business partner,” Uxbridge Town Manager Steven Sette said of the town’s first retail marijuana store.
Sette reported the town has received roughly $400,000 from marijuana businesses — there are now three operating in town — in a year, and that the town lifted the cap on manufacturing and cultivation businesses to be more accommodating to the industry.
“From the beginning, Uxbridge has welcomed cannabis businesses to the town,” Sette said. “We have worked with them through the licensing process, and we have locations for people to operate and build out their facilities.”
It was a similar story in Leicester, home of one of the first two retail marijuana stores on the East Coast.
“It has created positive cash flow for the town,” David Genereux, town administrator in Leicester, said.
Leicester has received a total of $885,048 in local option sales tax from marijuana so far, Genereux reported.
And in Worcester, Jacob Sanders, chief of staff for City Manager Edward M. Augustus Jr., said the $3 million in revenue the city has so far received from legal cannabis was particularly helpful this year.
“Revenue’s always helpful, especially in a time like COVID,” Sanders said. “It’s helpful to have, but it starts from the will of the voters and what they wanted in Massachusetts and they voted for cannabis which had the added benefits of additional revenue for the city.”
Two adult-use marijuana dispensaries opened on Nov. 20, 2018 — Cultivate in Leicester and NETA in Northampton — becoming the first legal marijuana retail stores on the East Coast.
In the first year of sales (November 2018-19), 33 marijuana retailers generated $393.7 million in gross sales and ultimately rang up $444.9 million for the full 2019 calendar year, according to the CCC.
Since Jan. 1, dispensaries have already surpassed the previous year’s revenue, even with two months of closure due to COVID-19, generating $539 million in gross sales, the commission added.
And at the close of business on Oct. 30, 80 marijuana retailers operating statewide had reached $1,000,521,905 in sales, according to the CCC.
“I would say it was a pretty big milestone, it shows the state and the industry that this is real, this is growing, and we’re doing it in an organic way,” said Brian Moran, chief financial officer at Garden Remedies Inc., which operates medical and recreational dispensaries in Newton, Marlboro and Melrose and a cultivation/manufacturing facility in Fitchburg.
Those sales have been a bit of a help for the commonwealth, moneywise.
Retail sales of marijuana are subject to as many as three taxes: the marijuana excise tax at 10.75%; the 6.25% sales tax; and the marijuana local tax option at up to 3%.. Thus, recreational marijuana effectively is taxed at 20%.
According to the Department of Revenue, this has translated into:
- Roughly $30 million in sales tax revenue for the state in the fiscal year ending July 1, and $50.7 million since sales began up until the end of August, the latest data available.
- More than $51.6 million in marijuana excise tax in the last fiscal year and $87 million in marijuana excise tax since sales began.
- Almost $15 million distributed to towns and cities with marijuana establishments in the last fiscal year, and $17.8 million since legal sales began.
In addition, municipalities can collect an up to 3% community impact fee on gross sales to mitigate the costs incurred as a result of marijuana businesses. These are part of host community agreements that are in effect for five years.
So where is this money going?
On the state side, marijuana excise tax money goes into the Marijuana Regulation Fund. The fund, which also includes licensing fees and any enforcement penalties, goes toward public safety and municipal police training, substance-use prevention and education, and programming for economically disadvantaged persons in communities disproportionately impacted by the War on Drugs.
Marijuana sales tax goes, along with regular sales tax revenue, into the state’s General Fund as well as the School Building Authority and MBTA funds.
Local option taxes and community impact fees go to the municipalities where the sale was made.
“About $200,000 will go automatically to the capital and stabilization fund, primarily infrastructure,” Sette of Uxbridge said. “We’ve also used them to establish a drug awareness task force. In addition to what has gone into the general fund, funds have gone out to pay for police vehicles and stuff like that. We’ve found the biggest impact is infrastructure, in water to cultivators/manufacturers; increased traffic, etc.”
In Worcester, the money has been going to summer programming for kids through Recreation Worcester and to pay for some of the staff time in inspectional services, the city solicitor’s office and the police department, Sanders said.
And in Leicester:
“We haven’t been spending the funds, in light of COVID-19, in the case that we have issues with our budget next year,” Genereux said.
Indeed, the money — even if a small percentage of the municipality’s budget — has been welcomed as COVID-19 hammers revenues.
“For municipalities it’s critical and certainly helps the state as they’re trying to fill holes,” said Tim Murray, president and CEO of the Worcester Regional Chamber of Commerce, which counts more than a dozen marijuana-related businesses on its membership roster.
But those interviewed said it was not just the taxes and revenue helping communities, it’s the industry.
“In many cases, it’s a two-fer or a three-fer,” Murray continued. “These businesses have host agreements, are paying taxes, and brick-and-mortar businesses are paying property taxes as well in places that were vacant or underutilized.”
Matthew Huron, CEO of Good Chemistry, a company with an adult-use and medical dispensary in the Canal District, added that the dispensaries are also helping customers.
“We’re grateful for the partnerships we’ve built with our neighbors and the city, and we’re grateful for the chance to serve patients and adult-use customers in Worcester during these challenging times,” Huron said in a statement. “Our ability to serve patients and adult-use customers in Worcester during the pandemic has allowed us to provide the city with much much needed tax revenue, and has allowed us to continue to support those in need, particularly those suffering from the impacts of COVID-19.”
And Dwan Packnett, vice president of government relations and community investment at Sira Naturals Inc., touted the marijuana company’s unionized workforce, support of a Jails to Jobs program helping those disproportionately impacted by the war on drugs, and community involvement.
“It’s not just about running a business, it’s about becoming a member that contributes to the well-being of the community,” Packnett said.
Sira Naturals is a vertically integrated company with medical dispensaries in Somerville and Needham and a Milford cultivation facility.
Added Packnett: “We try to focus on making our workforce look like the surrounding community, we are trying to ensure that we are not just there starting a business, but that we engage with (the community), look like them, and are trying to engage in the values that the community shares.”
Finally, Moran credited the CCC with setting up an industry that emphasizes the local.
“If the cannabis industry is successful in Massachusetts, it benefits Massachusetts because you have to be located in the state, you have to grow in the state, you have to manufacture in the state, and the product has to stay in our borders because of the (federal) illegality of it,” Moran said. “All of that investment is going to the state. It’s a very state-positive industry in that regard.”
That being said, communities were reluctant to depend on marijuana revenue, however.
Worcester, for instance, budgeted $700,000 for marijuana revenues this fiscal year; four months in, it has already accrued $1.13 million.
“If there’s one thing I know about this industry, it’s that it’s ever evolving,” Sanders said. He noted that federal legalization and delivery licenses may change the industry landscape and that the industry is heavily dependent on venture capital money. “It’s why we’re being conservative, trying to do our due diligence, trying to have a process in place, and trying to manage this as best we can.”
But whatever the budget, the revenue is likely to increase.
“The expectation is that the next billion will be quicker than the first billion,” Moran said. “We’re starting to see that acceleration we were expecting … A lot of people still point us to being a $2 billion-a-year state in terms of cannabis revenue.”