It’s only been six short months since “adult use” recreational cannabis became legal and Massachusetts dispensaries opened their doors for sales. In only half a year, the state has nearly doubled its original projections on sales.
In a report by MJBizdaily, as of the last week of May, 2019, cannabis sales in Massachusetts approached $140 million dollars, with an average of just under $23 million dollars brought in per month.
According to the Massachusetts Department of Revenue, they expected to collect between $44 million and $82 million dollars in taxes within the first fiscal year of cannabis legalization. Now, however, estimates from MJbizdaily predict the market as a whole may bring in close to $500 million dollars total by the end of 2019.
When purchasing cannabis in Massachusetts, residents pay 6.25% sales tax, as well as a 10.25% excise tax. The city or county you’re in may also include an additional 3% local tax. If these yearly sales estimates reach the max, the state could bring in upwards of 100 million dollars in retail sales alone. Even more tax revenue will come from the marijuana businesses themselves.
So where does all this money go, and what will it be used for?
First and foremost, it’s important to understand that marijuana, as a retail good, receives the same sales tax as any other taxable product, and this 6.25% goes toward the state’s general fund. Lawmakers then decide what this fund goes toward.
So what does the Massachusetts general fund do? For example, in 2017, the general fund distributed $7.18 billion dollars to Medicaid, $6.36 billion to secondary and elementary education, $1.39 billion to corrections, $1.17 billion to higher education, and $739 million to public assistance programs.
But that’s just the first sales tax.
The second, 10.75% excise tax on cannabis sales help keep marijuana safe, well regulated, and legal. Excise tax revenue, and cannabis business application and license fees flow into the Marijuana Revenue Fund, a pool which will fund the operating cost of the Massachusetts Cannabis Control Commision, or CCC, who act as the regulatory agency for marijuana.
The CCC’s operating costs totaled only $8 million dollars in 2018.
With the excise sales tax set to bring in something near $53 million in 2019, the Marijuana Revenue Fund will have more than they need. When excess occurs, state laws say these funds must be, “aimed at addressing potential impacts of the newly legal industry,” as well as the negative effects of marijuana’s previous illegality.
If the numbers pan out as MJBizDaily expects, the Massachusetts Marijuana Revenue Fund will have upwards of $40 million dollars to dedicate toward public awareness campaigns, public health, substance abuse programs, youth education, public safety, and the Prevention and Wellness Trust Fund, which works to prevent illness and provide healthcare equality.
Moreover, the Marijuana Revenue Fund also requires excess money go toward efforts to help those most affected by previous marijuana laws, people of color. They key is to give back to those who fought and suffered for years so that those 21 and older can now purchase cannabis without worry.
As described by the CCC and Mass.gov, those communities who saw, “high rates of arrest and incarceration for marijuana offenses,” will receive restorative justice and diversion programs, as well as workforce development, mentoring, and assistance in entering the cannabis industry.
The centering of public health, public awareness, and restorative justice should be the hallmark of any compassionate, comprehensive cannabis tax plan. As the first purveyor of recreational cannabis on the East Coast, Massachusetts sets a good example for future legal states like New York, New Jersey, and Pennsylvania.
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