The city of Westfield received $ 45,000 this fiscal year that it didn’t receive last year.
Quite the story at a time when the COVID-19 pandemic has affected the city’s finances and everything – especially the sales picture – is worse than expected.
The payment for the first quarter of the fiscal year came from the state as the city’s share of marijuana taxes, which was first collected this year. The city’s first marijuana retailer, Cannabis Connection, opened in June.
Westfield isn’t the only one seeing new money from the state’s growing cannabis industry. But cities and the companies themselves don’t necessarily know what’s going to happen next. As the industry matures, there is increasing competition and market volatility as consumer acceptance and habits change after pandemic lockdowns.
Will the end of COVID-19 restrictions mean more business? Will new stores open watered-down receipts or will greater social acceptance lead to more sales? Will new business in neighboring communities – Springfield’s first opening in September and taxes not yet – change the bottom line in communities that had monopolies in the early days?
And will the Massachusetts cannabis industry feel it when Connecticut – where the governor is pushing for legalization – and New York legalize adult marijuana? New Jersey voters approved the legalization in November.
Westfield Mayor Donald Humason, who opposed legalization as a legislature, said he is budgeting revenue very carefully based on all variables.
Those in the industry are also cautious.
“It’s kind of unknown at this point,” said Tom Keenan, CEO of Cannabis Connection.
He said that more competition will get into his business, at least initially.
“The market will expand. It’s all about how fast, ”he said.
Due to the bottleneck, products are currently being tested in accordance with state standards. Westfield recently approved an agreement with a marijuana laboratory to open in an industrial building near Westfield-Barnes Regional Airport.
Municipal source of income
In Massachusetts communities, recreational marijuana tax can be up to 20%: a sales tax of 6.25%, an excise tax of 10.75%, and a city and town local option tax of up to 3%. Not only do communities impose impact fees on marijuana retailers, but growers and processors as well.
Only recreational marijuana retailers generate sales tax. Medical marijuana is not taxed.
Recreational marijuana raised $ 14.9 million for cities in the fiscal year ended June 2020. That represents an increase in local marijuana tax revenue of nearly $ 2.9 million between December 2018 and May 2019, according to the Massachusetts Department of the Treasury.
The 80 marijuana retailers operating in Massachusetts had total gross sales of over $ 1 billion by the end of October, according to the State Cannabis Control Commission. The milestone was reached two years after the first two pot stores opened in November 2018. They were the first legal marijuana recreational stores on the east coast.
The state does not divide the revenue by city, but the municipalities in the region have provided figures for the Republican.
Northampton has three marijuana stores – including NETA on Conz Street, one of the state’s first two legal marijuana stores. Colonial Cannabis Co. on Bridge Street opened in June and Resinate on Pleasant Street opened in November.
The city raised marijuana taxes of $ 1.6 million in fiscal 2020, up from $ 980,000 the previous year. Revenue from impact fees also rose to $ 1.8 million in fiscal 2020, from $ 808,000 in the previous year.
Business is new in Boston. The city has budgeted $ 1.25 million in tax revenue and an additional $ 1.25 million in funds for the host community agreement after the items were not included in their previous budgets.
In Worcester, a recent audit report found that the city had $ 1.1 million in marijuana-related revenue in fiscal year 2021, including fees of nearly $ 991,000 and taxes of over 141,000 U.S. dollar. This compares to revenues for full year 2020 of $ 1.7 million, including fees of $ 1.2 million and taxes of over $ 499,000.
The city had total marijuana-related sales of $ 230,000 in fiscal 2019.
Pittsfield recorded $ 824,116 in sales tax and $ 167,500 in host community payments for the past fiscal year.
So far, Easthampton received $ 502,646 in taxes and fees from its marijuana businesses in fiscal 2021. Of this, $ 179,540 was taxes, $ 15,000 was community agreements, and $ 308,106 was impact fees. For the full 2020 fiscal year, the total was $ 1.5 million, down from $ 258,000 in fiscal 2019.
Chicopee received sales tax payments totaling $ 337,300 from cannabis retailers Theory and Mass Alternative Care in March and June 2020. The city received over $ 21,000 in cannabis impact fees from Theory.
The city hasn’t updated its cannabis revenue estimates for fiscal year 2021, said auditor Sharyn Riley.
Greenfield received Host Agreement payments of $ 15,000, Impact fees of $ 260,383, and taxes of $ 188,139 for the 2020 calendar year.
Bring the money to work
In Pittsfield, the money will be split between a tax stabilization account, the city’s general fund and a special public works improvement fund, said finance director Matthew Kerwood.
At Cannabis Connection in Westfield, Keenan said his business had no impact on city services other than additional traffic near an already busy interchange. The building’s extensive state-mandated alarm system also triggered a few times.
Holyoke’s first recreational marijuana store, Canna Provisions, opened in early 2020.
The city received Host Community Agreement revenue of $ 50.00 in fiscal 2019. After the sale began, the city received tax revenue of $ 349,725 for fiscal 2020. The last available tax number for fiscal 2021 was $ 14,696.
Marcos Marrero, the outgoing head of the city’s economic development department, said that in addition to tax revenue, the cannabis industry is boosting the city’s finances by creating a demand for commercial space that would otherwise be empty.
“It also increases your tax base the classic way by starting a new business,” he said. “How do we take this money and help small local businesses?”
Marrero said this means using the marijuana stores as bait to bring foot traffic to other businesses. It also means leveraging all of the work created by industry – both in retail stores and for plumbers, electricians, alarm firms, and other contractors.
Meanwhile, the marijuana tax money pays for city workers such as teachers, maintenance workers and police.
“You don’t have to take the argument that this is awful and you just tolerate it,” said Marrero.