When the first recreational marijuana dispensaries in Massachusetts opened their doors two years ago, expectations were high that the new revenue stream would make a big impact on the Bay State.
With the state's Cannabis Control Commission recently trumpeting $1 billion in gross sales among marijuana retailers, municipalities say the local effects of legalized pot have been largely positive so far, particularly during the pandemic.
And amid a crisis that's throttled local revenues, retail cannabis has been a welcome source of income for some communities as the industry continues to grow. Between December 2018 and May 2019, adult-use marijuana brought in nearly $2.9 million in local tax revenue, according to the Massachusetts Department of Revenue, and the following fiscal year, which ended in June 2020, cannabis drew roughly $14.9 million for cities and towns.
The data show that after steady growth each quarter, local marijuana tax revenue dropped during the first few months of the pandemic, when pot shops were shuttered for roughly two months under public health orders. But the latest figures from fiscal year 2021 indicate the industry is rebounding with more than $5.7 million in local tax revenue projected to date.
Beyond the local option tax on marijuana, municipalities can also collect revenue via community impact fees, which are negotiated through host community agreements drafted during the licensing process.
Cities and towns can draw up to 3 percent of a marijuana establishment's gross annual sales in community impact fees, with the stipulation that the funds must be used for costs related to the impact of the business, such as traffic or environmental impact studies, added costs for public safety staffing or substance use prevention programming.
To date, the Massachusetts Cannabis Control Commission has authorized 90 marijuana retailers to start operations, according to commission documents, as well as a few dozen cannabis businesses of other types, such as cultivation, production and testing.
Concerns about delivery
Before the Cannabis Control Commission voted Nov. 30 to finalize a home-delivery policy that is sure to reshape the marketplace here, municipalities lobbied hard against the commissions's wholesale delivery license with the argument that delivery not tethered to a brick-and-mortar retailer will cut into marijuana tax revenues for communities that host the physical marijuana stores.
"The Commission does not yet know how the market may react to a delivery license and we believe it would be prudent to take the time necessary to understand the disruptions this may have on the retail market before greatly expanding the license to include wholesale delivery. Many communities have welcomed recreational marijuana shops, and it would be a shame to see those shops close so early on in the recreational marijuana industry in Massachusetts," Massachusetts Municipal Association Executive Director Geoff Beckwith wrote to the CCC in October.
The mayors of Worcester, Springfield, and Brockton, along with Lawrence Mayor Daniel Rivera, separately wrote to the commission with similar concerns, as did municipal leaders from Shrewsbury, Athol, Raynham, Millis and Amherst.
A high point in hard times
As the industry grows, at least one Bay State community has rethought its position on pot during the public health crisis.
In a late October Town Meeting, Orleans voters overturned a local ban on retail marijuana establishments and approved a zoning amendment allowing two retailers to set up shop in town. The proposal to reverse the ban was brought forward by the town's Select Board, according to Director of Planning and Community Development George Meservey, who said the original ban was proposed through citizen's petition.
"I think it's looked at as a revenue source, and right now, the town is looking for any and all revenue sources to be considered," Meservey said, noting that local tax revenues have suffered on the Cape with the drop in tourism.
Fall River expects to collect roughly $1.9 million in tax revenue next year, Mayor Paul Coogan said, with two retail locations open there so far.
When it comes to pot, the city has been in the spotlight recently after former Mayor Jasiel Correia was charged with extorting marijuana vendors in September 2019. Coogan, who took office in January, said despite the city's track record, Fall River has resolved its issues and is still attracting and pursuing marijuana-related businesses, but with a focus on finding companies that will be the best fit for the community.
"Obviously cannabis is a big revenue source for the city of Fall River, and going forward we're just picking up the pieces and going forward," Coogan said.