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With Pot Sales Underway, State Banking on New Revenue

December 5, 2018

Adult-use marijuana sales had a "very robust" start, Revenue Commissioner Christopher Harding said at Wednesday's consensus revenue hearing, but he was unsure if sales will remain so strong as additional stores open. [Photo: Sam Doran/SHNS] Sun staff photos can be ordered by visiting our SmugMug site.

BOSTON -- State revenue officials are still forecasting that Massachusetts will take in between $44 million and $82 million in marijuana taxes this fiscal year and could bring in as much as $172 million in fiscal year 2020, Revenue Commissioner Christopher Harding told lawmakers on Wednesday.

The Department of Revenue estimates “should be used with caution for budgeting purposes” because the nascent legal retail market has just launched and consumer trends in cannabis can be unpredictable, he told members of the Joint Ways and Means Committee during a three-hour hearing on likely revenue trends.

Cannabis sales in Massachusetts are subject to a 10.75 percent excise tax and the state’s 6.25 percent sales tax, as well as a local tax of up to 3 percent.

The DOR estimates the state portion of marijuana tax revenue at between $93 million and $172 million for fiscal year that will start in July, with a midpoint of $132 million, Harding said.

The department last year estimated between $44 million and $82 million in marijuana revenue for fiscal 2019 and Harding said Wednesday his department’s estimate has not be adjusted, despite the industry’s slow takeoff.

Last year he said the estimate “assumes that effective July 1, 2018 there will be a reasonable number of retail establishments that will be operational during fiscal year 2019 and that the Massachusetts experience in terms of per capita consumption and the pace of sales ramping up is similar to that of other states where legalization has occurred, such as Colorado and Washington.”

So far, only two retail marijuana shops have opened to non-medical consumers. In the first 12 days of operation, those two businesses generated about $4.8 million in gross sales, the Cannabis Control Commission said this week.

Harding categorized early sales as “very robust” on Wednesday.

“We don’t know if that trend will continue at that pace once more stores open,” he said. “We’ll continue to track that.”

The CCC said more stores could open by the end of 2018 and more will come online on a steady basis in the new year.

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