Getting Answers: where does the state’s marijuana tax revenue go?

In Massachusetts, cannabis tax revenue now outpaces tax revenue from alcohol sales, and with a growing number of dispensaries in western Massachusetts selling r
Published: Sep. 21, 2022 at 10:22 PM EDT
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SPRINGFIELD, Mass. (WGGB/WSHM) - In Massachusetts, cannabis tax revenue now outpaces tax revenue from alcohol sales, and with a growing number of dispensaries in western Massachusetts selling recreational marijuana taxed at 20%, we’re getting answers on where all that money is going.

Born and raised in Springfield, 6 Brick’s owner Payton Shubrick grew up knowing the consequences of getting caught with weed.

“Carrying marijuana was a big no-no,” she said. “Dropping a dime bag meant in-house suspension, your parents getting involved, police, so it was a bit of a surprise to see the process of legalization.”

Recreational marijuana was legalized in the Bay State in 2016, with retail shops opening two years later. Since then, Massachusetts dispensaries have done more than $3.4 billion in sales.

With the opening of Springfield’s third dispensary, 6 Brick’s, Shubrick said the market is far from saturated.

“It’s exciting to think about the amount of money that can really be poured back into the community that was once negatively impacted by the same plant, and now leverage it in a positive way,” she told us.

As of halfway through the 2021-22 fiscal year, the state had taken in $74.2 million in marijuana tax revenue. That comes from:

  • A 6.25% sales tax, which goes to the state’s general fund, the transportation authority, and the school building authority.
  • A 10.75% state excise tax, supporting the state alcoholism administration and the Cannabis Control Commission.
  • And an optional 3% local tax, which the Springfield City Council adopted, bringing in $3.9 million so far, with most of it going to the city’s general fund.

“That’s what funds the majority of the city’s core service, so the DPW, the parks department, infrastructure, emergency services,” said Springfield City Council President Jesse Lederman.

Data from the Massachusetts Cannabis Control Commission shows tax distributions for cities and towns are on the rise from just under $15 million ($14,928,107) of tax revenue in 2020 to more than $27 million ($27,253,965) in 2021. Already this year, $42.5 million ($42,514,161) was doled out to municipalities.

“In the city of Springfield, we felt it was very important to ensure that a portion of these funds that come from the recreational sale of cannabis is reinvested, especially into communities that were impacted for generations by the illegal sale of cannabis,” Councilor Lederman said.

Legislation created by Councilor Lederman reserves a third of that 3% local tax for housing infrastructure, quality of life, and job training initiatives. That special fund has grown to $600,000, and Councilor Lederman said the council is working with stakeholders and the administration on how to spend it.

Shubrick said the funds should go to communities disproportionately impacted by the war on drugs.

“Given the checkered history of cannabis, understanding how many black and brown people really had their lives forever changed because they had to do jail time when it wasn’t legal,” she explained.

In Northampton, home to a dozen dispensaries, the mayor said the city has collected more than $5 million ($5,152,251) in local taxes, going to the city’s general fund.