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POT PASSES ALCOHOL IN MASSACHUSETTS
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annabis advocates have long insisted that pot is safer than alcohol. Now, in Massachusetts, it’s also more lucrative. According to data from the Bay State, tax revenue generated by Cannabis sales has officially surpassed that of alcohol for the first time. Halfway through the current fiscal year, Massachusetts reported collecting $74.2 million in marijuana excise taxes – far more than the $51.3 million in excise tax revenue generated by alcohol sales in the same time period. Interestingly, alcohol tax revenue is actually slightly up over the last five years. Marijuana sales just happen to be booming. Recreational Cannabis has been extremely popular – and profitable – since the state launched its retail sales program in November 2018. In September 2021, the Cannabis Control Commission, the regulatory board that oversees the state’s marijauna industry, announced that Massachusetts had reached $2 billion in adult-use sales. According to the Commission, the state has now sold $2.54 billion worth of pot products, as the Cannabis industry continues to grow. In Massachusetts, adult-use marijuana is hit with an excise tax of 10.75 percent. This is the tax that has produced $74.2 million in revenue at the midway point of the current fiscal year. However, Massachusetts also tacks on a state sales tax (6.25 percent) and jurisdictions hosting retail shops can add an additional “local” tax of up to 3 percent.
Photo by Rodnae Productions
The state collected a total of $208 million in marijuana tax revenue last year. While many businesses have been forced to close their doors or significantly scale back in the wake of the coronavirus pandemic, Cannabis continues to bring in substantial revenue to the cash-strapped state. And, it’s not just Massachusetts that’s reaping the benefits of this financial boon. A recent report from the Marijuana Policy Project found that states with legal retail sales programs have collected over $10 billion in Cannabis taxes since 2014.
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NO GIFTING GANJAIN NEWYORK O fficials in New York are cracking down on crafty Cannabis businesses in an attempt to halt illegal marijuana “gifting.” Gifting is an increasingly popular stopgap in states that have legalized Cannabis, but have not yet launched retail sales. Essentially, companies offer “free” pot products with the purchase of ordinary food or t-shirts at exorbitant prices. In doing so, the company claims it is, technically, making a legal sale and simply giving away the marijuana. New York’s adult-use pot law, passed nearly a year ago, does not specifically address marijuana gifting. However, some business owners using this method for Cannabis commerce point out that the law allows for “transferring, without compensation.” Many believe gifting fits this criteria and, therefore, they are not breaking the law. Nonetheless, the Office of Cannabis Management (OCM) – which oversees the state’s pot industry – disagrees. The agency has issued at least 24 letters to businesses ordering them to put an immediate end to ganja gifting or face possible arrest and fines. And, crucially, the OCM made it clear that offenders would be imperiling their chances of receiving a retail license from the state. According to OCM Executive Director Chris Alexander, “New York state is building a legal, regulated Cannabis market that will ensure products are tested and safe for consumers … Illegal operations undermine our ability to do that.” Of course, the best way to put an end to illegal – or gray area – Cannabis distribution is to implement a retail sales program. Unfortunately, the process has been excruciatingly slow in New York, as the formation of regulatory boards was delayed and now the task of crafting the rules for the industry is expected to take even longer. Officials don’t anticipate opening adult-use sales in the Empire State until sometime in 2023. With surging demand for legal pot and a great deal of money to be made, it appears unlikely that businesses will practice patience. However, the threat of losing a highly coveted retail license could have an impact.
MAR. 2022
Photo by Sharon McCutcheon
A similar scenario played out in New Jersey last summer, when the attorney general sent cease and desist letters to Cannabis companies caught running marijuana gifting operations. The Garden State has also been slow to launch retail sales, causing some businesses to improvise. Like New York’s transferwithout-compensation provision, New Jersey’s adult-use law allows marijuana to be gifted to those 21 and older. But also like New York, New Jersey cracked down on thinly-veiled pot gifting ventures.
