STORY BY ADAM STERN PHOTO ISTOCK
What the
TAX?
T
axes are often met with derision but are an inevitable fact of life that are only celebrated with the cashing of refund checks and an eponymous holiday based on their removal for a weekend. As a result, we don’t often think of the impact taxes have on our cities and towns; and the taxes collected within the cannabis industry are no exception. I learned this firsthand upon my first visit to an adult use establishment in Massachusetts. The first words I heard were: Cannabis Employee: Welcome my friend! Can I see your ID? While security guards stand or sit in various corners of the room, I hand over my ID. Once my ID is returned, I am directed to walk through another security door. As I walk into the main serving area of the dispensary, I try and remember my research from the online menu. I stopped at the bank earlier that day, knowing I needed cash and in viewing the online menu, I knew how much to bring. So I thought to myself: Me: I brought $100, that is enough for my $45 Eighth and a $15 Edible Chocolate Bar, and maybe a couple of pre-rolls. Once it’s my turn to order, I hear: Budtender: Hey my man, I need to see your ID again; thanks. What can I get for you? As I place my order, I am thinking of how smooth I am, knowing what I want and not needing any help. As the Budtender placed and collected my order, he starts plugging away.
Budtender: Okay, so with your Eighth at $45 and your $15 Edible, along another $40 for pre-rolls, your total comes out to $120. As my eyes widen in shock, I start looking over my items, thinking back to my online calculations, I must have messed up my math. Me: $120? Don’t you mean $100? Budtender: The total is $100 in products, but after the Excise Tax of 10.75%, Sales Tax of 6.25% and a Local 3% Tax, we must add a 20% Tax after product cost. Doing some quick calculations in my head, thankfully the order was exactly $100, $120 did add up to 20% in taxes. Me: Wow that seems like a lot of taxes on a single product. Budtender: Yeah, that’s why a lot of people call it “Tax-a-Chusetts. After a little chuckle and back and forth conversation, I started to become curious. Me: All the taxes on these products, where do they all go? Budtender: Where don’t they go? The cannabis industry is almost single handedly helping fix and repair, as well as starting new projects for cities. Most of the money is collected by the Massachusetts Cannabis Control Commission, who then distributes the money to three main branches: The Massachusetts Bay and Transportation Authority, the State’s General Fund, and School Building Authority Fund. Then, up to 3% Local tax can be used by our local municipality and town to fix damaged roads, repair failing infrastruc-
ture, and help offset any costs increased traffic may bring thanks to our services. Me: Wow, it sounds like while the taxes may be high (wink), they are all going towards good causes, and it explains all the construction, demolished buildings, and road work I have seen throughout the state! Budtender: Yeah, the Cannabis Industry brought in almost $2,000,000,000 (yes Billion), in taxes since adult use started, and in December of 2021 it is estimated the Cannabis Industry in Massachusetts brought in $74 Million, while alcohol brought in closer to $51 Million. After talking for a few more minutes, I realize there was a line of people starting to form behind me. Me: Well thanks for the education lesson. Seems like there are a lot of pros and cons to the taxes, and if they keep going to the right places and the state justifies the taxation, then it could be worth it. One of the lessons I learned walking away from that exchange was that the cannabis industry can be a huge windfall of revenue when it comes to suffering and slow-moving communities that need a tax infusion; and in cities like Worcester MA, you can see the difference the cannabis taxes are making from road repairs to new buildings and infrastructure for businesses. It is important to ensure the taxes continue to benefit the community and are maintained to ensure business success along with community development and the success of the legal market over the illegal. CRQ SPRING 2022
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