We are a group of grassroots organizers working in our town to overturn the ban and work toward progress. For more information about the benefits of regulated, recreational retail adult use, please click here. You can also fill out a brief survey to share your opinion on whether or not we ought to overturn the ban.

 

Retail Marijuana Revenue

Background

In November 2016, state voters approved the legalization of recreational marijuana in Massachusetts. The Regulation and Taxation of Marijuana Act of 2016 requires any seller of recreational marijuana to be a licensed retailer. The state legislature subsequently voted to delay licensing for cannabis shops until July 1, 2018. At the May 2017 Bourne Town Meeting, residents voted to approve a moratorium on commercial sales of recreational marijuana in town until November 30, 2018. At the March 2018 Special Town Meeting residents rejected a ban on recreational marijuana sales. At the May 2018 Bourne Annual Town Meeting the residents approved the 3% local option sales tax on recreational marijuana sales.

State law also allows municipalities to establish a host agreement with commercial marijuana vendors (recreational, medical or cultivation) to pay the municipality up to 3% of gross sales to offset reasonable costs imposed on the municipality. As with any other business, the town can also collect property and personal property tax from marijuana businesses, both retail and commercial.
Revenue assumptions for retail sales of recreational marijuana in Bourne

• Potential Local Option Sales Tax and Host Community Revenue: 3% Local Option Sales Tax and up to 3% Host fee (for this analysis we’ve calculated revenue on the full 6%)

• Property Tax Revenue: Although there is potential for Retail stores to move into vacant property it is also possible to move into existing locations which would not significantly increase property tax revenue. Since Revenue is unknown it has been excluded from the calculations below.

• Personal Property tax – Retail stores also will likely have minimal taxable personal property, so it is not included.

• Potential Risks to Revenue Estimates: Heavy taxation (23% total for state excise, state sales, local option sales and local host community fee) may keep sales underground, oversupply/flood of recreational shops that increases competition, under-reporting of recreational sales

• Potential Costs to Bourne: No potential costs have been identified. No data available on civil and criminal costs resulting from legalization (accidents, damage, etc.)

Three ranges of estimated revenue from retail adult use (non-medical) sales based on estimated sales state-wide for FY20 in the MA Department of Public Health Mandated Report on Marijuana issued June 29, 2018.

• High Estimate ($900 million Gross Sales state wide with 1% in Bourne): MA Sales have been estimated to reach $909,734,513 in FY20.  If 1% of the sales ($9,097,345) are made in Bourne, then the 6% revenue from the 3% Local option sales tax plus the 3% Host Community fee would be $545,841.

• Medium Estimate ($900 million Gross Sales state wide with 0.33% in Bourne): MA Sales have been estimated to reach $909,734,513 in FY20. Bourne currently receives about 0.33% of the Local Option Meals tax state wide. Applying the same percentage of sales tax revenue to adult use marijuana sales, the sales in Bourne would be $3,002,124. The 6% revenue from the 3% Local option sales tax plus the 3% Host Community fee would be $180,127.

• Low Estimate ($450 million Gross Sales state wide with 0.33% in Bourne): Using 50% of the MA Sales that been estimated, the gross sales would be $454,867,257 in FY20. Bourne currently receives about 0.33% of the Local Option Meals tax state wide. Applying the same percentage of sales tax revenue to adult use marijuana sales, the sales in Bourne would be $1,501,062. The 6% revenue from the 3% Local option sales tax plus the 3% Host Community fee would be $90,064. There are reports of facilities in Canada and Colorado closing due to weak sales; investors report that heavy taxes keep sales underground.

Additional revenue considerations assumptions:

• Although not addressed here, personal property and property tax from cultivation (grow) facilities is too speculative at this point and has not been calculated, though is likely to be revenue positive for the town.

• There is likely to be a first mover revenue advantage for municipalities opening recreational establishments. This is expected to dilute over time as additional facilities open.

On October 1, 2018, Bourne Special Town Meeting narrowly passed a ban (vote total: 415-321) on such establishments, limiting our town’s ability to benefit from the new laws, create local jobs, generate new tax revenue, and minimize the illicit cannabis market in our town.