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Massachusetts Marijuana Business

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What is the Demand for Marijuana in Massachusetts?

Data obtained from the Cannabis Control Commission revealed that over $496 million was generated from retail sales of marijuana in Massachusetts between January 2021 and the 11th of June 2021. An estimated 25% of adults in the state use recreational marijuana, with each adult spending about $40 to $42 per marijuana purchase.

As of the end of 2019, over 98 recreational marijuana establishment licenses had been issued in the Commonwealth of Massachusetts. According to the Cannabis Control Commission, 37% of these licenses were issued to marijuana retailers, 32% were issued to marijuana cultivators and 27% were issued to marijuana product manufacturers. The marijuana product categories with the highest demands include buds, raw pre-rolls, infused products, and vape products. These product categories constitute 91% of the total recreational marijuana demand in Massachusetts. Buds are the most demanded marijuana products, making up about 34% of the total marijuana demand in the state. This is followed by raw pre-rolls and infused or edible products, which make up about 25% and 19% respectively of marijuana demand. Vape products form 13% of the total marijuana demand in the state. Other product categories such as trims, concentrates, kief, and beverages make up only 9% of total marijuana demand in the Commonwealth of Massachusetts.

How is Marijuana Taxed in Massachusetts?

The Massachusetts Department of Revenue collects all taxes related to marijuana sales in the commonwealth per Massachusetts Regulation 830 CMR 64N.1.1. A Session Law, An Act to Ensure Safe Access to Marijuana (St.2017, c.55), approved the creation of marijuana retail sales outlets and imposed various taxes on marijuana sales in the Commonwealth. According to the Act, all recreational marijuana outlets in the state pay tax rates of up to 20% for all marijuana retail sales. The 20% tax rate comprises the standard retail sales tax of 6.25%, cannabis excise tax of 10.75%, and an optional local sales tax of up to 3% (imposed by municipalities). Marijuana businesses must file a single tax return which would include all marijuana taxes. Massachusetts does not impose any taxes on the sale of medical marijuana.

The tax revenue collected from recreational-use marijuana sales in the Commonwealth is allocated for various purposes to ensure equitable development within the Commonwealth. The 6.25% sales tax constitutes part of the Commonwealth-generated revenue from standard sales tax. This tax is deposited into the Commonwealth's General Fund and School Building Authority Funds. The revenue generated from the sales tax on recreational marijuana is used for developmental projects and the operational expense of the government. The 10.75% cannabis excise tax is used to fund the Marijuana Regulation Fund. The Massachusetts General Laws c.94G established the Marijuana Regulation Fund for the implementation, administration, and enforcement of marijuana laws in the state. These monies are used to promote economic equity programs and other programs that benefit individuals living in communities disproportionately affected by the war on drugs. They are also used to fund public health, behavioral health, public safety, and police training in the state. Communities and municipalities determine how they spend the 3% optional local sales tax on marijuana. Majority of these communities and municipalities invest this tax revenue in education, infrastructure, and programs that mitigate the effect of marijuana sales to the host community.

What is the Massachusetts Department of Revenue?

The Massachusetts Department of Revenue is tasked with ensuring statewide compliance with tax laws in the Commonwealth of Massachusetts, as well as the management of municipal finances. As stipulated by Massachusetts Regulation 830 CMR 64N.1.1, all marijuana sales tax collections in Massachusetts are handled by the Commonwealth's Department of Revenue.

The DOR mandates all marijuana establishments to file their tax returns on or before the 30th day of the month after the reporting period. However, to file tax payments, marijuana establishments must be duly registered with the Department of Revenue. It is mandatory for any business intending to engage in recreational marijuana sales to first obtain a license from the Cannabis Control Commission. Afterward, they can register with the Massachusetts Department of Revenue. The steps for the registration and payment of marijuana tax with/to the DOR is as follows:

Request a Certificate of Good Standing with the DOR online. Individuals may also call MassTaxConnect on (617) 887-6400 between9:00 a.m. to 4:00 p.m., Monday through Friday
Complete online registration with the Department of Revenue through the MassTaxConnect portal upon receipt of license from the Cannabis Control Commission
Log in to the MassTaxConnect portal and add marijuana retail tax in the additional account type
File marijuana tax returns online through the MassTaxConnect portal
Pay marijuana tax return. Marijuana tax payments can be made online on the MassTaxConnect portal using a credit card. Money orders or checks can also be used to make tax payments. However, for cash payment, licensees would need to schedule an appointment with the nearest DOR District Office Counters to make their payments. Late payments of taxes are subject to fines and interest under Massachusetts Legislation M.G.L. c.62C.

Queries related to marijuana tax payments can be directed to the Massachusetts Department of Revenue at (617) 887-6367 or by filing an inquiry form online. Interested parties can also contact this office for tax-related assistance in person at any of the following DOR District Office Counters: