Westport marijuana revenue may be lower than thought

Prices, proliferation of shops and state law could impact local tax revenues

By Ted Hayes
Posted 2/27/23

Local tax revenues from the sale of medical and recreational marijuana may not be as big of a fiscal panacea as some had hoped. In Westport, the difference could cost the town thousands due in large …

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Westport marijuana revenue may be lower than thought

Prices, proliferation of shops and state law could impact local tax revenues

Posted

Local tax revenues from the sale of medical and recreational marijuana may not be as big of a fiscal panacea as some had hoped. In Westport, the difference could cost the town thousands due in large part to a change in state law and the growing proliferation of, and resulting decrease in marijuana prices at, dispensaries across the state.

Town Administrator James Hartnett told the select board at its last meeting that despite hopes to the contrary, "we're not going to see $50,000 to $200,000 in revenue" every year from Westport's sole dispensary, Coastal Healing.

"I think at best, we're probably looking at $15,000 to $30,000, and even that may be difficult."

Tax payments in other communities across the Commonwealth have been coming in lower than expected, he said. And with more retail outlets out there, prices and revenue are down.

One of the largest impacts on what towns like Westport can expect is due to a law signed last summer by Gov. Charlie Baker that in effect halves the revenue communities that host dispensaries see.

Prior to the state law, host communities were given tax payments equal to 3 percent of total sales within their town, as well as a "community impact fee" that in many communities, like Westport, was set at an additional 3 percent of sales.

While the fee still exists under the law, communities must now demonstrate that the funds received under the fee are "reasonably related" to the costs imposed on them by the existence of marijuana establishments. Those include such costs as police and fire calls, and traffic management. Hartnett told the council that dispensaries are challenging the local host agreements with respect to impact fees.

"We believe the host agreement should stand, which could add another $25,000 to $40,000" in revenue each year, he said.

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