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Massachusetts: Marijuana Tax Dollars Top Alcohol

Excise taxes on Cannabis for adult use have exceeded alcohol excise taxes for the first time in Massachusetts


Excise taxes on Cannabis sold for adult recreational use have exceeded alcohol excise taxes for the first time in Massachusetts. This reflects growing marijuana sales that reached $2.54 billion, according to the Cannabis Control Commission, reports the Associated Press.

Massachusetts collected $74.2 million in marijuana excise tax through December 2021 – halfway through the fiscal year. This compares to $51.3 million in alcohol excise taxes, WCVB-TV reports.

The excise tax of 10.75% on recreational marijuana is part of the total tax revenue. There is also a 6.25% state sales tax, plus a local tax of up to 3%. It all added up to $208 million in total tax revenue last fiscal year.

In 2019, 22 retailers made $444.9 million in sales from recreational marijuana use in Massachusetts, according to the commission. In 2020, despite two months of COVID-19 closures, retailers generated $702 million, reports MassLive. By September 2021, the commission reported retailers had generated $844 since the year started.

Transition From Medical To Adult-Use Sales

The transition from medical to adult recreational use typically leads to a doubling or even tripling of revenues “almost overnight,” according to Vivien Azer. Azer is a senior Wall Street research analyst and managing director at Cowen covering the emerging marijuana sector.

Azer said the pandemic increased marijuana sales with people on lockdown and having more disposable income. But she added consumption trends have now started to normalize.

“Not only is the industry growing by migrating current consumers out of the illicit market into the legal market,” Azer said. “But you’re also engaging consumers that have probably tried the product once in their lifetime, but then moved away from the category. But they have permission to reengage with the category now that it’s legal,” she said.

Alcohol Use Steady; Cannabis Use Skyrocketing

Tax data show alcohol consumption is hardly plummeting. But the meteoric rise in marijuana illustrates changing attitudes around recreational alcohol and Cannabis use.

“I think that people are looking for an alternative to make them feel better,” said Mikayla Bell, community outreach manager for NETA, one of the largest cannabis retailers in the state. “Oftentimes people are turning to alcohol for relief. And now they found another product with without the hangover, without the calories.”

Bell said the general public is becoming more comfortable with the idea of adult-use Cannabis. This holds true even if they’re not using it themselves, she said.

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