Net marijuana taxes in Newton estimated to range from $291k-$700k

Government agencies have estimated how much net tax revenue Newton can expect to add to its budget from recreational marijuana stores if they come to Newton. These estimates range from a low of $291,000 by the Massachusetts Department of Health and a high of approximately $600,000-$700,000 by the Mayor’s office.

The Massachusetts Department of Health has done an analysis on the subject of potential local tax revenues for recreational marijuana stores in a report produced by UMass, Mathematica Policy Research and JSI Research. This report finds, “the estimated median local tax revenue over the first two years of retail sales ranges from $72,835 in suburban communities with a low population density, to $582,899 in urban communities with a high population density.” Since these projections are over two years, then the high end estimate would be approximately $291,449 annually.

Jonathan Yeo with the Newton Mayor’s office is estimating that 3% sales taxes from recreational marijuana sales (medical marijuana sales are not taxed) could be as high as $700,000 per year and Community Impact fees the city will negotiate in Host Community Agreements with retailers could add an additional $1.3 million per year for a total of $2 million.

However, according to the Cannabis Control Commission' Guidance on Host Community Agreements, the $1.3 million from Community Impact fees are earmarked to reimburse Newton for direct expenses that Newton will incur from hosting retail recreational marijuana stores, and cannot go into the general fund for other purposes. Allowed expenses from the Community Impact fees include things such as police details to direct traffic around stores, inspections of stores, traffic studies for stores, etc. It can also be used to fund substance abuse prevention programs, but only during the initial years of hosting stores. After that, the cost of any such substance abuse programs would have to come out of general funds, and would reduce the net amount of taxes expected to go into the budget. If Newton’s direct expenses for hosting stores are less than the estimated $1.3M, then the amounts collected from Community Impact fees would have to be adjusted downward when the Host Community Agreement contracts with retailers are renewed every 5 years, according to the CCC.

Newton has a ballot question on November 6 to ban retail recreational marijuana stores in Newton, put on after a 6800 signature petition by Opt Out Newton. If the measure passes, then Newton will lose out on the $291k-$700k in estimated tax revenue. However, the loss of the Community Impact fees will have no impact since they would have only been allowed to reimburse costs directly related to stores. These expenses won't exist if there are no stores.