Revenue from the city’s first cannabis retailer has so far brought Meriden more than $20,000 in sales tax revenue a month. Projections of continued revenue from this revenue stream remain volatile, and top financial officers are cautious about the credibility of the city’s potential revenue from marijuana sales. However, the mayor expressed a positive outlook on the potential for continued, and possibly increasing, cannabis-related revenues available for urban use.
According to an article by Mary Ellen Godin in The Record Journal, the city collected a $22,345 cannabis excise tax in January, resulting in a total of $22,345 in February gross produced by Zen Reef, the city’s only adult cannabis hybrid retailer. He said he will receive $29,240 from sales.
The Finance Committee recently agreed to base this year’s forecast on projected sales and include $180,000 in projected sales in the 2023-2024 budget. But city finance director Kevin McNavola warned that pharmacies have opened in surrounding cities and towns and that they could take some business away from Meriden. Finance Committee Vice Chairman Dan Brunett said there was no historical data and only two months’ worth of information was available. But Godin said city officials were considering other facilities and were relieved that $180,000 was a conservative estimate.
Mayor Kevin Scarpati said he believes the actual number could be higher considering two more pharmacies have been approved at two other facilities in the city.
Godin said state law states that for marijuana products, “all purchases are subject to a 6.35% state sales tax, a 3% city tax, and a state cannabis tax of approximately 10-15% based on THC content. It is explained that Early state revenues will be donated to agencies and programs that have implemented cannabis retail markets. The state expects about $75 million in tax revenue by 2026. ”
Proceeds can be used for a variety of needs, such as landscaping streets where cannabis/hybrid retailers are located. education programs or youth employment and training programs; Mental health and addiction services, to name a few possibilities.
“I really didn’t know what to expect when budgeting for this new income,” Scarpatti said. “It was important to include the numbers in the new budget window. Not only was this appropriate, but from January 2023 he was able to include forecast figures through June 2024. I think we can go a little further north than that.”
The city has plans for other marijuana retailers, which are off to a good start with tax revenue from Zen Leaf. In the early stages of recreational cannabis legalization, this looks like a sustainable source of funding for the city’s future.