Industry analysts say Massachusetts’ recreational marijuana market has great potential. Sales are projected to reach $1.2 billion by 2021 just in Massachusetts.
If sales meet that projection, it will create roughly $240 million in tax revenue for state and local governments, according to Metro West Daily News. New Frontier Data projects $450 million in sales next year, set to begin in July. The firm also projects large sales growth annually.
According to New Frontier Data, the state should earn about $90 million in marijuana tax revenue in its first year.
Beau Whitney of New Frontier Data said, “That’s assuming a relatively smooth rollout of the regulatory infrastructure and assumes demand will build over time through greater participation in a regulated space, and that people will feel comfortable with cannabis in their communities.”
To help make these projections, marijuana use rates from the National Institutes of Health was referenced.
Whitney also said, “There’s already demand there. It’s more of a matter of converting it over from the illicit market.”
The tax on recreational marijuana sales has not been determined. Voters approved a 12-percent maximum tax, but state lawmakers may raise it to 20-percent. A bill was recently signed to allow for state sales tax of 6.25-percent and a 10.75-percent excise tax to also be imposed. Individual communities will be able to tack on an additional 3-percent in local taxes if they choose.
If the 12-percent tax rate stays in place, sales in the state’s first year are estimated to range from $375 million and $696 million, according to the Department of Revenue (DOR). By 2020, the DOR projects sales to reach $747 million to $1.38 billion. Projections were not created at the 20-percent tax rate.
Whitney pointed out that taxing recreational marijuana sales too high still leaves the black market intact. Washington state has the highest recreational marijuana sales tax in the country at 37-percent. Colorado follows behind at 30-percent. Oregon is in the middle with 17-percent with Nevada and California at 15-percent sales tax.
Tom Adams of ArcView Market Research projects that the legal marijuana industry may generate $2.3 billion in total economic activity in the state. This includes projections that almost 17,400 new jobs will be created statewide. Adams also predicts that cross-border sales will be big.
Adams said, “States that are dragging their feet on this are kidding themselves. In 10 years, it’s hard to imagine there will be much state prohibition left, or even federal prohibition.”