Cannabis commission defends pace of pot shop openings and lower-than-expected tax revenue
The chairman of Massachusetts’ cannabis commission is defending the agency after a lawmaker criticized the lower-than-expected tax revenue generated for the state and the slow pace of licensing marijuana businesses.
In a letter sent Thursday to state Representative Mark Cusack, commission head Steven Hoffman said the launch of Massachusetts’ marijuana industry has been “relatively smooth and incident-free,’’ compared to other states that legalized marijuana at the same time.
Cusack, in his own letter to Hoffman in June, criticized the agency’s progress on generating tax revenue and questioned why state cannabis leaders had not been able to deliver on the revenue promised.
Hoffman responded that collecting taxes was undoubtedly important, but it should not take priority over other responsibilities of cannabis commissioners, like efforts to enhance public safety, cut down on the illicit market, and keep marijuana out of the hands of children.
“While the generation of tax revenue for the state and its municipalities was a clear objective of the law, Nowhere in the statute does it state that maximizing tax revenue, particularly in the short term, should dominate the other objectives,” he wrote.
In his own letter, Cusack, the House chairman of the Joint Committee on Revenue, requested information about the agency’s licensing processes, tax revenue projections, and its role in certain municipality decisions. Cusack also included more than two dozen questions and asked Hoffman to respond within three weeks.
Most notably, Cusack, who is also the former chairman of the Joint Committee on Marijuana Policy, questioned why expected tax revenue had fallen short.
Cusack wrote on June 27 that with just days left in the fiscal year, the state had collected about $29.9 million in marijuana tax revenue, about $33 million less than projected. The goal for fiscal 2020 will rise to $132.5 million.
“If a contributing issue was the speed at which the rollout occurred, then one would think a system would be in place — with an adequate number of well-trained staff and inspectors — to streamline and get more retailers up and running at a faster pace, while keeping safety and the consumers in mind,” Cusack wrote.
The state collects 17 percent in tax revenue from marijuana sales — a 6.25 percent sales tax and an additional 10.75 excise tax.
Marijuana tax revenue is expected to grow as more businesses open, Hoffman said, also pointing out that many of Massachusetts’ 351 cities and towns have placed bans on marijuana establishments, or on marijuana retail stores exclusively, hindering some progress.
The commission has sent out a voluntary survey to all municipalities to determine how many have banned marijuana establishments and is still waiting to hear back from some cities and towns.
Meanwhile, Hoffman said, as commissioners worked to set up the initial framework for the marijuana industry, they did their best to weigh the concerns of all participants, while placing a priority on consumers and patients.
All of this, he said, took time.
“I feel we have done a good job balancing the oftentimes conflicting perspectives of these groups and are continuing to stand up a marketplace that will work for all,” Hoffman wrote in his 13-page response, which also had several documents attached.
Cusack said Friday that he and his staff were still reading through Hoffman’s response.
In his letter, Cusack also expressed concern about the roadblocks some prospective companies are facing when seeking approval to open from cities and towns. He criticized the commission for “allowing” certain municipalities to block medical dispensaries from converting to stores that sell both medical and adult-use marijuana products.
Although he didn’t name any city or town, his concern referred to cities like Cambridge, where a recent proposal from two city councilors would bar medical dispensaries from opening for recreational sales for the first two years.
This, Cusack said, is evidence that “municipalities are once again disregarding the law in order to prevent their openings.”
But Hoffman said it’s beyond the commission’s authority to dictate what municipalities do. The commission voted 4-1 in August 2018 that it “does not have the authority to review or regulate host community agreements,” the contracts that must be signed between marijuana establishments and municipalities before the company is approved to open by the state.
Overall, Hoffman said the commissioners know there’s still a lot of work to be done, but are proud of what they’ve accomplished.
“We are committed to doing everything we can to meet all the objectives of the legislation,” Hoffman wrote.
Read Hoffman’s full response to Cusack’s letter. On pages 6-13, the questions are in Cusack’s words, and responses are from Hoffman (If you are reading this on mobile and can’t see the letter, click here.):