Recreational marijuana is subject to sales tax at 6.25%, excise tax at 10.75% at the state level, and up to 3% tax at the local level. The local level tax is distributed to towns and cities that are home to recreational marijuana stores. Marijuana purchased by medical patients is not subject to tax.
In Northampton, tax revenue from marijuana sales goes into the city’s general fund revenue, treated like hotel and motel tax revenue. For the fourth quarter of Fiscal 2020, Northampton is estimating a loss of 33%, or $136,000 in revenue. Adult-use sales in the first quarter of Fiscal 2021, the months of May, June and July, are expected to have a 67% reduction, or $260,965, according to city documents.
“We are using a very conservative revenue estimate for marijuana,” said Narkewicz. “We’re still finalizing some of those projections, but this is definitely one of the industries impacting our revenue significantly.”
For Fiscal 2020, Northampton had estimated adult-use revenue at $1.2 million. In the first and second quarters of Fiscal 2020, the city collected $535,085 and $444,972, respectively, as of figures released in February.
The state’s portion of taxes from retail marijuana in Fiscal 2020 was assumed to be in the range of $93 million to $172 million, with a midpoint of $132 million, according to testimony by state Department of Revenue Commission Christopher C. Harding during a consensus revenue hearing in 2018.
For Fiscal 2020 year to date, there has been $28,984,402 in sales tax, $49,861,350 in excise tax and $13,886,166 in local tax collections from marijuana sales, according to Department of Revenue figures.