Montague cautious on marijuana tax revenue

  • 253 Farmacy on Millers Falls Road, as seen in September when it opened as the first marijuana retailer in Montague. Town officials hope to set the revenue generated from the business through taxes and a special “impact fee” aside into a separate fund to be put toward capital projects. Staff File Photo/PAUL FRANZ

  • Jars of marijuana buds on display at 253 Farmacy in Montague. Town officials hope to set the revenue generated from the business through taxes and a special “impact fee” aside into a separate fund to be put toward capital projects. Staff Photo/PAUL FRANZ

Staff Writer
Published: 2/27/2020 6:05:13 PM

MONTAGUE — Legal marijuana is a growing business, in multiple senses of the phrase. But as a source of municipal revenue, it is untested, so Montague town officials are advocating for a conservative approach to handling marijuana money for the foreseeable future.

Montague currently has only one marijuana retailer — 253 Farmacy, which opened in September. The town makes money off 253 Farmacy through taxes and a special marijuana “impact fee.”

Projecting from 253 Farmacy’s revenue in the short time it has been open so far, Town Administrator Steve Ellis estimated that Montague’s yearly revenue from the taxes and fees might be between $180,000 and $240,000.

Half of that revenue can be used however the town wants. The other half, which comes through the impact fee, has legal restrictions from the state on how it can be used.

But with the legal marijuana industry still so new — and likely to change as nearby states relax their laws — Montague’s Selectboard and Finance Committee both have cautioned against incorporating the revenue directly into the town’s operating budget.

“This is not yet known to be a predictable or sustainable revenue stream,” Ellis said. “We understand that the market could go from very robust to very soft in any locality.”

Instead, town officials are proposing the money be held in a separate account, to be drawn from as needed.

To set up that legal infrastructure, there are four articles on the warrant for an upcoming Town Meeting, on March 5, at 6:30 p.m. at Turners Falls High School.

In practice, the half of the money that is not restricted by state law would be put toward capital projects, of which Montague has a “substantial backlog,” Ellis said.

The other half, from the impact fee, can only be used to cover town costs associated with the operation of a local marijuana business, Ellis said — for example, a police presence to deal with increased traffic around the store, educational outreach by the town Health Department or legal fees from the town’s initial permitting of the company.

If town officials are skeptical about the sustainability of marijuana, they are also cautious regarding any growth. Ellis said the town has not been approached by any other potential businesses.

“We wouldn’t speculate on having any other establishments open,” he said.

Reach Max Marcus at mmarcus@recorder.com or 413-930-4231.




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