Revenue from the city’s first cannabis retailer has, so far, yielded more than $20,000 a month in sales tax revenue for Meriden. Projections for a continuing income from this source are still in flux and a top finance officer is cautious about the reliability of money the city might see from marijuana sales. However, the mayor expressed a positive outlook on the potential for continued — and possibly increasing — pot-related proceeds available for city use.
The city collected $22,345 in cannabis sales tax in January and is scheduled to receive $29,240 from February’s gross sales generated by Zen Leaf, the city’s only adult-use cannabis hybrid retailer, according to a Record Journal story by Mary Ellen Godin.
The Finance Committee recently made a projection for the year based on anticipated sales and agreed to include $180,000 in expected revenue in the 2023-2024 budget. However, city Finance Director Kevin McNabola cautioned that with dispensaries opening in cities and towns around the area those establishments could draw some business away from Meriden. Finance Committee Vice Chairman Dan Brunet noted that there is no historical data and only two months’ worth of information to go on. However, city officials have looked at other facilities and were comfortable that $180,0000 was a conservative estimate, according to Godin’s story.
Mayor Kevin Scarpati said he believed the real number could be higher given that two more dispensaries are approved at two other city sites.
Godin’s story explains that according to state law, in regards to marijuana products, “every purchase will have a 6.35% state sales tax, a 3% municipal tax, and about 10-15% state cannabis tax based on THC content. Early state revenues will go towards agencies and programs that implemented the cannabis retail market. The state expects about $75 million in tax revenue by 2026.”
The revenue can be used for a wide variety of needs, such as streetscape improvements where cannabis / hybrid retailers are located; education programs or youth employment and training programs; and mental health and addiction services — to name a few possibilities.
“We didn’t really know what to expect when budgeting this new revenue,” Scarpati said. “It was important to include a number in the new budget line. That was not only appropriate, but that we include a projected figure from January 2023 to June 2024. I think we can go a little north of that.”
The city has plans for other marijuana retailers and has seen a good start on tax-generated income from Zen Leaf. At this early stage of cannabis legalization for recreational use, this looks like a sustainable source of future funds for the city.