Weed sales outpace alcohol for the first time in Massachusetts

Massachusetts cannabis tax revenue is performing better than forecast over a four-year period in the state’s adult-use market. According to the latest available data, Massachusetts collected $74.2 million in marijuana excise taxes — much more than the $51.3 million in alcohol excise taxes it collected.

According to data collected by Gallup polls, liquor sales are continuing the downward trend that began two decades ago, despite a temporary sharp surge in liquor sales amid COVID. Analysts have wondered if there’s a connection between cannabis reform and alcohol sales.

The trends in Massachusetts are no different. Fortune reports that liquor taxes, which are levied on each gallon of alcohol produced, have also remained flat over the past five years, at $0.55 per gallon of wine and $4.05 per gallon of spirits.

Massachusetts collected over $112 million in excise tax revenue from adult cannabis sales in 2021 — 206 percent more than projected — according to a monthly public session presentation of data from the state Cannabis Control Commission.

“This number also underscores the relentless efforts of the entire agency, particularly that of our hard-working employees, to carefully regulate a safe, accessible and effective marketplace for adult use that upholds key principles of our mission – including public health, public safety and Justice others — foremost,” said the commission’s executive director, Shawn Collins, in a statement Jan. 25.

The state collects an excise tax of 10.75 percent on the projected retail price of recreational cannabis in addition to a 6.25 percent state sales tax plus a local tax of up to 3 percent.

Cannabis sales are going much better than expected despite all the hiccups along the way like COVID. However, analysts say the surge in Massachusetts cannabis sales comes as no surprise.

Vivien Azer, a Wall Street research analyst and chief executive at Cowen, who covers the burgeoning cannabis sector, told local news station WCBV that states’ transition from medical cannabis to adult use typically happens “almost overnight.” leading to a doubling or even tripling of revenue.”

The start of recreational cannabis sales in every state is something of a spectacle that needs to be celebrated.

Mikayla Bell, Community Outreach Manager at NETA, one of the largest cannabis retailers in the state. “I think people are looking for an alternative to make them feel better,” Bell told WCBV. “People often turn to alcohol for relief. And now they have found another product with no hangovers and no calories.”

Cannabis sales in Massachusetts hit a milestone last September when state sales surpassed $2 billion.

In the first year of cannabis sales, November 2018-2019, 33 cannabis retailers generated gross sales of $393.7 million. Revenue for the full calendar year 2019 reached $444.9 million.

In 2020, 91 adult-use cannabis retailers made $702 million in gross sales despite being closed for two months due to the pandemic.

Most states levy a relatively high rate of excise duty on cannabis. California’s cannabis tax hike, for example, didn’t go down well with legacy growers. But cannabis isn’t the only industry facing heavy taxes.

Alcohol taxes in Massachusetts could also rise soon. State Representative Kay Khan introduced bill H 2973 to double excise taxes on beer, wine and spirits. The state spends $2.6 billion each year to fight alcoholism and addiction and should consider making the industry pay for it.