MERIDEN — The city collected $22,345 in cannabis sales tax in January and is scheduled to receive $29,240 based on February’s gross sales from customers at Zen Leaf, the city's only adult-use cannabis hybrid retailer.
The Finance Committee last week made a projection for the year based on anticipated sales and agreed to include $180,000 in expected revenue in the 2023-2024 budget.
“It’s going in the general fund on a revenue line,” said Finance Committee Vice Chairman Dan Brunet. “It’s included with cell phone tower revenue. Quite often these revenue lines are guesstimates, like, say, the revenues from the City Clerk’s office.”
The committee had no historical data and only two months of any trend, Brunet said. But city officials looked at other facilities and felt comfortable $180,0000 was a conservative estimate.
Mayor Kevin Scarpati said he believed the real number could be higher given that two more dispensaries are approved at two other city sites. However, city Finance Director Kevin McNabola argued that other dispensaries opening in towns and cities outside of Meriden could draw away some of the local business.
“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. But Kevin’s argument is the revenue starts high and could taper off.”
The three percent tax revenue collected on adult-use recreational cannabis sales was offered by the state as an incentive to municipalities to host dispensaries. Meriden passed zoning provisions to allow three retail dispensaries, three micro-cultivation facilities and three large production facilities. Only Zen Leaf, formerly Willow Brook Wellness, on East Main Street is fully operational for both medical and recreational sales. Recreational sales began on Jan. 10, 2023.
According to the state Department of Consumer Protection, the adult-use cannabis and medical marijuana totaled more than $22 million for the period from March 1, 2023 to March 31, 2023. The amount has risen steadily since topping $5 million in January.
In March, medical marijuana patients purchased 339,062 products and adult-use transactions consumers purchased 234, 974. The average product price for medical marijuana patients was $37.06, and $40.69 for adult-use products. Medical marijuana patients do not pay taxes on the purchase of their medicine, according to the DCP.
State law says 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.
Cities and towns may use their added revenue for the following:
■Streetscape improvements and other neighborhood developments in communities where cannabis / hybrid retailers or micro-cultivators are located.■Education programs or youth employment & training programs in town.■Services for town residents who were released from custody, probation, or parole.■Mental health or addiction services.■Youth service bureaus & municipal juvenile review boards.■Community civic engagement efforts.