In Massachusetts, cannabis now generates more taxes than alcohol

In Massachusetts, alcohol sales are not declining. But cannabis sales are skyrocketing, to the point where, for the first time ever since legalization in 2016, cannabis tax revenues have surpassed those of alcohol.

Since the opening of cannabis in Massachusetts in November 2018, total sales reached $2.54 billion, according to data from the Cannabis Control Commission.

While tax data show that alcohol consumption is barely in free fall, the rise in cannabis consumption bears witness to changing attitudes to recreational alcohol and cannabis consumption.

«I think people are looking for an alternative to feel better,» said to WCVB Mikayla Bell, community outreach manager for NETA, one of the state's largest cannabis retailers. «Often, people turn to alcohol for relief. And now they've found another product without the hangover, without the calories.».

For the first time, excise duties on cannabis have exceeded those on alcohol. Halfway through the fiscal year, the state collected $74.2 million in December 2021, compared with $51.3 million for alcohol.

Cannabis taxes in Massachusetts

The 10.75 % excise tax on recreational cannabis represents only about half of the total tax revenue collected for the cannabis in Massachusetts. There is also a state sales tax of 6.25 %, plus a local tax of up to 3 %. Total tax revenues amounted to $208 million last fiscal year.

According to Vivien Azer, an analyst at Cowen, an analysis agency that covers the cannabis sector, the pandemic has boosted cannabis sales as people are locked in and have more disposable income, but she added that consumption trends have now begun to normalize.

«Not only is the industry growing by migrating existing consumers from the illicit to the legal market. But you're also engaging consumers who probably tried the product once in their lives, then walked away from it, but now have permission to return to it now that it's legal,» she said.