Marijuana Revenues Fall Short — Industry Reps Project ‘Dramatic Uptick’

(CT Examiner)


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Stamford has received its first tax checks from the sale of marijuana by two retailers doing business in the city.

The amount totals $77,553. 

Fine Fettle, which operates on Research Drive, wrote the city a check for $65,333. CuraLeaf, on East Main Street, wrote a check for $12,220. 

“The towns have been sending us bills,” said Ben Zachs, Connecticut chief operating officer for Fine Fettle, which has three other shops in the state. “Some send the bills quickly and some are taking a little longer.”

Connecticut began charging the tax on Jan. 10 for recreational marijuana only – medical marijuana sales are tax-free.

The state collects its 6.35 percent sales tax on marijuana and allows municipalities to charge 3 percent. The state collects another 10 percent to 15 percent in taxes depending on the potency of the marijuana sold.

The Department of Revenue Services reported this month that Connecticut collected $3.2 million in sales tax revenue in four months, January to April.

In 2021, when the state legalized sales of recreational marijuana, the Office of Fiscal Analysis estimated that marijuana sales would bring in $20.4 million in tax revenue in the first full year of operation. 

That would come to $6.8 million for four months.

But the $3.2 million in state tax revenue generated between January and April is less than half that.

It’s a partial representation of what the nascent industry will produce, said Adam Wood, president of the Connecticut Cannabis Chamber of Commerce.

“We are in the first phase of recreational marijuana sales. There will be a dramatic uptick in sales and tax revenue as the market expands,” Wood said. “Now, the ones that are operating are the medical dispensaries that converted over to recreational sales. But there will be much more activity once all these other license applicants come online.”

The state Department of Consumer Protection is still awarding licenses in a number of categories, including retailer, micro-cultivator, delivery service, manufacturer, packager, food and beverage products, and more.

Most license types are awarded by lottery, with half reserved for “social equity” applicants who go through a separate lottery. The state created a Social Equity Council to open up the legal marijuana industry to people who live in communities that were disproportionately harmed by past criminalization of marijuana.

“The Social Equity Council will be redistributing money to disproportionately affected areas. So millions of dollars in revenue will be coming back to cities like Stamford, to be spent on efforts to improve quality of life in those areas,” Wood said. “The actual impact on a community such as Stamford will be greater with that piece than with the tax revenue piece.”

That will happen in the next several months, he said.

“The industry will see a lot of evolution in the next year,” Wood said.

Zachs, the COO of Fine Fettle, agreed.

“It’s definitely a new program in Connecticut; there are things that need to mature in the market. Sales are good across the state but we expected them to be 15 percent to 20 percent higher,” Zachs said. “We need more operations on the cultivation side. We have enough overall product in Connecticut, but we don’t have enough variety. With gummies and edibles, for example, we’re still in the early stages of production.”

At the Stamford store, “demand has been solid. We are growing month over month, but we’re not bursting at the seams,” Zachs said. “There’s room for growth.”

In Stamford and elsewhere, the legalization of recreational marijuana has spurred a proliferation of smoke shops. Many are unlawfully selling marijuana, capitalizing on consumers not knowing who is licensed to sell marijuana and which products are legal. 

In April state Attorney General William Tong launched a statewide crackdown on smoke shop sales of illegal products.

This month the state Connecticut Legislature voted to close a loophole that allows smoke shops and other stores to sell cannabis products that exceed the state’s legal limits.

“It has been a legal gray area,” Zachs said. “There has been an over-saturation of products that are coming from states where there is too much supply, so they try to get it onto shelves in other states. Setting up a system to manage that is really important.”

A representative of CuraLeaf, Stamford’s other marijuana retailer, could not be contacted Thursday. A woman who answered the phone at the East Main Street store said to fill out a request for comment on the company’s website, but that did not elicit a response.

According to business news websites, CuraLeaf, based in Wakefield, Mass., operates in 19 states and is the biggest cannabis company in the U.S., and one of the largest in the world.

Stamford Grants Officer Anita Carpenter said the $77,553 collected from CuraLeaf and Fine Fettle will go into a special revenue account for uses that meet requirements stipulated by the state, including street and other improvements “in communities where cannabis retailers, hybrid retailers, or micro-cultivators are located.”

Other statutory uses include education programs; youth employment and training programs; services for individuals who served prison time, or time on probation or parole; mental health or addiction services; youth services; and civic engagement efforts.

The Board of Finance has approved the receipt of the $77,553, and the Board of Representatives is expected to do the same at its July meeting. Specific uses of the money must go back through the boards for approval. 

A third marijuana retailer, Sweetspot, has an application pending before the Stamford Zoning Board to open a store in the shopping center at Bull’s Head. The proposal has met opposition from neighboring residents and business owners. The Zoning Board is scheduled to take up the application again at its June 26 meeting.

Angela Carella

For 36 years prior to joining the Connecticut Examiner, Angela Carella was a beat reporter, investigative reporter, editor and columnist for the Stamford Advocate. Carella reports on Stamford and Fairfield County. T: 203 722 6811.