Where will Connecticut’s Marijuana tax go?
NEW HAVEN - Within seven hours of opening adult-use marijuana sales on Tuesday in Connecticut, the state had already reported that $250,000 worth had been sold.
And, because 20% of the price of marijuana is tax, the state is anticipating a windfall of funds.
The 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.
Connecticut and New York are the only states so far that tax based on THC. The tax rate is based on the product’s type and total THC reflected on its label.
Specifically, the tax rate is:
• 0.625 cents per milligram of total THC for cannabis plant material
• 2.75 cents per milligram of total THC for cannabis edible products
• 0.9 cents per milligram of total THC for cannabis, other than cannabis plant material or cannabis edible products.
Based on what you buy, it could be an additional 10-15% in taxes. On top of that, the state has also implemented a sales tax of 6.35%.
The recreational cannabis law outlines where all of the state revenue will go starting this year. For the fiscal years of 2022 and 2023, 100% of the state retail cannabis tax revenue will go to the Cannabis Regulatory and Investment Account to pay costs state agencies to incur in implementing the state’s recreational cannabis law.
For fiscal years 2024-26, 15% will to the state’s general fund, 60% to the Social Equity and Innovation Fund, and 25% to the Prevention and Recovery Services Fund.
The Social Equity and Innovation Fund funds appropriations for access to business capital, technical assistance for business start-ups and operations, workforce education, and community investments. The Prevention and Recovery Services Fund appropriations for substance abuse prevention, treatment, and recovery services and substance abuse data collection and analysis.
In the fiscal years 2027-28, 10% will go to the general fund, 65% to the Social Equity and Innovation Fund, and then 25% to Prevention and Recovery Services. Starting in 2029 and onwards, 75% will go to the Social Equity and Innovation Fund and 25% will go to the Prevention and Recovery Services Fund.
For the 3% municipal tax, the law states cities and towns can spend the money in a number of categories including:
1. Streetscape improvements and other neighborhood developments in communities where cannabis retailers, hybrid retailers, or micro-cultivators are located
2. Education programs or youth employment and training programs in the municipality
3. Services for individuals living in the municipality who was released from DOC custody, probation, or parole
4. Mental health or addiction services
5. Youth service bureaus and municipal juvenile review boards
6. Community civic engagement efforts
Compared to surrounding states that have started recreational marijuana sales, Connecticut has the highest taxes. The state estimates the total tax revenue will be about $73 million by the fiscal year 2026.
