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  • Mamaroneck Observer

Follow the Money - Sales Tax Revenue from Marijuana Sales Explained - Part 2

As reported previously, the Village Board of Trustees voted 4:1 on November 8, 2021, to opt out of allowing cannabis retail dispensaries and on-site cannabis use sites to operate within the Village. Mayor Murphy was the lone “no” vote.

By voting to “opt out” the Village Board may re-visit their decision in the future.

How much sales tax revenue would the Village receive if a future Village Board wanted to change that decision and allow retail cannabis sales?

Cannabis retailers (dispensaries and on-site use lounges) must charge 13% sales tax on retail sales. NYS keeps 9% with 4% going to local governments. Of that 4% Westchester County receives 1% and the remaining 3% is split between the Town (either Mamaroneck or Rye depending on where the business is located) and the Village. The amount of the split is based on an agreement between the Town and the Village. If there’s no agreement the split is even. In other words, the Village would receive only 1.5% of the total retail sales within its borders.

This revenue would be a windfall to the Town(s) since policing and zoning issues are up to the Village.

Allowing these businesses to open in the Village would bring people to the Village and add more jobs. It would also provide convenient access to cannabis products for people who live in the Sound Shore area.

But along with the sales tax revenue comes potential additional costs and unanticipated pitfalls. Sales of cannabis are still illegal under Federal law, so it remains primarily a cash business. That could make establishments vulnerable to theft.

While it’s too soon to tell and there’s not enough data from other communities, there could be other financial impacts to the Village. Depending on the location of the business, there could be additional parking revenue and/or an increased demand for police resources and police staffing.

Based on reported first day sales in CT, a retail cannabis establishment could be expected to reach $13 million dollars in annual sales. If similar sales happened here the Village would receive $195,000 (1.5% sales tax rate) in additional sales tax revenue. But it’s reasonable to think the Village could have additional costs including policing.

And once a community “opts in” they may not later “opt out” if circumstances change and they find the business undesirable – or too expensive to police.

A review of the zoning code is also recommended in order to control where, when and how a cannabis business may operate - but undue burdens cannot be imposed.

Elected officials should be thoughtful about the future of cannabis sales in the Village and, if they decide to move forward, do it cautiously.


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