Northampton nets $1M+ in marijuana revenues

  • The exterior of New England Treatment Access, or NETA, is shown June 27, 2018 in Northampton.

Staff Writer
Published: 7/3/2019 10:42:58 PM

NORTHAMPTON – After reaping $737,331 in revenues from New England Treatment Access in March, the city has received a $1 million-plus windfall from the marijuana retailer on Conz Street.

The Department of Revenue delivered $530,589 in excise tax revenue to the city in June, representing three percent of the gross revenue from recreational marijuana sales at the dispensary in February, March and April.

NETA also delivered a $520,728 community impact fee check to the city in June, money that represents three percent of NETA’s gross recreational marijuana sales from January through March. NETA makes payments to the city quarterly and provides the community impact fee money as outlined in the company’s host community agreement with the city.

Mayor David Narkewicz said more time will be needed to reliably estimate revenues from recreational marijuana sales in Northampton, noting the limited number of retailers in the state today. There were nine retailers open in February, 13 in March and 17 in April across the state.

“We’re still talking about a small universe of retailers,” he said.

He also said it is challenging to make accurate revenue estimates until there are three to five years of data available.

The city’s excise tax revenue from NETA was $168,727.87 in January, $189,680.16 in February and $172,180.99 in March.

Unlike the excise tax money, the community impact fee money must be spent on items that offset the dispensary’s financial impact on the city, such as roads or law enforcement. The fee is part of the city’s five-year host community agreement with NETA, which opened for recreational marijuana sales last November. The company opened initially as a medical marijuana dispensary in 2015 and continues that business.

The City Council voted in May to set up a Marijuana Community Impact Fee Stabilization Fund, which will hold the community impact fee money. Upcoming payments will go into this fund and Narkewicz said that once the community impact fee money from the last two payments has been certified by the state, he will ask the council to transfer it into the fund.

Northampton’s first quarterly revenues from NETA totaled $737,331.40, between the excise tax and community impact fee. The next payments to the city will be at the end of September.

The first two excise tax payments, because they were not factored into the city’s fiscal budget which ended June 30, will have to remain as what is called free cash, which the state Department of Revenue must certify before it is available for use.

“We couldn’t have built it into the FY 2019 budget,” said Narkewicz, saying that there was no way to accurately predict how much marijuana revenue the city would receive.

Narkewicz said that free cash is used for one-time expenses, such as capital improvements. The mayor did not say which capital improvements would be funded by the revenues generated by NETA’s marijuana sales, but he did say that it might result in the city borrowing less.

Future marijuana excise tax payments will be built into city budgets going forward. The current city budget, which began July 1, includes $1.2 million in marijuana tax money.

The mayor said that the state revenue department is encouraging communities to be conservative with their marijuana revenue estimates, and he noted that overestimating will result in a deficit. Any excess revenue beyond what is estimated will go into free cash.

The mayor said that, without factoring in the marijuana revenue, the city might have asked for a property tax override for the current fiscal year. Currently, the mayor intends to ask for an override for fiscal 2021 to renew the city’s fiscal stability plan.

“It forestalled it for one budget year,” he said of the new revenues from NETA.

Bera Dunau can be reached at bdunau@gazettenet.com




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