Connecticut Marijuana Business

What is the Demand for Marijuana in Connecticut?

Although the Connecticut Department of Protection (DCP) has no official sales figures for medical marijuana in the state, the number of medical marijuana patients has increased over the years. This increase indicated a continual rise in the demand for medical cannabis in the state. As of March 2023, there were about 50,000 patients and caregivers registered under the Connecticut Medical Marijuana Program (MMP). Fairfield County had the highest number of registered patients in the state's MMP, with almost 11,000 patients.

Connecticut legalized recreational marijuana in July 2021, but legal sales did not begin until January 10, 2023. According to the news, Connecticut dispensaries made over $250,000 on the first day of recreational marijuana sales. Experts in the marijuana industry have projected recreational cannabis sales in Connecticut to hit between $300 million and $370 million and grow to about $800 million by FY 2026. In January 2023, Connecticut recorded $5.1 million in sales for adult-use marijuana and $8.2 million for medical cannabis. Between January and March 2023, both medical and adult-use marijuana sales have grown significantly. In March, the state recorded $12.6 million in sales for medical marijuana and a revenue of $9.6 million for adult-use marijuana.

How is Marijuana Taxed in Connecticut?

Medical marijuana does not qualify for the prescription medicine tax exemption in Connecticut. It is subject to the state's sales and use tax. Cannabis patients in the state are required to pay a 6.35% sales tax whenever they buy medical marijuana. Medical cannabis is not subject to excise tax in Connecticut.

The sale of adult-use marijuana in Connecticut is subject to a 6.35% sales tax and another 3% sales tax for the municipality where the actual cannabis sale happens. Additionally, Connecticut imposes a statewide cannabis tax on retail sales of cannabis edible products and marijuana plant materials. The statewide cannabis tax is charged based on the amount of THC per milligram on retail sales of cannabis by micro cultivators, cannabis retailers, or hybrid retailers. Depending on the cannabis products, the statewide cannabis tax rate varies and includes the following:

• 2.75% per milligram of total THC displayed on the product label in marijuana edible products

• 0.625% per milligram of total THC on the product label for marijuana plant materials

• 0.9% per milligram of total THC reflected on the product label for cannabis other than marijuana plant material or cannabis edible products

According to the Connecticut recreational marijuana law, the Responsible and Equitable Regulation of Adult-Use Cannabis Act (RERACA) during the first two fiscal years (2022 and 2023), 100% of the tax revenue generated from retail cannabis sales will go to the Cannabis Regulatory and Investment Account. It will support the administrative costs, especially those incurred in implementing the state's recreational cannabis law. In subsequent years, the tax generated from retail marijuana sales will be distributed as follows:

• In the fiscal years (FYs) 2024 to 2026:

  • General Fund - 15%

  • Prevention and Recovery Service Fund - 25%

  • Social Equity and Innovation Fund - 60%

• In the FY 2027 to 2028

  • General Fund - 10%

  • Prevention and Recovery Service Fund - 25%

  • Social Equity and Innovation Fund - 65%

• For 2029 and subsequent years:

  • Prevention and Recovery Service Fund - 25%

  • Social Equity and Innovation Fund - 75%

What is the Agency Taxing Marijuana Business in Connecticut?

The Connecticut Department of Revenue Services (DRS) taxes marijuana businesses, among other enterprises, in Connecticut. The DRS requires each cannabis retailer, micro cultivator, or hybrid retailer in Connecticut to register under the Department before they can legally sell cannabis. They can do so by contacting the DRS at (860) 541-3286 between 8:00 a.m. and 4:30 p.m., Mondays through Fridays, or via email. Each cannabis retailer, micro cultivator, or hybrid retailer is required to pay the statewide cannabis tax for the privilege of selling cannabis products in Connecticut. However, rather than bear this cost, state law allows them to collect the tax from their customers at the time of sale.

For each month they transact business in Connecticut, the DRS requires each cannabis retailer, micro cultivator, or hybrid retailer to file cannabis tax returns and other associated payments on or before the end of the month following the month covered by the said return. Any cannabis business that fails to pay its cannabis tax return as and when due is subject to a $250 or 25% of the total amount due and unpaid, whichever is greater. For cannabis tax-related matters in Connecticut, interested persons can contact the DRS at:

Department of Revenue Services

450 Columbus Blvd.

Suite 1

Hartford, CT 060103

(860) 297-5962