related to

Guide Marijuana Retail Taxes FAQ

Massachusetts voters passed a ballot initiative in November, 2016 legalizing adult use marijuana in the state. As of July 1, 2018, the Massachusetts Department of Revenue will collect tax on the sale of adult use marijuana by licensed facilities. Within this guide you will find answers to frequently asked cannabis questions.

This guide is not designed to address all questions which may arise nor to address complex issues in detail. Nothing contained herein supersedes, alters or otherwise changes any provision of the Massachusetts General Laws, Massachusetts Department of Revenue Regulations, Department rulings or any other sources of the law.

Where can I find information on cannabis licensing?

The Massachusetts Cannabis Control Commission has information related to cannabis licensing. You can visit their site at: https://mass-cannabis-control.com/licensing/

How long does it take to get a cannabis license?

The approximate timeframe is 90 Days. If more than 90 days have passed, contact the Cannabis Control Commission.

What is a Certificate of Good Standing and how do I get one to apply for a cannabis license?

Individuals, corporations, and other organizations often need proof that they are in good standing with the Commonwealth, i.e., all tax liabilities have been met, in order to obtain financing, sell their business, renew licenses, or enter into other business transactions.

You can get a Certificate of Good Standing by visiting MassTaxConnect and selecting the “Request a certificate of good standing” link.

Learn more with Request a Certificate of Good Standing.

If you have no tax activity history in Massachusetts, follow the same procedure through MassTaxConnect and you will receive a Certificate of Good Standing/Tax Compliance Request Status letter that can be submitted with your application.

Should I renew my information every year?

Yes. Each licensee is required to renew their Certificate of Good Standing and cannabis license annually.

If I’m an existing business taxpayer, can I add my new marijuana tax type to my account?

Yes, when you receive your cannabis license, log in to MassTaxConnect, on or after July 1, 2018. Once logged in, you will notice an I Want To section, at the right hand of the screen. Select Add Account Type/New Location. If you want to register for Marijuana Retail Taxes using one of your pre-existing Sales or Meals tax locations on MassTaxConnect, the address of the license and the address of the pre-existing location must match.

If I’m already a registered marijuana dispensary (RMD) and would like to apply for a retail license, do I need to apply for a new Certificate of Good Standing?

Yes. A new Certificate will need to be submitted for any type of new license or renewal of an existing license.

When do I register on MassTaxConnect now that I have my cannabis license?

When you receive your final cannabis license, you will register for marijuana retail taxes on MassTaxConnect. We suggest you wait to register until you have your final license [rather than your provisional license]and are ready to begin selling product, as a filing expectation will be triggered once you do register. However, if you have employee withholding taxes prior to selling retail products, you will want to register to file returns and pay withholding tax. From the MassTaxConnect homepage, click the Register a new taxpayer link, select the appropriate hyperlink for your tax situation, and follow the links through the registration.

How do I file my marijuana tax return?

Once you have established a MassTaxConnect online account, log in to your account. From the Accounts tab, click the Account hyperlink for the tax you wish to file. Select the Period hyperlink for the desired period. Click the File or amend a return hyperlink in the I Want To section.

What activity do I report on the marijuana tax return?

Sales of marijuana products only. The sale of accessories, and any other items not containing marijuana, will be reported on the standard sales tax return.

Will all marijuana taxes be reported on the marijuana tax return?

Yes. Only one return is necessary. There will be a calculation for the sales tax, excise tax, and local option tax on the same return.

Is medical marijuana subject to tax?

In general, a sale of medical marijuana to a purchaser is not subject to tax, as long as the purchaser presents his or her Medical Use of Marijuana Program ID Card and valid government-issued identification at the time of sale. In addition, the marijuana retailer must verify at the time of sale that the purchaser is certified and registered with the Department of Public Health.      

Are business expense deductions allowed for marijuana businesses?

While Massachusetts legalized the licensed sale of marijuana, marijuana remains federally classified as a Schedule I controlled substance and is illegal to traffic under Federal Law. Under Internal Revenue Code § 280E, trade or businesses that traffic in controlled substances are prevented from claiming any trade or business deductions provided by the Internal Revenue Code, other than for the cost of goods sold. Because Massachusetts generally follows the trade or business deductions provided by the Internal Revenue Code, businesses engaged in marijuana-related activities may not deduct trade or business expenses for Massachusetts business tax purposes either.

Can a marijuana business deduct the cost of goods sold?

Yes, while Internal Revenue Code § 280E prevents a marijuana business from deducting trade or business expenses, marijuana businesses may deduct the cost of goods sold. For more information about determining the cost of goods sold for a marijuana business, please see guidance issued by the Internal Revenue Service.

When are my payments due?

Payments can be made throughout the month, but are ultimately due on the same date as the return, which is the 20th day of the following month.

Can I make my payments online?

Yes, payments can be made on MassTaxConnect. If you choose cash voucher in MassTaxConnect, you will be directed to the voucher that is required with the payment. The cash payment instructions will have detailed information as to how, where, and when you can make the payment, including making an appointment 24 hours in advance.  

Can I use an armored car service to deliver a payment?

Yes, if an armored car company offers the service, and is one of the major licensed and bonded providers, that is certainly an option for you. Major providers include Brinks, Garda, Loomis and Dunbar. Please notify DOR that you will be using an armored car service when making your appointment.

Can I pay with a credit card?

Yes.

Can I pay by check or money order?

Yes, print the completed voucher and mail a check or money order to the address on the voucher. Be sure to include the voucher in the mailing. 

What happens if I pay late?

Penalties and interest (according to M.G.L. c. 62C) will be imposed for late filing and payment.

How do the marijuana retail taxes apply to sales of marijuana by marijuana establishments that don’t have a retail license?

The marijuana excise and marijuana local tax option are only imposed on sales by marijuana retailers to individual customers. However, the sales tax applies to sales of marijuana at the wholesale level in the same manner as all other industries involved in the sale of tangible personal property.   

In general, all sales of tangible personal property in Massachusetts are presumed to be retail sales subject to tax, unless the sale is a sale for resale or otherwise exempt from tax.  A seller can prove that a sale of tangible personal property is a sale for resale or exempt from tax by accepting either a resale certificate (Form ST-4) or an exempt use certificate (Form ST-12), respectively, in good faith. For more information as to how a seller may accept these certificates in good faith, please see the Department’s “Resale and Exempt Use Certificates” regulation, 830 CMR 64H.8.1. Additional information about the Massachusetts sales tax may be found in the Massachusetts Sales and Use Tax Guide.   

A sale by a marijuana establishment, such as a marijuana cultivator, cooperative, product manufacturer, or transporter, of marijuana is similarly presumed to be a sale for retail. However, a marijuana establishment may also show that a sale of marijuana to another marijuana establishment is (1) a sale for resale by accepting in good faith a resale certificate (Form ST-4) presented by the marijuana establishment; or (2) a sale for an exempt use by accepting in good faith an exempt use certificate (Form ST-12) presented by the marijuana establishment. Possible exempt uses include the sale of marijuana for use as materials in manufacturing, agricultural production, or for research or development.  

Who can I call if I have questions?

If you have questions specifically related to licensing or general cannabis questions, please contact the Massachusetts Cannabis Control Commission at (617) 701-8400.

If you have marijuana tax filing, payment or registration related questions, please contact DOR’s Miscellaneous Excise Tax Division at (617) 887-6665.

If you have a question related to a city or town adopting the local option tax on retail sales of marijuana, please contact the Municipal Databank by phone at (617) 626-2384, email at databank@dor.state.ma.us, or fax at (617) 660-7023.

Feedback

Did you find what you were looking for on this webpage? * required
We use your feedback to help us improve this site but we are not able to respond directly. Please do not include personal or contact information. If you need a response, please locate the contact information elsewhere on this page or in the footer.
We use your feedback to help us improve this site but we are not able to respond directly. Please do not include personal or contact information. If you need a response, please locate the contact information elsewhere on this page or in the footer.

If you need to report child abuse, any other kind of abuse, or need urgent assistance, please click here.

Feedback