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Marijuana Retail Taxes FAQs

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.

Updated: September 13, 2021

Table of Contents

Where can I find information on cannabis licensing?

The Massachusetts Cannabis Control Commission has information related to cannabis licensing. To learn more, visit the Commission's Licensing page.

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. 

  • Once logged in, select the More… tab.
  • Select Add an Account, New Location or New License in the Access section.

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. 

Need Certificate of Good Standing for retail license if done for registered marijuana dispensary?

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 Notice to Commence Operations from the CCC, you will register for marijuana retail taxes on MassTaxConnect. We suggest you wait to register until you have this final document, and are ready to begin selling product, as a tax 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?

You can file your marijuana taxes like any of your other taxes. Once you have created a MassTaxConnect online account, log in to your account.

  • From the Summary tab, locate the account hyperlink for the tax you wish to file. 
  • To file for the most recent period, select the File Now hyperlink. 
  • For other periods, select the Returns hyperlink in the Account panel. 

What activity do I report on the marijuana tax return?

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

Will all marijuana retail 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. Do not report sales of medical marijuana on the marijuana tax 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 Massachusetts Cannabis Control Commission. Sales of medical marijuana should not be reported on the marijuana tax return. (Updated: 9/13/21)     

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 in advance, but are ultimately due monthly on or before the 30th day following the month represented by the return. 

To learn more, visit New Due Date for Sales and Use Tax Returns.

New! Advance payment requirements for: Sales and use, Sales tax on services, Meals, Room occupancy excise, and Marijuana retail 

Beginning April 2021, a provision in the FY21 budget requires that taxpayers with over $150,000 in cumulative tax liability in the prior year will be required to make advance payments. To learn more, visit New Advance Payment Requirement for Vendors and Operators in G.L. c. 62C, § 16B.

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.

If you don’t have a retail license, how do you apply marijuana retail taxes to sales of marijuana?

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.  

Where can I find information on marijuana delivery businesses?


(FAQ added August 2, 2021) 
I own a marijuana business that has a marijuana delivery operator or marijuana courier license, or is a marijuana establishment with a delivery endorsement from the Cannabis Control Commission.  Do I have to collect and remit the marijuana retail taxes on my deliveries of marijuana and marijuana products to consumers? (For purposes of this FAQ, “marijuana” includes both marijuana and marijuana products.)
 

Marijuana delivery operator licensees and marijuana establishments with a delivery endorsement must collect the marijuana retail taxes on marijuana they sell and deliver directly to consumers. Before selling and delivering marijuana directly to consumers, marijuana delivery operator licensees and marijuana establishments with a delivery endorsement must register as vendors with DOR and collect and remit the marijuana retail taxes.

Marijuana courier licensees are only authorized to deliver marijuana to consumers on behalf of a marijuana retailer and are not allowed to sell marijuana directly to consumers. Therefore, for sales of marijuana delivered by a marijuana courier licensee on behalf of a marijuana retailer, the marijuana retailer is the entity required to collect and remit the marijuana retail taxes. A marijuana courier licensee is not required to register with DOR as a vendor or to collect and remit the marijuana retail taxes.    

(FAQ added August 2, 2021) 
My marijuana business sells and delivers marijuana directly to consumers.  Which city or town’s local option tax do I collect and remit?
 

All marijuana retailers, marijuana delivery operators, and marijuana establishments with a delivery endorsement use their host community to determine the local option tax that applies to their sales and deliveries of marijuana. Therefore, marijuana delivery operator licensees and marijuana establishments with a delivery endorsement collect and remit the local tax option imposed by their host community on all their sales and deliveries of marijuana directly to consumers.

For a sale of marijuana delivered by a marijuana courier on behalf of a marijuana retailer, the marijuana retailer collects and remits the local tax option imposed by its host community.  

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.

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