Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Cannabis Tax topic
No spam. Unsubscribe anytime.
Cannabis industry pushes flat excise tax to curb cross-border sales and illicit market
Summary
Industry witnesses and retailers told the committee that Connecticut's potency-based cannabis tax is driving consumers to buy across state lines and on the illicit market. Business leaders urged replacing it with a single retail excise near 10.65% to simplify compliance and improve competitiveness with Massachusetts.
Cannabis business owners and trade groups told the Finance, Revenue & Bonding Committee that Connecticut's current potency-based excise tax is too complex and makes legal products less competitive than neighboring states', pushing millions annually out of state or into the illicit market.
"Connecticut currently uses a potency-based tax system," said Kebra Smith Balden, owner of a licensed dispensary. "Depending on the product, consumers can pay up to 35% in taxes." Several retail owners and operators estimated that between $150 million and $160 million of potential legal sales are leaving Connecticut each year for Massachusetts and other jurisdictions where taxes and final retail prices are lower.
Representatives urged lawmakers to pass HB5109, which would replace the THC-potency tax with a single excise percentage on retail sales (advocates referenced 10.65% as a regional alignment target). Business chiefs said the current regime also imposes significant administrative burdens: one operator testified staff spend many hours a month calculating potency bands and reconciling discrepancies with the Department of Revenue Services.
Supporters argued that a flatter tax would make pricing predictable for consumers, reduce compliance costs, help legal retailers win back customers from out of state, and shrink the unregulated market that does not test products or collect taxes.
Lawmakers asked industry witnesses about risks tied to products with higher potency and youth access; witnesses said regulated retailers must follow strict age-verification rules and that lower legal prices would help attract consumers away from unsafe, unregulated sellers.
What's next: The committee heard multiple business owners and industry associations testify in favor of HB5109 and requested additional fiscal estimates and administrative details from state agencies about estimated revenue changes under a flatter excise regime.
