Recreational cannabis brought in millions last year. Maine towns could finally get a cut.

Maine’s recreational cannabis market has raked in millions of dollars in state tax revenue, and after almost five years, the municipalities overseeing the businesses could finally receive their share of the pot.

The Legislature’s Veteran’s and Legal Affairs committee on Wednesday heard testimony in support of two bills that would implement revenue sharing across Maine’s cannabis industry, meaning towns and cities that allow recreational businesses could receive a portion of the tax revenue they generate. Legislators hope the bills will encourage more towns and cities to allow cannabis shops and help them recoup the costs of overseeing the recreational program.

But the bills face an uphill battle. This isn’t the first time — or even the third — that revenue-sharing has been proposed for the highly taxed industry.

The two bills take different approaches to spreading the wealth.

The bill proposed by Rep. Jeffrey Sean Adams, R-Lebanon, would give 10% of the money credited to the Adult Use Cannabis Public Health and Safety and Municipal Opt-in Fund to municipalities that have opted to permit any type of recreational cannabis business, not just shops. Communities are not required to report when they’ve opted-in, but the Maine Office of Cannabis Policy estimates there are about 128 that have. The money would be distributed equally. It was not clear Wednesday how much money is currently in the fund.

Meanwhile, the bill proposed by Rep. Adam Lee, D-Auburn, would have 12% of the revenue from the sales and excise taxes spread among municipalities that have opted to allow recreational businesses. The amount of money per town would be based on the share of the sales revenue generated in each municipality. So, if Portland, for example, generated more money, the city would also receive more money.

Lee said the 12% represents a “thoughtful balance between state revenue needs and local municipal support.”

The expectation of revenue sharing and what that could mean for his city was a key reason he voted in support of the 2016 referendum, he said.

“Auburn has embraced the industry,” Lee said, but “it has received very little in return.”

It’s unclear exactly how much money a municipality would get in either bill, but it could be tens of thousands of dollars. Last year, the state’s 175 shops brought in $243 million, earning the state about $24 million in sales tax revenue alone.

Cannabis products are subject to a 10% excise tax, and the excise tax on cultivators is based on weight and the type of product – $335 for a pound of flower and $94 per pound of trim.

Those taxes could change, however. Gov. Janet Mills is proposing a 40% sales tax increase to 14%. The change is expected to generate nearly $4.2 million in fiscal year 2026 and $11.5 million the following year. The excise tax, meanwhile, could decrease, lowering the charge on flower, for example, to $223 per pound. 

Right now, all the revenue generated by the industry goes to the state’s general fund and none to local coffers.

Legislators have considered revenue sharing multiple times. Different bills have proposed shares ranging from 5% to 25%, but none have been successful.

In 2022, the Legislature passed a bill to reimburse municipalities up to $20,000 for costs associated with opting into the recreational market, but removed a provision that would have given 5% of sales and excise tax revenue to the municipalities.

Lawmakers hoped the reimbursement would encourage more towns and cities to allow retail cannabis sales. Adams’ bill would eliminate the reimbursement program.

At the time, about 60 communities had opted in. In the two years since, that number has increased to about 80, though it’s unclear if the reimbursement was the impetus.

That’s still only about 16% of Maine’s roughly 500 municipalities — a low number that Rep. David Boyer, R-Poland, said creates cannabis deserts, which fuels the illicit market while saturating the communities that permit sales.

“The vast majority of towns in our state do not allow for (recreational) cannabis, but we know that cannabis is being sold every day in the state, whether it’s medical, (recreational) or on the illicit market,” said Boyer, who presented Adams’ bill. “I think towns that are on the fence regarding opting in or not, I think this would definitely put them over the edge and make sure that we have more folks using the regulated market.”

Supporters have argued that the lack of revenue sharing also artificially inflated the cost of cannabis business licenses. For example, a license in Lebanon is $40,000 upfront, with a $20,000 annual fee. In Sanford, it’s $20,000. In Manchester, however, a license is just $100.

But municipal officials have argued that without a portion of the money from the state, the high licensing costs are necessary to recoup the expense of drafting and enforcing the ordinance. Portland, which carries a $10,000 licensing fee, had to hire a cannabis compliance coordinator and an additional licensing assistant to keep up with the demand.

Tammy Smith, who has stores in both the medical and recreational markets, told the committee that the towns she works in have instituted moratoriums on new businesses.

“Since there aren’t very many places that stores can open, they flocked to towns that have opted in,” she said. “It’s become a hassle. It’s burdensome for their towns to cover the cost of yearly relicensing … Having some sort of money coming in, that would help offset their cost.”

The bills have the full support of the Maine Municipal Association. In written testimony, Rebecca Lambert, municipal issues specialist for the association, said cannabis revenue sharing in any capacity would provide much-needed support for local infrastructure, law enforcement, public health initiatives and community programs.

“Fair revenue distribution strengthens local economies and ensures the sustainability of Maine’s cannabis industry,” she said.