December 12, 2023

Massachusetts Proposes New Tax Regulations Affecting Cannabis Retail and Marketplace Facilitators

By Joseph Feehan, Partner, Tax & Business Services

Massachusetts Proposes New Tax Regulations Affecting Cannabis Retail and Marketplace Facilitators Cannabis

The cannabis industry in Massachusetts is poised for a regulatory shake-up as the Department of Revenue (DOR) introduces proposed changes to the tax collection process for out-of-state remote retailers and marketplace facilitators. With the proposed regulation, 830 CMR 64H.1.9, the DOR aims to streamline and clarify the sales and use tax collection requirements, which could have significant implications for the cannabis market.

The DOR has scheduled a public hearing for Tuesday, December 19, 2023, to discuss these potential changes. The hearing provides a platform for interested and impacted parties to voice their opinions or concerns regarding the regulation. Given the importance of these changes, stakeholders in the cannabis industry, including retailers and marketplace facilitators, are encouraged to attend or submit comments.

The key changes outlined in the proposed regulation include amendments to section (4) that would exempt individuals who facilitate sales of marijuana or marijuana products on behalf of marijuana retailers from the marketplace facilitator requirements.

Additionally, section (7) is proposed to be updated to reflect recent adjustments in the tax filing and payment deadlines, including the advance payment requirements specified in 830 CMR 62C.16B.1. These changes are part of the DOR’s effort to ensure that tax collection keeps pace with the evolving landscape of the industry.

The implications of these proposed changes are significant. For the cannabis market, clearer guidelines and tax collection requirements may lead to more transparent and efficient operations. Retailers and marketplace facilitators will likely experience an administrative shift as they adjust to the new requirements, which could impact their cost structures and operational workflows.

Moreover, these regulatory adjustments may influence the sales of cannabis by potentially reducing the tax burden on certain segments of the market, thereby affecting competitive dynamics. The exemption for individuals facilitating sales could also encourage more marketplace facilitators to enter the industry, promoting growth and competition.

The DOR is offering a remote option via Zoom for the public hearing. Details on joining and participating in the meeting are available on the DOR’s website, ensuring that stakeholders can easily access the information and contribute to the discussion from anywhere.

As the cannabis industry matures, regulations such as 830 CMR 64H.1.9 will shape the landscape for businesses and consumers alike. The Massachusetts DOR’s proposed changes underscore the state’s commitment to refining its approach to taxation in the sector, signaling potential shifts in how cannabis commerce is conducted within the Commonwealth.

Should you require any assistance or would like to discuss how these changes may impact your business, please reach out to Joseph Feehan at [email protected] or a Marcum State and Local Tax professional.

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