BANGOR, Maine — Jim Burke of LaGrange grows and sells medical marijuana, along with baked goods and butter infused with the medicinal plant.
He considers himself an “activist at heart,” but he’s also at the center of a growing business community that contributes nearly $5 million to state coffers each year, by some estimates.
“With the economic turndown that we’ve had lately, the medical marijuana program’s been a savior for a lot of the people of Maine, especially those without any work and [who] have disabilities,” Burke said.
“They’re the bracket of workers who are not your first choice for rehire so a lot of them are going into medical marijuana and they’re adding to the economy greatly,” he said.
Since medical marijuana became legal more than three years ago, growth and production has generated increasing tax and fee revenues for the state. It has created nearly 100 jobs at dispensaries and income for more than 1,300 caregivers, figures from the Maine Revenue Service and estimates from the Medical Marijuana Caregivers of Maine show.
But determining exactly how much this new green economy has contributed since Jan. 1, 2011, is difficult because while the state tracks revenues from Maine’s eight designated dispensaries, it does not track caregivers such as Burke, who could classify themselves as drugstores, retail businesses or agricultural concerns, among other things.
In addition to the eight medical marijuana dispensaries, there are more than 1,330 registered caregivers, according to the Maine Department of Health and Human Services.
The tax rate for marijuana sold for medical purposes and for related equipment is the retail sales rate of 5.5 percent, however, the rate for edible products, such as pot brownies and lozenges, is 8 percent, which is the state’s tax rate for prepared meals.
Since the state began collecting taxes from dispensaries, it has received nearly $1 million in revenue, Maine Revenue Service spokesman David Heidrich said in a recent interview.
In 2011, the first year of Maine’s medical marijuana program, dispensary operators contributed $42,832 in sales taxes, Heidrich said. In 2012, the total jumped to $265,655, and last year, when the state’s sales tax increased from 5 percent to 5.5 percent and the meals and lodging tax rate went from 7 percent to 8 percent, the total climbed to $636,986, he said.
That figure does not include income taxes paid by employees of medical marijuana dispensaries.
By the end of 2012, 95 Mainers were employed by the state’s eight dispensaries, according to the Maine Medical Use of Marijuana Program’s most recent annual report to the Maine Legislature. Of those, 76 were new jobs, the report said.
Heidrich said the level of revenue generated by caregivers is not clear.
“Maine Revenue Service does not know how much revenue is being received from caregivers since they do not assign a specific business code to [medical marijuana caregivers]. Caregivers could be registered as drugstores or as other retail for tax purposes,” he said.
Paul McCarrier, a board member of Medical Marijuana Caregivers of Maine, estimates that caregivers throughout Maine contribute as much as $3.6 million in income taxes, sales taxes on their growing equipment and through the $300-per-patient registration and $31 background check fees they pay.
“Medical marijuana, I think, is bringing a significant amount of money into state coffers,” McCarrier said.
The estimated grand total, he said, is based in part on the state’s income tax rates, the average number of patients each caregiver serves and how much the 15 growers surveyed by the caregivers group said they paid in sales taxes on supplies and equipment in 2012.
“With 1,400 caregivers in the state, we can average that each caregiver is taking care of three patients,” he said, pegging the number they serve at 4,200 patients. Based on that, he estimated that the total caregivers paid $1.26 million in patient registration and background check fees alone.
Depending on the number of patients they serve, the amount of product they sell and how much they charge for it, caregivers can earn up to $42,650 a year, McCarrier said.
Based on a rough breakdown of how many one-, three- and five-patient caregivers there are based on caregiver feedback, McCarrier estimated that caregivers paid a combined $1.7 million in income taxes.
The caregivers group is gathering data on medical marijuana’s economic impact on ancillary services, McCarrier said. One example he offered was sales taxes paid to local hydroponic stores. In 2012, 15 grow stores the group spoke with each pegged gross average annual sales to caregivers at $750,000. Based on the current sales tax rate of 5.5 percent, that translates to $618,750 in state revenue, he said.
“Combining what caregivers pay in state income tax, along with what they pay in sales tax for equipment and grow supplies, we estimate that caregivers add $2,319,055 annually to state coffers through income and sales tax, with $1,303,400 paid in registration fees,” McCarrier said.
“The grand total that caregivers pay to the state is $3,622,455,” he added.
Burke, who is both a patient and a caregiver, thinks the economic impact is even greater.
He and his wife, Sue, operate Care by Cannabis LLC out of a greenhouse attached to their home. They also rent growing space to another caregiver.
In addition to marijuana itself — they grow 30 different strains — the Burkes also offer edibles such as baked goods and marijuana butter, Burke said. They deliver their products to patients within a 30-mile radius of Levant.
“We all pay taxes, we all pay for licenses,” he said. “I have to pay the Department of Agriculture and for inspections — cleanliness, water quality, et cetera. We’re food processing approved. Things have to be up to a certain standard with the state. They have requirements on the dos and don’ts that you’re allowed for your grow and it’s very, very stringent, very regulated.
In addition, he said, the business employs two part-time assistants, a housekeeper and an on-call handyman.
“Everything we purchase for our business we buy from the local community,” he added. “And we try to use the mom-and-pop lumber store instead of the big-box stores. We try to go to the small garden centers versus the big-box stores. We are firm believers in supporting the local community and so whatever we’re earning, we’re putting back into the community.”
The Burkes each care for five clients and grow for themselves.
“So we add to the total, which is great because under the law passed last year, we’re allowed to share out our extra meds. We’re allowed to give away to anyone that we meet with cancer or life-debilitating illnesses. We donate medicine for free.”
McCarrier said recently that the caregivers industry in Maine has potential to grow if what he referred to as the “green ceiling” is lifted.
“Unfortunately, caregivers are limited to serving five patients. In the next [legislative] session, we’ll be working to show that there’s a really big need for caregivers to be able to serve more than five patients so that more people can make a living from it,” he said.
“I think something that the state needs to realize is that there’s a vibrant economy that we’re providing,” McCarrier said, adding, “We can serve a lot more people at a lower cost [than dispensaries can] but the state isn’t allowing that. We need to let these small businesses grow.”
For Burke, being a caregiver is more of a calling than a business.
“It’s more than selling marijuana. A lot more,” he said. “Some of our patients we’ve had to take to the grocery store, to the pharmacy to get their meds because they have no transportation. We’ve had to go and work out their legal problems because they’re in the medical marijuana program.”
Burke said most caretakers are not in it for the money.
“You grit your teeth and don’t look at numbers. Every month you wonder how you’re going to make ends meet,” he said.
Now in its fourth year, the Burkes’ business is on the verge of making a profit.
“It’s very expensive because of the law. We have to be in a fully enclosed environment. It has to be an indoor grow. Henceforth, we need to run lights,” he said. “My electric bill is $4,000 a month. That’s during the worst two parts of the year,” midsummer because of the need for air conditioning and midwinter because of the need to heat.
“Last year, we were in the red by $1,” he said.