Connecticut marijuana taxes projected to reach $73 million in fifth year of sales. Cities and towns would collect $18 million of total.

As Connecticut is still grappling with the brand new industry of legalized marijuana, officials are now projecting they will collect $73 million in state and local marijuana taxes by the fifth year of legalization.

While possession of recreational marijuana became legal on July 1, officials do not expect retail sales to begin in Connecticut until mid-2022. The retailers and growers have not yet been selected in a long regulatory process that involves deciding which firms are eligible and where they would be located.

Municipalities will collect a sales tax of 3% on marijuana sales, but the towns have the right under the new law to block retail sales through their local zoning commissions. Some towns have already indicated they will prohibit the sales, while planners, lawyers and town councils in other municipalities are studying the issue and mulling their options.

The numbers represent a sharp change from the high-flying expectations of exuberant advocates who said in 2019 that sales could generate as much as $180 million per year. Opponents at the time said the estimates were overblown.

But the legislature’s nonpartisan fiscal office, which released the latest numbers, never joined in the exuberance of the advocates. The fiscal office said in 2017 that the sales would generate closer to $30 million in tax dollars during the first full year.

The latest projections by the office show that the sales would start slowly and generate $4.1 million in state and local taxes by the end of current fiscal year that ends on June 30, 2022. Only a relatively small number of retailers might be operating at that point in the infancy of the program.

The second year would generate $26.3 million overall, including $20.4 million at the state level. The numbers would jump to $44.6 million in the third year, including $33.4 million for the state and $11.2 million for the towns.

By the 2025 fiscal year, $71.2 million would be collected, including $53.8 million for the state. By the fifth year, collections would be $73.4 million, including $55.2 million for the state and more than $18 million for the towns.

Multiple legislators, including House Speaker Matt Ritter of Hartford, said they were not chiefly concerned about the revenue being raised but were instead concerned that Connecticut had fallen behind other states in legalizing a product that should be regulated instead of being left to the black market.

Across the state, local officials have offered a wide variety of views on marijuana in a process that is still evolving in many towns.

In Waterbury, the zoning commission on Wednesday imposed a one-year moratorium that says that no applications for marijuana retailers will be approved until at least Aug. 9, 2022. Waterbury mayor Neil O’Leary, a former police chief, favors the moratorium because he has concerns about the potential impacts of street crime and drug addiction.

In similar fashion, Greenwich, Prospect and Newtown have decided to prohibit retail stores in their jurisdictions. Thomaston, a small town of about 7,500 residents in Litchfield County, imposed a six-month moratorium.

By contrast, Middletown is taking a more favorable approach as officials study how zoning regulations would need to be modified.

The taxation that was approved by the legislature features a multipronged approach. In addition to the 3% sales tax that would be kept by the municipalities, marijuana would be subject to the state’s 6.35% sales tax. Purchasers would also pay another tax that would be based on the amount of THC — the active ingredient that produces marijuana’s “high” feeling — that can vary by product.

Overall, the tax would be about 20% — meaning Connecticut’s tax level would be about the same as Massachusetts. But Lamont says Connecticut’s marijuana taxes would be about 4% lower than rates in neighboring New York state.

“For decades, the war on cannabis caused injustices and created disparities while doing little to protect public health and safety,” Lamont said when he signed the measure. “The law that I signed begins to right some of those wrongs by creating a comprehensive framework for a regulated market that prioritizes public health, public safety, criminal justice, and equity. It will help eliminate the dangerous, unregulated market and support a new and equitable sector of our economy that will create jobs. The states surrounding us already, or soon will, have legal adult-use markets.”

During months of debates and negotiations, one of the biggest sticking points was that lawmakers could not agree on how the marijuana tax money should be spent.

The final decision was that 60% of the money would go to social equity and initiatives to help communities that were harmed the most during the federal war on drugs, up from 55% in Lamont’s original bill. In addition, 25% would go to a special “prevention and recovery services fund” for mental health, up from 15% in Lamont’s bill. Both Republicans and Democrats had called for spending additional money on drug treatment, pushing for the 25% level in the final compromise.

The final 15% would go to the state’s general fund to administer the marijuana program at agencies such as the state consumer protection department for regulations, testing, licensing and oversight.

House Republican leader Vincent Candelora of North Branford said that anyone who thought the marijuana tax revenue would represent a large windfall for the state’s general fund is mistaken. With marijuana already available in other states, he said that total tax collections in Connecticut would not reach high levels as the state would not be a destination for those seeking to purchase the drug.

“Over the course of the next year, Connecticut residents will seek marijuana either through the black market or outside Connecticut,” said Candelora, noting the one-year delay in retail sales here. “I anticipate the revenues won’t be as great as people are trained to get the product elsewhere. People have it. They’re smoking it. They’re utilizing it. The black market is going to be cheaper than the state of Connecticut’s market.”

While the nonpartisan projection for $55 million in revenue for Connecticut is still five years away in the 2026 fiscal year, Candelora is not sure if tax collections will reach that level because of the widespread availability of marijuana from other sellers.

“This product is all over the place,” he said. “People get it on the internet. I’m just not sure the revenues will even be at the $55 million mark.”

Christopher Keating can be reached at ckeating@courant.com