Municipalities in the Bay State have collected more than $50 million in host community fees since the start of the state’s adult use market, although significantly more may be unreported, according to a study from the Massachusetts Cannabis Business Association.
The state requires aspiring cannabis operators to obtain host community agreements and settle on impact fees as part of the initial licensing process. The report from MCBA shows a lack of transparency in how those impact fees are assessed and how the fees are used in the community.
“Nearly four years after legalization, it’s clear that cannabis businesses have no more impact on their municipalities than any other business, but only in this industry is legalized extortion of businesses the norm,” said MCBA CEO David O’Brien. “Cannabis businesses are happy to contribute to the cost of municipal services related to their operation, but they need accountability and transparency.”
The Massachusetts Municipal Association dismissed the study as yet another attempt from the industry to undercut impact fees and Boston community agreements, according MMA spokesperson Candace Pierce.
“It’s no surprise that the cannabis industry is issuing another report that promotes the financial interests of their membership, aiding their campaign to discredit host community agreements that cities and towns have negotiated fairly on behalf of the public,” said Pierce. “Cities and towns should retain the ability to represent their residents and taxpayers in negotiating local agreements with the cannabis industry. Reducing the modest 3% impact fee and subjecting communities to overregulation by a state agency would undermine the original incentive to encourage municipalities to expand the recreational marijuana marketplace.”
The study was performed by Northeastern University PEAK Scholar Jack Masliah under the guidance of Jeffrey Moyer, professor at Northeastern’s School of Public Policy and Urban Affairs.
The study involved sending public records requests to 88 municipalities, requesting information about impact fee payments. Of those 88 requests, 54 municipalities responded, with seven of them not reporting a total amount of received fees.
The remaining 47 municipalities brought in over $53 million since 2018, but there was a wide range between towns. Fall River, whose former mayor Jasiel Correia is currently in prison, in part, for demanding illegal impact fees from cannabis companies, collected the most with $5.3 million, followed by Brookline, where the first adult use dispensary in the metro Boston area opened, with $4.9 million.
In contrast, West Stockbridge collected the least amount with $3,404.
The report noted that some of the discrepancy could come from accounting differences from the timeline in between when the town reported to the CCC and when it responded to the MCBA’s record request, but the association fell short of dismissing all the discrepancies.
“While some of this may come from accounting timelines, there are still large discrepancies in excess of $1 million both ways,” said the report.
Impact fees from HCAs have long been a point of contention from cannabis operators that claim that without proper accounting there is likely to be abuse from the municipality.
“As a business owner, I track every dollar that goes through my business. It’s disturbing that cities and towns in Massachusetts are collecting millions of dollars from hard-working businesses, and can’t even say where the money is going,” said Caroline Pineau, owner of Stem, a cannabis company in Haverhill.
“We’ve been open for three years now, and in that time, we’ve shown that we’re no different than any other local business. We shouldn’t be treated as a piggy bank that can be raided for local spending that has nothing to do with our business.”
Pineau is currently in the middle of a lawsuit against Haverhill over the town’s assessed impact fees, much like Happy Valley in Gloucester. Both cases were filed in Essex Superior Court and are still in the pretrial phase.