Pot sellers seek relief on impact fees

CNHI file photo/The recreational marijuana industry in Massachusetts wants lawmakers to update the laws governing host agreements between marijuana retailers and local governments, which some say are charging excessive fees to open retail pot shops

BOSTON — Pot shop owners are urging the state to curtail fees they’re forced to pay to cities and towns to set up operation, arguing that they have minimal impact on police, fire and other municipal services.

The Legislature's Joint Committee on Cannabis Policy heard testimony Tuesday from dozens of retailers and industry advocates who say local governments are charging excessive pay-to-play fees and refusing to justify the charges.

David Torrisi, president of the Commonwealth Dispensary Association, which represents marijuana retailers, said negotiations of so-called host agreements are "inherently one-sided, the impact fees are being abused" and the cost of a marijuana business on surrounding communities is "negligible."

"I could make the argument that a Dunkin' Donuts shop has more of a detrimental impact than a marijuana store does,” he said.

The state’s 2016 law legalizing marijuana allows adults age 21 and older to possess up to 10 ounces of weed, and it authorizes regulated cultivation and sales.

The law allows communities the option of charging pot shops excise taxes up to 3% on retail sales. That's on top of a 10.75% state cannabis excise tax and the state’s 6.25% sales tax.

In addition to those taxes, cities and towns may charge impact fees that are "reasonably related to the costs" of hosting a pot business, such as staffing additional police patrols. But those fees cannot exceed 3% of the company's gross revenue.

Those fees must be re-negotiated by communities every five years under the law.

Some communities have added a "reopener" clause to the agreements that require marijuana dealers to ramp up payments if they're giving other communities more money.

Industry advocates say the long lines and traffic jams outside dispensaries that came with the opening of the first retail stores in late 2018 subsided long ago. Most stores hire their own security and don't rely on local police.

Sen. Diana DiZoglio, D-Methuen, has filed a proposal that would require local governments to conduct annual audits of the costs to their communities from hosting pot businesses and refund dispensaries those impact fees, if necessary.

If a community fails to do an audit, dispensaries could sue to recoup the money.

Dizoglio says she has heard from marijuana businesses which aren't opposed to paying fees but feel like they are being held over a barrel by the agreements.

"They are concerned about what they see as a lack of transparency and accountability including municipalities not providing documentation of the impact," she told the committee.

Rep. Andy Vargas, D-Haverhill, filed a similar proposal in the House, which is also being considered by the committee.

Caroline Pineau, owner of Stem, a Haverhill cannabis business that sued the city over fees charged in its host agreement, said it has had no impact on the city's public safety but is still being charged.

"I can tell you that after more than 12 months in operation I am yet to see a negative impact upon Haverhill ... and I'm yet to see any documentation whatsoever of an impact on Haverhill," she said. "However, this has not stopped the city from demanding the full 3% impact fee."

Pineau said requiring local officials to justify the fees would ensure they are "reasonably related to the cost." She said the changes to the state's pot law would also provide cannabis operators with "specific steps toward relief, if municipalities fail to follow the law."

Efforts to eliminate the impact fees are strongly opposed by the Massachusetts Municipal Association, which argues that the agreements are no different than contracts with developers and others to offset the increased costs of providing police, fire or other municipal services.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group's newspapers and websites. Email him at cwade@cnhinews.com

Trending Video

Recommended for you