Judge to decide on city's request to dismiss pot shop lawsuit  

Adam and Caroline Pineau stand in their store, Stem, in Haverhill. The couple, who opened Haverhill’s first retail recreational cannabis shop, is suing the city.TIM JEAN/Staff photo

A judge in Newburyport Superior Court will decide if a lawsuit brought by the owners of downtown cannabis dispensary Stem against the city of Haverhill will go forward.

Stem, located on Washington Street, is arguing that by law the city must justify the amount it is charging the store in community impact fees in order for it to renew its license to sell cannabis products and that the city is delaying providing that information.

The city is asking for the suit to be dismissed, arguing that because the cannabis industry is so new, that ways of determining the impact of a cannabis dispensary are still being developed and that it needs more time.

According to Massachusetts Lawyers Weekly, in a suit filed in Essex Superior Court in March, Stem alleges the city is violating both state law regulating the cannabis industry, as well as the terms of its host community agreement (HCA) by failing to provide documentation of costs the city incurs because of the operation of the business.

Stem is asking the court to order the city to produce documentation/proof of costs imposed upon the city by Stem and if the city cannot or does not produce evidence of documented costs, Stem maintains it is not obligated to pay an impact fee.

The suit has captured the attention of the state’s cannabis industry, as well as communities where cannabis shops have opened, as the decision could set new standards on how communities can collect impact fees or even if they would be allowed to.

In its motion for dismissal, which was heard last week by Newburyport Superior Court Judge Janice Howe, the city is claiming that the law includes no deadline or timeline by which the city is obligated to produce the documentation.

The city’s lawyer, Michele Randazzo, said the city needs more time to gather the information on the impacts resulting from the operation of Stem and that the information should be available around the end of August.

Attorney Thomas MacMillan, who represents Stem owner Caroline Pineau, argued that the city has failed to provide a timeline for when the information will be available and that Stem, which he said has already paid the city an impact fee of $358,900 in May — which coincided with Stem’s one year anniversary — could in theory end up paying the city a total of about $1 million or more over the next five years, yet still not have the information the owners have requested.

Randazzo argued that state law governing cannabis sales does not specify a timeline of when and how a community must provide impact information and that since the cannabis industry is so new, the city needs more time to gather that information. She said the pandemic was one factor that delayed gathering that information.

“There are many aspects of potential community impacts for which there is simply is no methodology or current practices for collecting data,” Randazzo said. “Cities and towns are faced with having to develop data collection tools in order to measure some of those impacts that we can’t measure right now.”

“We expect to be able to meet with (Stem) for an annual review sometime after Aug. 24,” Randazzo added, noting the city is working with a consultant to determine impacts and that gathering the information and documenting it takes time.

MacMillan said Stem paid the city the highest amount in impact fees allowed by law, 3% of gross sales, which he said amounted to $358,900, but that the city has failed to provide documentation on what costs it has incurred as a result of the operations of Stem.

In addition to the impact fee, Stem also recently paid the city $365,796 in taxes for its first year of operation and has distributed more than $53,000 to local charitable causes along with providing the city more than 100 hours of community service, according to documents provided by Pineau.

“The city’s position seems to be we will get it to you when we want to,” MacMillan said about the documentation Stem has requested.

MacMillan told the judge that the city is being vague about when it will provide impact documentation to Stem, other than to say sometime after the end of August.

He said the city has a contractual obligation to provide the information and that it should not have a deadline for collecting impact fees if the city has no deadline for providing the documentation requested by Stem.

“All Miss Pineau is asking for is to give Haverhill Stem the documentation that justifies the full amount of the 3% (impact fee),” MacMillan said.

At the conclusion of the hearing, Howe indicated she would be taking the arguments under advisement and would issue a decision sometime in the near future.

 

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