Pot shops aren’t for everyone, but far more people are taking advantage of the state’s nascent retail marijuana industry than are actually patronizing those businesses. In the case of city and town halls, one might say, they’re addicted to the green.
Fees baked into host agreements between communities and their pot shops are out of hand. Even though the state’s retail marijuana law ostensibly limits these fees, research shows local officials taking full advantage — and then some.
Lawmakers are revisiting this issue, with Merrimack Valley Sen. Diana DiZoglio and Rep. Andy Vargas advocating a commonsense solution. The Democrats propose annual audits of a community’s actual costs for hosting a marijuana dispensary to ensure the fees meant to recoup those expenses aren’t out of whack. If they are, a community would be forced to refund the money.
It’s a good short-term step. The better solution is for the state’s Cannabis Control Commission to get much more aggressive in overseeing these agreements and using its statutory leverage to ensure communities follow the law.
The dynamic of city and town officials “negotiating” how much pot shop owners pay for the privilege of operating is hardly new. And, to be sure, it’s the kind of negotiation reserved for businesses that aren’t exactly beloved — whether it’s a real estate developer forced to pay “linkage” to win approval for a project, or a cable company pushed to put money into public access studios as part of a local franchise agreement.
But the imposition on pot shop owners in Massachusetts are so far past what the state’s retail marijuana law allows to the point of farce. And if this shakedown can happen in this industry, what’s to prevent the practice from spreading?
In Haverhill, Caroline Pineau has gone so far as to sue the city, saying it cannot show $400,000 worth of actual expense in supporting the operation of her business, STEM Haverhill, despite the “impact fee” she’s required to pay. There’s no way the traffic control or public safety costs amount to that.
Mayor James Fiorentini’s argument is that pot shops are “making a lot of money” — and a deal’s a deal. “This is not about transparency or itemization,” he tells reporter Allison Corneau. “This is about a company that comes here and makes and agreement and tries to get out of it.”
Set aside, apparently, that the legal basis for that impact fee is covering expenses related to the impact of the business. In what other circumstance would the city hand someone a bill without showing how it came up with the total?
In fairness to Fiorentini, he’s far from alone. A study by the McCormack School at the University of Massachusetts Boston examined 460 host agreements between pot shops and their cities and towns. The vast majority of impact fees “were pegged at the 3% limit specified in state law," it found. The researchers also discovered a “significant proportion” of agreements require pot shops to pay even more than the legal limit.
Adding up all of the excess — whether in donations to local charities or other costs stipulated by local officials — amounts to nearly $2.5 million in overpayments, according to the report, and that doesn’t count the costs too murky to tabulate.
The study, which was paid for by the state’s Cannabis Business Association, found the marijuana industry made $393 million in its first year in operation, ending in November 2019, with nearly $12 million of that earmarked for cities and towns, and “little oversight” over how that money would be spent.
That’s to say nothing of local taxes applied by cities and towns on each pot sale — of up to 3% — or the state’s 10.75% cannabis excise and its 6.25% state sales tax.
In the meantime, notes David Torrisi, president of the Commonwealth Dispensary Association, the real impact of these shops is “negligible.” He tells Statehouse reporter Christian M. Wade, “I could make the argument that a Dunkin’ Donuts shop has more of a detrimental impact than a marijuana store does.”
The McCormack School study calls for stricter limits on host agreements, including more rules on what pot shops can be forced to pay and a “more robust and transparent accounting structure to track funds.” All are good ideas. Greater oversight and accountability are essential, lest city and town halls continue to get away with this unseemly harvest.