As state changes Cannabis regulations, why some South Shore officials are crying foul
Massachusetts Towns Concerned Over State's New Cannabis Regulations and Fees.
Some city and town officials are worried that new regulations issued by the state Cannabis Control Commission, which regulates the marijuana industry in Massachusetts, will take a significant bite out of their revenues.
The new rules include restrictions on "community impact fees" that cities and towns charge cannabis stores. The fees are intended to cover municipal costs generated by marijuana stores, such as overtime for public safety employees and traffic studies.
Many towns and cities charge 3% of a cannabis business' gross revenues as an impact fee, the maximum allowed. That's on top of a 3% local sales tax and a 17% state sales tax.
Some businesses and industry groups have cried foul, claiming municipalities have been collecting impact fees without accountability or justification.
Others argue that impact fees have tilted the playing field in the favor of larger, well-financed firms better equipped to absorb the high costs of entering the industry.
In a 2022 letter to state legislators, then-Cannabis Control Commissioners Shaleen Title and Steven Hoffman wrote: “The host-community agreement process has been abused to the detriment of small and minority-owned businesses for almost six years straight now.”
Some municipalities have agreed with that opinion. In November 2022, Boston not only stopped collecting impact fees but returned $2.86 million to nine cannabis shops in the city, according to Cannabis Business Executive.
A sweeping cannabis reform bill signed by then-Gov. Charlie Baker in August 2022 aimed to crack down on the fees.
The Cannabis Control Commission spent more than a year producing regulations to govern the new law's implementation. In September, it voted 3-1 to approve those regulations, which will go into effect in March.
Under the new rules, cities and towns charging community impact fees will have to produce itemized invoices documenting each expense, its purpose and its relation to the activities of a specific retailer. Municipalities will no longer be able to charge a percentage of gross revenues, as many have done in the past.