Cannabis Businesses Sue Cities Over Impact Fees

In a legal battle that could reshape the landscape of the cannabis industry, several cannabis businesses in Massachusetts are taking legal action against their host cities and towns over the controversial issue of impact fees. These fees, initially intended to offset the potential negative effects of cannabis businesses, have come under scrutiny for being exploitative and lacking transparency.

Caroline Pineau’s Fight Against Unfair Fees

Leading the charge is Caroline Pineau, CEO and owner of Stem Haverhill, who decided to sue her city after being charged nearly $900,000 in community impact fees. Pineau alleges that the fees imposed on her business are unjust, especially considering that she is the only cannabis operator in Haverhill required to pay them in full.

The Controversy Surrounding Impact Fees

Community impact fees, amounting to a 3% surtax on cannabis businesses, are included in Host Community Agreements (HCAs) signed between cannabis businesses and municipalities. However, many businesses argue that these fees are being collected without proper accountability or evidence of how the funds are being used to address the purported impacts of cannabis operations.

Lack of Transparency and Accountability

David O’Brien, President of the Massachusetts Cannabis Business Association, highlights the lack of transparency surrounding the utilization of impact fees. Municipalities have been found to allocate these funds for various purposes unrelated to cannabis operations, raising questions about the fairness and legality of their collection.

Financial Burden on Cannabis Businesses

With cannabis already heavily taxed, the additional burden of impact fees has placed significant strain on cannabis businesses, many of which are struggling to remain profitable. As a result, businesses have begun requesting refunds and pursuing legal action against municipalities to recoup the fees they’ve paid.

Legal Developments and Hope for Change

In a landmark settlement, Caroline Frankel, owner of Caroline’s Cannabis, successfully won a $1.2 million settlement from the town of Uxbridge after it failed to justify the spending of impact fees. Additionally, recent regulatory changes by the Cannabis Control Commission aim to address the issue by requiring municipalities to provide invoices of claimed impact and limiting the duration of fee collection.

The Call for Municipal Reform

While some cities and towns have ceased collecting impact fees altogether, others have taken proactive steps to return collected fees to cannabis businesses. Boston, for example, has returned millions of dollars in fees to cannabis operators as part of its commitment to fostering an equitable and inclusive cannabis industry.

The Road Ahead

As the legal battle over impact fees continues, cannabis businesses remain hopeful for a resolution that ensures fairness and transparency in the industry. With mounting pressure on municipalities to justify the collection of impact fees, there is a growing momentum for reform that prioritizes the interests of cannabis businesses and promotes a thriving and equitable cannabis market.

The legal challenges faced by cannabis businesses over impact fees underscore the complexities and injustices within the cannabis industry. As stakeholders push for accountability and reform, there is a renewed opportunity to create a regulatory framework that supports the growth and sustainability of cannabis businesses while addressing the legitimate concerns of host communities. Only through collaboration and dialogue can we forge a path forward that fosters a fair and prosperous cannabis industry for all.