Franklin Could Get Weed Whacked

For years, Massachusetts cities and towns like Franklin have been collecting  ‘community impact fees’ from local cannabis business operators. It was one of the selling points for bringing pot businesses to towns. But without transparent accounting and clearer justification the pot party may be coming to an end.

On Thursday, Caroline's Cannabis, the state’s first independently owned and first woman owned adult-use recreational dispensary, reached a settlement agreement with the town of Uxbridge in a lawsuit over the collection of community impact fees deemed unlawful since they were not documented. The agreement resulted in the town paying nearly $1.2 million to settle the lawsuit.

Mindful of the changing regulatory climate, Boston had earlier refunded much of the 'impact' money it collected from its several cannabis businesses and state regulators followed their lead by crafting new rules.

A new model host community agreement issued by the state’s Cannabis Control Commission  makes it clear these fees are generally illegal.  The Massachusetts Cannabis Business Association (MassCBA) yesterday called on communities across the state to immediately return cannabis impact fees to affected businesses.

“For years, communities have been treating cannabis community impact fees as piggy banks with zero accountability and little transparency,” said MassCBA President and CEO David O’Brien. “The legislature has repeatedly made it clear that municipalities cannot legally collect fees that are not spent on reasonably-related municipal costs, but cities and towns are holding on to millions of dollars that were unjustly collected over the past few years. Communities need to immediately return all money that wasn't spent on reasonably-related costs.”

A 2022 analysis of cannabis community impact fees in a sampling of 54 cities and towns found that the state’s municipalities had collected more than $50 million from those communities alone. Based on the size of the state’s legal cannabis market, the total amount of community impact fees collected since legalization could be as high as $165 million. That analysis indicated that Franklin had collected about $1.5 million.

Legislation signed by Governor Baker in August 2022 made it clear that cities and towns are required to document any impacts and base their fees on those impacts, while instructing the state’s Cannabis Control Commission to reject any agreements that call for excessive payments. In November 2022, Boston returned $2.86 million to nine cannabis shops in the city.

“After so many municipalities abused the HCA process for years, it’s gratifying to see a fresh start initiated by new guidance from the CCC and some cities and towns even reversing course and returning some of the excessive fees,” said former Cannabis Control Commissioner Shaleen Title. “The small businesses who stood up for themselves and led this change should be commended.”
“I’m happy that we were able to come to a mutual agreement,” said Caroline Frankel, owner of Caroline’s Cannabis. “Unfortunately, it took litigation for the Town to recognize there are no known impacts, and to resolve the case. This case should help other operators and municipalities to work out an agreement.”

“Returning unjustly-collected community impact fees is the right thing to do, and other communities need to follow the precedent set in Boston by returning fees to all affected businesses,” said O’Brien. “MassCBA will continue to fight against illegal community impact fees until every cannabis business receives their refund check.”