Grow, Gift, Repair

No matter where you look, local government is out of control

Local marijuana license fees can have a significant impact in a state’s marijuana industry. Excessive local fees made the news last year when Mass Medi Spa failed to make a $100,000 community revenue sharing payment to the town of Norwell, Massachusetts. That fee, which was imposed by the local municipality, was in addition to state-related license fees and made the cost to do business in the marijuana industry too high in Norwell.

In the case of Mass Medi Spa, city officials told The Patriot Ledger that the payment was part of an agreement that the town reached with Mass Medi Spa before its license was granted in February 2016. Town officials believed Mass Medi Spa decided not to build its dispensary in Norwell, and the reason might have been the legalization of recreational marijuana that Massachusetts residents voted for in November 2016 coupled with the fact that Norwell, Massachusetts residents had voted locally to ban recreational marijuana sales.

In fact, regulations had already been passed to prevent recreational sales in the town. In other words, Norwell created an environment where even medical marijuana sales are challenging while the next town over might be a whole lot easier and less expensive to do business.

This isn’t a completely unique story. In some states where medical and/or recreational marijuana has been legalized, local municipalities are given a great deal of leeway in determining what marijuana businesses can and can’t do within their borders. As a result, many municipalities charge a variety of fees and taxes to marijuana-related businesses. They might even prohibit marijuana sales entirely or create insurmountable rules and regulations that create a hostile environment for the marijuana industry.

Massachusetts isn’t the only state that allows municipalities to tack on fees and taxes that make doing business in the marijuana industry difficult. In California, local marijuana licensing fees can vary significantly from one city to the next.

The city of Santa Ana charges $1,690 in application fees and $12,086 in permit fees. San Jose, California charges an annual operating fee of $131,846, and Long Beach charges $5,870 in application fees for a recreational license as well as a minimum of $1,136 in permit fees for dispensaries and up to $2,751 in permit fees for manufacturers according to the Long Beach Press-Telegram.