Grow, Gift, Repair

Will HCAs be challenged in 2019

Like the tax, the impact fee may not exceed 3 percent of gross annual revenues and must be “reasonably related to the costs imposed on the municipality by the operation of the marijuana establishment.”

The law also says any payments made to a municipality must be recorded and kept as a public record and the initial agreement can last no longer than five years.

“The costs and impacts of hosting a Marijuana Establishment will understandably vary from municipality to municipality and negotiated HCAs should reflect the particular impacts on the host community,” a CCC guidance document says.

Under the agreement signed by the town of Leicester and Cultivate President and founder Sam Barber in April, the company agreed to pay a 3 percent annual community impact fee of no less than ”$75,000 and shall not exceed $250,000,” a copy of the agreement obtained from the town shows.

“We felt that having a floor of $75,000 – with $50,000 toward economic development and $25,000 to the town’s parks – was a good bottom line,” Genereux said. “And we felt that $250,000 on the top end made a lot of sense as well.”

‘Outside the bounds’

Any money not used to cover costs related to Cultivate’s operation – or to fund town parks and an economic development plan – will be directed into the town’s general fund.

That last part raises some eyebrows.

“I think that would fall outside the bounds of the statute,” said attorney Blake Mensing, of the payment’s required minimum. “You have to incur a cost, it can’t be forward-looking.”

“The community impact fee is meant to offset impacts actually incurred costs to the community, up to 3 percent, so there is not a minimum amount,” continued Mensing, whose Holliston-based firm, The Mensing Group, LLC, advises the cannabis industry. “I am not saying there won’t be, but if there are no impacts, the statute does not allow the town to collect a single dime.”

Geoff Beckwith, executive director and CEO of the Massachusetts Municipal Association, sees things differently.

“This was not created as part of a revenue scheme on the part of state government or local government,” he said. The MMA is a member organization representing the 351 cities and towns in Massachusetts and the municipal officials who run them.

“The ballot question (passed by voters in 2016) made provisions for a tax but that was refined by the Legislature and actually there is a much higher state tax and a much higher revenue stream that will be going to state government than local government,” Beckwith said in a recent phone interview.

Every adult-use cannabis sale made in Massachusetts is subject to a 10.75 percent excise tax and the state’s 6.25 percent sales tax, in addition to a cannabis-specific state tax up to 3 percent of the location’s gross annual sales.

Lawmakers updated the “local control” section of the state’s adult-use marijuana law last summer. In addition to raising the maximum allowable tax at the local level from 1 percent to 3 percent, lawmakers included a provision allowing municipalities to assess a community impact fee with strings attached.