Massachusetts marijuana operator sues to recover controversial fees from town

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A Massachusetts marijuana retailer is seeking to recover $1.4 million in controversial fees charged by its host town.

Caroline’s Cannabis filed a lawsuit against Uxbridge in April 2022 alleging that the town failed to provide any documentation to justify a host community agreement (HCA) fee as required by state law.

According to the lawsuit – recently uncovered and first reported by independent journalist Grant Smith-Ellis – Caroline’s is asking a judge to rule that “no impact fee is due” and that the company is entitled to recoup the fees it has paid plus interest.

The case is ongoing, court records obtained by MJBizDaily show.

Massachusetts law requires cannabis operators to negotiate HCAs with the municipalities where they plan to do business before licenses are issued.

An HCA permits a municipality to seek reimbursement for extra costs related to marijuana companies doing business there – say, extra police officers for traffic or security.

Such fees are capped at 3% of a marijuana company’s gross annual sales and must also be “reasonably related to the costs imposed upon the municipality by the operation” of the business, according to the Massachusetts Cannabis Control Commission (CCC).

But marijuana businesses and advocates have long alleged that municipalities automatically demand the maximum 3% without proving actual costs.

A 2021 study found at least $2.46 million in documented HCA overpayments.

In 2022, Massachusetts’ then-governor signed a marijuana reform bill intended to give the CCC more oversight over HCAs and to allow businesses to renegotiate them.