Massachusetts marijuana stores sue town over host community fees

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Three state-regulated marijuana retailers in western Massachusetts are suing a town government for almost $6 million over “community impact fees” levied as part of their host community agreements.

The fees, which are levied on top of local taxes, are meant to help municipal governments offset the potential costs of hosting cannabis businesses.

However, the three retailers suing the town of Great Barrington – Farnsworth Fine Cannabis, Rebelle and Theory Wellness – argue that the town has not incurred any extra costs from their businesses.

“As time has gone on, it’s become more and more apparent that there’s no financial impact on any of these municipalities,” the plaintiffs’ attorney, David Rich, told MassLive.com.

Rich added that towns are supposed to document specific costs from hosting marijuana operators.

“According to emails to the dispensaries attached to the lawsuit, Great Barrington officials said they found ‘no significant costs’ imposed on the town because of the businesses,” MassLive.com reported.

Great Barrington Town Manager Mark Pruhenski responded to the lawsuit in a statement.

“Both of these businesses freely agreed to the terms of their HCAs, including payment of the community impact fees,” Pruhenski wrote.

“Now, after skipping payments that were due, they want to declare that their payment agreements were illegal.

“In plain words, the failure to pay is a violation of the HCAs and a breach of contract.”

The so-called host community agreements (HCAs) allow Massachusetts municipal governments to extract fees from local cannabis businesses.

However, HCAs were reined in somewhat after 2022 marijuana reform legislation that gave the Massachusetts Cannabis Control Commission (CCC) more oversight over the deals.

Under the agreements, local governments can collect up to 3% of an adult-use company’s gross sales in the form of a special tax.

The CCC has since published a model HCA to guide relations between cannabis operators and local governments.

Pushback against Massachusetts HCA fees has succeeded in the past.

In January, the town of Uxbridge settled with a retailer for $1.2 million after a lawsuit that alleged the town failed to justify the fees.