Municipal official defends treating marijuana businesses like the mob treats diner owners
Having served as the mayor of Newton since 2018, and as an alderman-at-large before that, Ruthanne Fuller knows how valuable it can be to host cannabis companies. With more than half-a-million local tax dollars a year coming from weed plus millions more in other perks paid for by canna companies, her administration has learned to lean hard on marijuana when it’s time to write the city budget.
For Newton and other places that have taken advantage of weed businesses, though, it’s getting much harder to milk the cow. In 2023, the Massachusetts Cannabis Control Commission adopted new regulatory guidelines for Host Community Agreements while also taking on the responsibility of overseeing those arrangements. For years, companies have complained of abuse and even extortion at the hands of city and town halls, but the adjustments put in place are meant to prevent officials from abusing canna businesses in their fiefdoms.
In some places, companies are also seeking retribution for the years of unjustifiable sin taxes they have been made to pay. Needless to say, many municipal leaders are pissed. As Mayor Fuller wrote in a section of her latest weekly email to constituents titled, “Outrageous Demand by Three Cannabis Companies”: “Three of Newton’s retail marijuana businesses—Garden Remedies, Ascend, and Redi—have recently threatened to sue the City of Newton if we do not refund community impact fees they paid to the City of Newton under their host community agreements (HCAs).”
Fuller’s rant continued, “These host community agreements are a requirement under state law in order for marijuana businesses to obtain a state license and conduct business in any city or town. Under state law and through these HCAs, cities and towns collected community impact fees of up to three percent of each business’s gross sales. Garden Remedies, Ascend, and Redi voluntarily agreed to make annual community impact fee payments to the City of Newton when signing the HCAs.”
Changes to Host Community Agreements in recent years
Fully missing the hilarity of using the word “voluntarily” to describe municipal bullying, the mayor went on to claim that fees Newton has collected “are exactly the types of costs permitted under state law and guidance from the State’s Cannabis Control Commission.” But that’s definitely not the case under the new law, which prohibits municipalities from requiring that the CIF be a certain percentage of the licensee’s total or gross sales as a term or condition of an HCA, and also prevents cities or towns from demanding fees in excess of three percent of the licensee’s gross sales.
This is an existential issue for some cannabis enterprises. As Max Borg, a partner in the corporate and cannabis groups at Blank Rome in Boston, wrote last July: “Many licensees in Massachusetts have complained over the years that CIFs—often requiring payments to host communities in excess of three percent of gross sales—have been some of the greatest financial challenges for these businesses, particularly in light of the fact that such CIFs are not tax-deductible expenses.”
As a result, Borg added, “Many licensees have faced difficulties making these payments over the years.” And some have fought to get those payments back. In April 2022, Caroline’s Cannabis filed a lawsuit claiming “that there have been no impacts or costs to the Town of Uxbridge and, in the absence of documentation of costs, the Town cannot collect the impact fee.” Following the change in state law,
in December 2023, Uxbridge refunded the majority of the company’s impact fee payments, in what Caroline’s called “the first [settlement] of its kind in the Commonwealth of Massachusetts.” The company was given back $1,171,633.60, or about 80% of the payments made up to that point.
In response to the Uxbridge news, the Massachusetts Cannabis Business Association wrote in a statement: “For years, Massachusetts cities and towns have been illegally collecting excessive ‘community impact fees’ from local cannabis business operators without transparent accounting and little oversight. In response to a new model host community agreement issued by the state’s Cannabis Control Commission that makes it clear these fees are illegal, the MassCBA today called on communities across the state to immediately return unjustly-collected cannabis impact fees to affected businesses.”
The landscape of adult-use cannabis sales in Newton
In 2018, Newton voters showed just how much they like weed by rejecting two local ballot questions that could have banned new operations or put an arbitrary cap below the state limit on how many pot shops could open there. Per Mass regulations, Newton must allow at least eight adult-use stores.
Currently, there are four recreational dispensaries—Redi, Ascend, the Green Lady, and Garden Remedies, with only the latter also serving medical patients—plus two delivery operators that serve the Greater Boston region. Other companies have tried and failed or are in the process of attempting to open there, while Newton is also the planned site for the state’s first licensed research facility, to be run by the publicly-traded Canadian company Curaleaf.
With so much cannabis activity in play, officials have been sure to get their slice of the pie—and then some. The list of projects underway in Newton using mitigation funds from cannabis companies reads like a compendium of targets that Tony Soprano might hand to his underlings out for a hard day’s work of door-to-door extortion. The development mitigation fund promises include: $40,000 from Garden Remedies for “pedestrian improvements” and a bus shelter; $25,000 from Verilife for a bus shelter; and nearly $10 million from Redi for projects ranging from “offsite transportation improvements” to a million-dollar splash park.
As Mayor Fuller put it in her recent letter, that’s the cost of doing business when you sell cannabis. She wrote, “The City of Newton spent these funds, in accordance with Massachusetts law, to address the increase in community need for services of our police, health, public works, and schools; for drug abuse and prevention services, as well as mental health services as a consequence of the operation of the marijuana businesses. …
“Garden Remedies, Ascend, and Redi chose to locate and operate in Newton. They selected Newton as a favorable place to engage in the business of selling marijuana products. By many accounts, their operations have been financially rewarding.”
Precedent the HCA law’s retroactive applicability
Last June, Massachusetts Superior Court Associate Justice Jeffrey Karp ruled that the new HCA regulations from 2023 did not apply retroactively to an agreement entered into in 2018 between the City of Haverhill and Haverhill Stem LLC, a licensed cannabis dispensary. In other words, neither that dispensary nor others seeking refunds for potentially unwarranted past impact fees are guaranteed to see the same outcome as Caroline’s Cannabis did in Uxbridge.
In November 2024, Stem Haverhill and its host city finally resolved their long-running dispute. Still, similar disagreements and lawsuits continue to fester and pop up across the state—even as the CCC continues to monitor HCA agreements. That’s no surprise; shortly after the new law was passed, then-CCC Director of Licensing Kyle Potvin estimated that “from [his] preliminary review, [he had] not seen a single compliant HCA.”
As those agency reviews continue and cannabis businesses look to enter into more amenable agreements with their hosts, there will likely be more consternation. And more lawsuits, perhaps including in Newton.
“Now Garden Remedies, Ascend, and Redi are asserting that the community impact fees were somehow illegal,” Mayor Fuller wrote. “They are demanding the City refund the money spent over many years on these critical public services. This demand is not based on any court ruling or on the determination by the Cannabis Control Commission that the impact fees were illegal.
“In fact, while the state law governing HCAs was amended in 2022 to severely limit the ability of communities to collect impact fees in the future, that change in law did not affect the City’s rights nor the obligations of Garden Remedies, Ascend, and Redi to pay agreed upon impact fees under their HCAs. This has been confirmed by a recent decision in Middlesex Superior Court. Garden Remedies, Ascend and Redi’s demand for a refund is outrageous.”
