Worcester Business Journal

6 Worcester Business Journal | September 17, 2018 | wbjournal.com BY ZACHARY COMEAU Worcester Business Journal Staff Writer Anxious to open, marijuana firms are agreeing to excess host community payments like chari- table donations and 'Welcome to Ayer' signs Chris Hudalla, founder of ProVerde Laboratories, has been negotiating with Milford on a host community agreement for three months. Regulated to the brink C annabis testing lab ProVerde Laboratories has been operating in Milford – at 420 Fortune Boule- vard – for four years, ever since the state legalized the medical use of marijuana. e company would love to jump into the recreational marijuana business, but it first needs to secure a host community agreement with the town. "We've been struggling with that a bit," said Founder Chris Hudalla. e company and Milford have yet to agree on terms of an agreement but have been discussing it for about three months. According to Hudalla, that's because the town is asking for a very sig- nificant financial outlay of cash as part of the agreement. According to Hudalla, industry advocates and lawmakers, ProVerde's situation is similar to other companies and entrepreneurs looking to jump into the state's newest industry as cities and towns ask for what they call exorbitant cash payments and services, which advo- cates say don't comply with the law. For now, the Cannabis Control Com- mission won't review the agreements to ensure compliance with the law, as the state's adult-use cannabis regulating board voted 4-1 last month against a proposal by Commissioner Shaleen Title to review the documents. In addition to a local 3-percent sales tax, the state law legalizing the use and regulated sale of cannabis says munic- ipalities can ask for up to 3 percent of a marijuana establishment's gross sales as part of a community impact fee – provided the town can back up those requests with documented expenses. However, many signed agreements reviewed by WBJ appear to include other payments in addition to that 3-percent cap. "is issue is important because if no one enforces the limits, that undermines the explicit intent in the law to ensure that small businesses are included in the newly legal marijuana industry," Title said via email. "ere may be require- ments for them to make payments that exceed the limits that small businesses can't afford." Asking for 60% of revenues Testing labs like ProVerde have razor thin margins and are one of those businesses not able to afford impact fees, Hudalla said. Besides, the facility located in an office park along a busy road has largely been a quiet neighbor. Essentially, the company owes the town nothing for additional services rendered as a result of its opera- tions, Hudalla said. "at excessive cost for us is basically zero," Hudalla said. Hudalla said the town kept asking for a similar kind of payment to the $250,000 annual fee agreed to with marijuana grower Sira Naturals. Town Administra- tor Richard Villani did not return a call seeking comment for this story. Profit margins at marijuana testing facilities like ProVerde Laboratories in Milford are smaller than those of other types of marijuana businesses, like retailers and cultivators. PHOTO/MATTWRIGHT

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