Worcester Business Journal

wbjournal.com | February 5, 2024 | Worcester Business Journal 9 PHOTOS | WBJ FILE W O M E N I N L E A D E R S H I P F O C U S BY ERIC CASEY WBJ Staff Writer A n Uxbridge cannabis busi- ness is set to receive a re- fund of nearly $1.2 million, following the settlement of a lawsuit over the Town of Uxbridge's decision to charge the busi- ness a community impact fee. Caroline's Cannabis, a dispensary with a location at 640 Douglas St. in Uxbridge, reached an agreement with the Town of Uxbridge to see $1,171,633 of communi- ty impact payments returned to the busi- ness, according to a Jan. 18 press release from Macmillan Law Offices, a Haver- hill-based firm representing Caroline's. e agreement comes following an April lawsuit Caroline's filed in Worcester County Superior Court seeking for the Town to provide documentation show- ing the impact fees were related to costs created by the dispensary's operations. "Hopefully this is a cautionary tale for those municipalities that are still resistant to refunding unsubstantiated community impact fees," omas MacMillian, the legal representative for Caroline's, said to WBJ in an email. Massa. law allows municipalities to charge cannabis businesses a community impact fee of up to 3% of the company's gross sales to cover costs imposed on Cannabis businesses urge local governments to return impact fees, as Uxbridge pays $1.2M to settle lawsuit Cannabis refunds the municipality reasonably related to the operation of the business. Cannabis operators have long argued these fees are unjust and cannabis establishments do not cause any additional costs to munici- palities compared to other businesses. "For years, communities have been treating cannabis community impact fees as piggy banks with zero accountability and little transparency," David O'Brien, president and CEO of the Massachusetts Cannabis Business Association, said in a press release issued Jan. 19. "e legislature has repeatedly made it clear that municipalities cannot legally collect fees that are not spent on reasonably- related municipal costs, but cities and towns are holding on to millions of dollars that were unjustly collected over the past few years. Communities need to immediately return all money that wasn't spent on reasonably-related costs." In the early years of the legal cannabis rollout, the way local governments were asking for large fees in exchange for approval of host community agreements served as an impediment to the growth of the industry and was one of the reasons why smaller businesses and those run by people of color had a hard time breaking into the sector. An analysis released by MassCBA in 2022 of 54 municipalities found they had collected $50+ million in impact fees. Based on the size of the cannabis economy, MassCBA says the total amount of collected impact fees could be as high as $165 million. Worcester's host community impact fee structure has undergone significant changes since the City collected its first recreational cannabis-related revenue in 2019. e City collected $5.2 million in fees between fiscals 2019 and 2023, said City spokesman omas Matthews. Once based on a standardized formula using sales projections provided by the marijuana establishment, the City switched to a flat rate of $5,000 in 2022 before eliminating fees altogether in January 2023. e City maintains these fees were the result of the mutually agreed upon terms and conditions reached with cannabis businesses, and these fees were compliant with state law. e refund issued by Uxbridge represents 80% of the payments Caroline's has made to the Town, according to Macmillan Law. "I'm happy that we were able to come to a mutual agreement," Caroline Frankel, owner of Caroline's Cannabis, said in the MassCBA release. "Unfortunately, it took litigation for the Town to recognize there are no negative impacts, and to resolve the case. is case should help other operators and municipalities to work out an agreement." Others in the Mass. cannabis space agree it's time for municipalities to reconsider impact fees, which are established in the host community agreements businesses are required to sign with their home municipalities. "Aer so many municipalities abused the host community agreement process for years, it's gratifying to see a fresh start initiated by new guidance from the CCC and some cities and towns even reversing course and returning some of the excessive fees," Shaleen Title, who served as a CCC commissioner from 2017 until 2020, said in the MassCBA release. "e small businesses who stood up for themselves and led this change should be commended." A bill signed into law by former Gov. Charlie Baker in August 2022 clarified municipalities are required to document any financial impact caused by the existence of a cannabis business within its borders, and fees should be directly tied to those established impacts. Caroline Frankel opened Caroline's Cannabis in Uxbridge in 2019, becoming the 11th dispensary in Massachusetts and the first where she avoided six-figure legal costs by teaching herself the regulations. How cannabis fees are spent In 2022, the Massachusetts Cannabis Business Association published the results of a survey with 42 municipal governments over where they had spent the money they collected from cannabis businesses. General fund 50% Infrastructure 19% 14% 10% 5% 2% Stabilization funds Police & firefighters Public schools Administrative costs W Source: Massachusetts Cannabis Business Association

• Cover