HATFIELD — A cannabis manufacturing and processing company will be allowed to continue its operations on Routes 5 and 10, with a new host community agreement in place and pledge from the business to make a $40,000 contribution to the town.

Despite concerns from the Select Board that Treeworks LLC didn’t meet the financial terms and other aspects of the original host community agreement signed in 2019, the board at its Feb. 6 meeting unanimously approved a new five-year agreement, along with a settlement pact that Treeworks will make quarterly $10,000 payments throughout 2024.

Select Board Chairwoman Diana Szynal said Hatfield officials’ hands were tied by state legislation passed in 2022 that no longer allows cities and towns to collect a percentage of gross sales from cannabis, and also limits the ability for communities to retroactively collect that money.

“This is a reasonable agreement that is fair to the community and fair to Treeworks,” Szynal said.

The legislation places limitations on community impact fees, include a prohibition on fees that are tied to a percentage of gross sales. This means Hatfield is unable to recover the five-year, 3% annual tax set in the original agreement.

Szynal said the new agreement partially recognizes contents of the previous one that, in addition to money coming to the town, would offer education to Hatfield students.

“We definitely want a good business like theirs to continue to be able to do that,” Szynal said, adding, “This is a really good compromise.”

Milo Childs Campolo, a Treeworks founder, said he appreciates that a new deal was reached. “I feel strongly that we are prepared to fulfill the agreement as agreed upon and continue to offer medicinal products to the community and jobs and keep a good standing with the town,” Milo said.

Treeworks opened in May 2020 and employs 30 people, making cannabis products for retailers and dispensaries, such as edible gummies, a pain salve that is a non-psychoactive cream for achy joints and sore muscles, and tinctures, which are medicinal cannabinoid liquid.

The exact use for the $40,000 is unknown, though will likely go toward a capital project in town, rather than paying for any recurring expenses. Szynal said a school-related project is possible.

The initial quarterly payment, for January, February and March, has been received, with the next payment due on April 1. “We trust that they will honor that,” Szynal said.

Paul Dostal of Main Street told the Select Board that residents voted to allow cannabis-related businesses because of the revenue they could generate locally, helping fund schools and other initiatives. In the initial years of adult-use marijuana sales, Northampton collected $3.1 million in community impact fees.

While Hatfield could have pressed the matter of the lost money, Select Board member Ed Jaworski said any legal action may not have been successful, and would have been costly.

The legislation also narrows a community impact fee to specific services provided, such as police details or infrastructure to accommodate traffic, which are not being provided in Hatfield.

Szynal said her frustration is with the Legislature.

“I don’t think it was a fair way for the Legislature to treat municipalities,” Szynal said.

Scott Merzbach can be reached at smerzbach@gazettenet.com.