Editorial: Waiving of impact fees a mark of legal marijuana’s success

  • Matt Yee, director of retail sales for Resinate, and dispensary manager Jennifer Hawkins pose in the marijuana dispensary's new outlet on Pleasant Street in Northampton on Wednesday, Nov. 18, 2020.

Published: 2/18/2021 1:54:06 PM

When Northampton Mayor David Narkewicz announced last month the city would forgo collection of community impact fees from local marijuana businesses, it was a recognition that legal cannabis has not had the baneful social impacts some feared.

Since 2016, when New England Treatment Access opened a medical marijuana dispensary in the city, Northampton has amassed more than $3 million from the optional impact fee, a 3% tax (1.5% on medical marijuana sales) it collects in addition to the 3% excise tax on all gross recreational marijuana sales.

Under Massachusetts law, the impact fee must be “reasonably related to the costs imposed on the municipality by the operation of the marijuana establishment.”

As examples, Northampton’s host community agreements all cite “... impacts upon its road system, law enforcement, inspectional services, permitting services, administrative services and public health services, in addition to potential additional unforeseen impacts upon the city.”

The revenues from the impact fee can only be used for these kinds of community impacts, and may not be channeled into the city’s general fund. The arrangement expires after five years, at which point it must be renegotiated.

As of January, according to Narkewicz, the city had spent about $1 million of the impact fees it had collected on, for example, road repairs and improvements in the neighborhood of NETA’s dispensary.

“There haven’t been necessarily any major impacts,” the mayor said. “A lot of the concerns, potential concerns, about this industry mostly came from people who opposed legalization and thought there would be increases in crime, or there would be increases in drug abuse, etc. And I think those concerns have not materialized. We certainly haven’t seen that here in Northampton.”

Police overtime for traffic control around NETA, another significant cost to the city, is billed separately. That cost amounted to $804,403 in 2019.

Easthampton and Amherst have followed Northampton’s lead and assessed impact fees in their own agreements with dispensaries. Easthampton has netted approximately $1.2 million in impact fees, and Amherst less than $350,000. Those municipalities, however, are not prepared to follow suit on granting a tax amnesty just yet.

Northampton, it must be said, is in an enviable position. Owing to geography and an accident of birth — it was the first recreational pot shop to open in the entire Northeast, in November 2018, a minute from the region’s main north-south interstate — NETA was swamped with eager customers from Day One. Traffic and long lines of people out the door and down the street certainly have caused some problems, but after two years, things have settled down. New dispensaries have opened, and more plan to do so.

In exchange for all this heady commerce, the city has netted more than $3 million for its general fund. With more than that amount already banked from community impact fees, it’s well situated to call a halt to the collection of those fees. They’re not canceled — should the city incur unexpected costs associated with a particular business, it reserves the right to reimpose the fee.

Legal marijuana has not brought social woes and troubling consequences to those municipalities that have welcomed it. It has, instead, proven to be not only low-impact but a most lucrative business, for the purveyors and for the host communities.

One of the stated aims of the law that legalized cannabis in Massachusetts was to provide business opportunities to people of limited means, particularly Black and Hispanic people who have been harmed disproportionately by the criminalization of marijuana.

In making the recent change, Narkewicz acknowledged as much, saying he wants to “try to put up as few barriers and hurdles to the industry — particularly to small entrepreneurs and equity applicants.”

The legal marijuana industry will truly be a success story if it can fulfill that promise.

Daily Hampshire Gazette Office

115 Conz Street
Northampton, MA 01061


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