Metropolis of Northampton Mermaids 3% Impression Payment in Host Group Agreements | Foley Hoag LLP – Hashish and the Legislation

The City of Northampton announced that it is dropping the 3% fee charged by marijuana facilities and medical marijuana treatment centers to the community. Instead, the city does not charge an impact fee until certain costs have been identified for the community. The change applies to both existing and potential licensees.

Massachusetts law allows communities to charge a fee limited to 3% of gross sales for the first five years to cover the cost of running a cannabis business. Reaching an agreement on the Community Impact Fee is part of entering into a Host Community Agreement. This is an essential step along the way for any cannabis company applying for a license.

Northampton said the decision to lower mandatory impact fees made sense for both the city and businesses. Northampton Mayor Narkewicz said: “I really see this as another barrier that we are lowering because it will ultimately lower costs for all operators and I think it is the right move for Northampton. I can’t really speak for other cities. “

Why should a church willingly pass on this source of income?

One reason might be that Massachusetts law requires that an impact fee be “proportionate to the costs incurred by the community in operating the licensed facility.” The law also stipulates that the municipalities must document the impact costs they incur.

According to reports, Narkewicz noted that Northampton’s experience was that cannabis retailers did not cause a “major impact” as predicted prior to legalization, and that this was a reason for approving the impact fees.

In addition to collecting up to 3% of gross sales for an impact fee, municipalities can also add an optional 3% municipal excise tax to cannabis sales. The state levies a sales tax of 6.25% and a consumption tax of 10.75%.

Northampton states that local excise tax continues to be levied and that revenue is not limited to paying direct impact expenses. If lowering the 3% impact fee can help attract more businesses to the community, the move could bring in more tax revenue to fund programs unrelated to cannabis in the community.

Time will tell if other cities and towns will follow the Northampton approach and announce a comprehensive policy on impact fees or make those decisions from applicant to applicant. We have blogged about other topics related to the host community agreement process, including a case in the Supreme Court about host community agreements.

As more communities may seek to adjust their impact fees, the change is sure to add even more diversity to the unique process each operator faces when negotiating an agreement with their host community.