A recently published report on how cities and towns use fees charged to marijuana retailers in their communities has raised a number of red flags about how the money is used. Or, in the case of some communities being abused.
Moreover, it raises questions about transparency, or, in the case of some societies, a lack of transparency.
Finally, the report, compiled by a Northeastern University professor at the behest of the Massachusetts Cannabis Business Association, a trade group, raises questions about accountability. Or, more specifically, the lack of it.
Jeffrey Muir of Northeastern University’s School of Public Policy and Urban Affairs said a review of local spending records revealed “widespread differences” in how communities collect, track and report fee spending from cannabis companies.
“With no effective oversight over the collection or spending of these fees, it is up to municipalities to comply with the law that governs them,” Muir said. “While some municipalities follow the spirit of the law and strive for true transparency, most municipalities do not.”
The result of these irregularities directly affects small businesses as well as their customers in the form of higher prices and a higher cost of doing business.
Carolyn Benio, owner of Stem, a Haverhill retailer, noted that the justification for the higher fees — the need for more police calls or fire calls in marijuana stores — is completely unjustified.
“We opened our doors three years ago, and in that time, we’ve shown that we’re no different than any other local business,” she told State House reporter Christian Wade. “We should not be treated like a piggy bank from which to break into for domestic spending that has nothing to do with our business.”
In fact, Muir found that in many cases, money is deposited into the public funds of communities, with no way to keep track of how it is used. For everyone he knows, the money could be used to pay the mayor’s salary, public works employee health benefits, or a new plow for a DPW truck.
The report was based on public records requests made to 88 local governments, including Salem, Massachusetts, Gloucester, Haverhill and Amsbury.
The report said at least 12 communities, including Gloucester and Amesbury, were among those that had not explained how the money from the fee would be spent.
The law gives communities the option of selective taxation of up to 3% on retail sales. This is in addition to the state sales tax of 10.75% on cannabis and the state sales tax of 6.25%.
In addition to those taxes, cities and towns may charge impact fees “reasonably related to the costs” of hosting a business, such as providing more police patrols. But this fee cannot exceed 3% of the company’s total revenue.
Fortunately, cooler heads may soon prevail. The state legislature is considering legislation that would nullify existing host agreements between marijuana operations and local governments, and is asking them to renegotiate terms.
A six-member panel of House and Senate negotiators is drafting a final version of the motion.
We hope that the legislature will act soon to clamp down on aggressive fees levied by host communities.
At least one big concern is that so much money is being demanded from these fledgling companies that eventually only the big companies will be able to play in the sand of marijuana retail stores. And that in itself would be a crime, because prices will continue to rise and the only real losers will be the cannabis customers themselves.