Two cannabis companies have filed a $6 million lawsuit against the town of Great Barrington, Massachusetts. Theory Wellness and Rebelle are demanding the refund of community impact fees the companies paid to the municipality under the terms of their host community agreements or HCAs. In January 2019, Theory became the first store in Berkshire County to sell recreational marijuana – an industry that’s raked in millions over the past five years. While the companies claim Great Barrington has repeatedly admitted it has incurred no costs from their presence, Town Manager Mark Pruhenski says they’ve broken their contract by refusing to pay the fee. Attorney David Rich of the Boston law firm Todd & Weld is representing the cannabis companies. He spoke with WAMC.
RICH: The lawsuit seeks to recover or recoup those monies that the businesses have paid to the town of Great Barrington over the past several years in what is called community impact fees. And the basis of the claim is that the manner in which the [Massachusetts] legislature set up the manner in which businesses, cannabis businesses would operate is that the cannabis operators would enter into what's called the host community agreement with towns or municipalities which would, at least in part, allow for the town to recoup those costs that it incurred as a result of the operation of these cannabis facilities. The law permits the town or the city to charge up to 3% of the gross sales of the cannabis facility to offset costs- But the law is quite clear that there must be costs incurred by the town, and those costs must be documented by the town and or municipality. In this context and in this case, the town of Great Barrington acknowledged repeatedly in writing that it incurred no costs, yet it continued to assess and insist upon receiving host community fees or community impact fees to the tune of just under $6 million. And this lawsuit in large part seeks to recoup those funds that we allege were improperly assessed and retained by Great Barrington.
WAMC: Now, is there any precedent for this kind of suit? Is this happening other places Massachusetts? Are there any outcomes you can point to that might suggest a precedent around this?
The short answer to that is yes. For example, there was a lawsuit brought by business owners against the municipality in Uxbridge. And Uxbridge, after litigating that case for some time, agreed to return, through the entry of a judgment, over a million dollars to the cannabis facility owners. And the city of Boston without even requiring a lawsuit made the decision, having examined the law, that the funds that it had collected for which there was no corresponding cost incurred by the city of Boston were returned. There is also other litigation ongoing involving other municipalities around the state, but the two that I've mentioned are two specific instances where – one voluntarily and one through the court system – the municipality did return fees that were improperly assessed against cannabis owners.
Now, we've heard a lot from the cannabis industry about the way it's been treated, compared to say, the alcohol industry. What do you think this sort of says about just the premise of the community impact fees just as a concept to begin with?
When recreational cannabis was legalized in Massachusetts, there was a concern, perhaps a legitimate one, that these sorts of businesses popping up in local communities would place a disproportionate burden upon municipalities, whether that be through additional police detail, traffic issues, or other sorts of problems. And so, the legislature recognized that and included in the original statute that the town had the right to recover, up to a certain threshold, those costs- But the key was that the municipality was required to track those costs disclose those costs. Instead, what has happened is that these municipalities have simply used these fees as a profit center with no corresponding cost or offset, and over time, it's become abundantly clear to in the industry that that these municipalities aren't suffering any additional burden or cost any more so than any other business in their community. Yet, however, the municipalities have continued to assess these fees, and, we alleged, simply as a source of revenue, which is unfair, and in many respects, it defeats the very purpose for which they were entitled to assess these fees.
In a statement, the town manager of Great Barrington Mark Pruhenski said, and I'm quoting here, that “both of these businesses freely agreed to the terms of their HCAs, including payment of community impact fees. Now, after skipping payments that were due, they want to declare that their payment agreements were illegal. In plain words, the failure to pay is a violation of the HCA is in a breach of contract.” That's the end of the quote. What are your thoughts on that assessment of the situation?
The law did not and does not permit them to assess fees against any business without a corresponding expense that the town incurred and then the town documented in writing. In this case, the town documented in writing there was no cost incurred. So, it's our position that the assessment, the receipts, and the retention of these fees was in complete and utter contradiction of the very statute which entitled them to enter into an agreement which allowed them to collect fees in order to offset costs.
