UP IN SMOKE? Status of one of two would-be dispensaries unclear

While the holder of one of Marblehead’s two licenses to operate cannabis dispensaries says he hopes to open by summer, the holder of the town’s other license may have abandoned her quest to set up shop on Atlantic Avenue.

“With grateful hearts, Kind Lab has closed its doors after five years of cultivating plant-powered wellness alongside an incredible community,” reads a message — presumably from the business’ principal, Marblehead resident Angela Arena Foster — on the business’ website.

The statement continues, “This may be our final chapter, but the lesson of prioritizing your own wellness lives on.”

Back on Nov. 22, 2021, Foster signed a host community agreement with the town on behalf of her business, Seven Leaf Sisters Inc.. Foster’s shop, named Partake by Kind Lab, was to have operated from 385 Atlantic Ave.

Last April 13, the state’s Cannabis Control Commission granted Seven Leaf its license, which was good for one year. The Current’s attempts to contact Foster to inquire about Partake’s status were unsuccessful. Email sent to her business accounts did not receive a response, and the phone number listed on her Cannabis Control Commission paperwork is not in service.

However, late Monday, Town Planner Becky Cutting said she heard from Foster for the first time since Dec. 15, and Foster reported that she is still planning to open Partake.

Town Administrator Thatcher Kezer said that he did not have any additional information about Partake’s status, but if Foster did not plan to use the license, it could be made available again.

“We would have to look at how to proceed,” he said.

Meanwhile, the other license holder, Aro Cannabis, finally completed a protracted process to get its provisional license from the Cannabis Control Commission on Jan. 14, according to its CEO, Marblehead resident Mark Schuparra.

That license will enable Aro to begin to build out its shop at 222 Beacon St., Schuparra said.

“I would like to be open by this summer,” he said.

Almost two years ago, the Select Board chose Aro over two other contenders for the license, in part because he had yielded to feedback he had gotten when he lost out to Seven Sisters in his first attempt to secure a license.

On the first go-round, Schuparra proposed operating Aro from 31 Atlantic Ave., but the sense of the board was that the Beacon Street location, near the Transfer Station, would have less of an impact on the community than if it were based in the downtown area.

Competing for the license with Aro were two other businesses, Flower & Soul and The Green Loft, which were proposing to set up shop at 56 and 28 Atlantic Ave., respectively.

That competition suggests that there might be some eager suitors, should Partake’s license become available. But Kezer is not so sure.

In the intervening two years, the cannabis market has become saturated, and prices have plummeted, according to Kezer.

“The industry seems to have changed,” he said.

Impact fees drying up

In terms of revenue potential for the town, state law allows municipalities to collect a 3% tax on cannabis sales.

In addition, at the outset of the licensing process, dispensaries typically enter into host community agreements. State law, G.L.c. 94G, §3(d), allows host community agreements to require dispensaries to pay “community impact fees” of up to 3% of their gross sales.

In the early days of the Massachusetts cannabis industry, it became standard practice for cities and towns to ask for the maximum allowed by law as part of those agreements.

But between the passage of a reform bill signed into law by then-Gov. Charlie Baker in August 2022 and regulations that followed a little over a year later from the Cannabis Control Commission, community impact fees have become less of a cash cow for municipalities.

The onus is now on cities and towns to document that the impact fees are “reasonably related to the costs imposed upon the municipality by the operation of the marijuana establishment.”

Within a month after the date of the renewal of a dispensary’s license, the host community must send documentation of the costs incurred by the municipality to the dispensary. The law explicitly allows cannabis businesses to sue cities or towns if they believe the municipality has not sufficiently justified the community impact fee.

The changes in the law prompted the city of Boston not only to stop collecting community impact fees but also to refund nearly $3 million to nine cannabis shops in the city.

More recently, in Uxbridge, a first-of-itskind lawsuit culminated in a settlement that saw the town cut a check of approximately $1.2 million to Caroline’s Cannabis, representing a refund of 80% of the community impact payments the business had made.

At least some industry watchers now expect cities and towns to be increasingly willing to refund community impact fees, either voluntarily like Boston or upon being sued like Uxbridge, and perhaps forgo them altogether.

Our neighbor’s experiences

In Salem, tax revenue from what are now five adult-use pot shops — Insa, Seagrass, Alternatives Therapies Group, Atlantic Medical Partners and Starbird — has grown steadily since stores first opened in 2019, providing a significant boost to the city’s budget, according to Salem Finance Director Anna Freedman.

“The excise tax has been helpful to Salem in terms of providing revenue for our needs and meeting our increasing fixed costs,” Freedman said.

The numbers support her assertion. Cumulative cannabis tax revenue in Salem jumped from $63,441 in fiscal year 2019 to over $4.4 million by the end of fiscal 2023. Freedman said the actual figures exceeded early expectations.

“Because this was a new industry and Salem was among the first communities to work to try to support its development, we didn’t have the benefit of detailed revenue forecasts for what it might generate,” she explained.

Freedman noted that, as part of the city’s general fund, the money supports Salem’s overall budget for services like public safety, education, infrastructure and more.

Previously, the city’s cannabis retailers voluntarily donated to Salem’s Transportation Enhancement Fund for programs like the on-demand Skipper ride service and Bluebikes bike share. However, recently amended state regulations now prohibit such contributions detached from the impact of the business on the community, according to Freedman.

Looking ahead, Freedman sees cannabis revenue continuing to benefit Salem’s budgetary needs, though primarily through the 3% sales tax.

“Because the state is drastically restricting what kinds of revenues communities can collect from these businesses, we are basically limited to the 3% local excise tax, which can only be used for general fund purposes,” she said.

Still, Salem’s position as an early adopter of adultuse cannabis served as a model for other cities eyeing the economic potential.

Swampscott, on the other hand, began reporting collections in fiscal year 2022. The revenue started modestly, with just under $5,500 coming in in December 2021. But collections quickly gained momentum as the community increasingly engaged with the town’s two permitted pot shops, Terpene Journey and Local Cannabis Company.

Throughout fiscal years 2022 and 2023, Swampscott’s collections climbed steadily, amounting to over $322,000 by the end of 2023. The town deposits quarterly payments from the Massachusetts treasury into its general fund.