Massachusetts cannabis company wins $1.2M settlement in ‘impact fee’ lawsuit

Caroline's Cannabis alleged that use of the fees were undocumented, making them illegal.

In what could prove to be a landmark deal, Massachusetts marijuana company Caroline’s Cannabis reached a $1.2 million settlement with the town of Uxbridge, after the company sued for undocumented “impact fees” levied against it.

Uxbridge is only the latest Massachusetts municipality to lose some of the cash it had previously collected from the marijuana industry, the Franklin Observer reported.

The fees – which had originally been written into the state law that legalized recreational marijuana as a way to supposedly offset local impacts of the new trade – have come increasingly under fire, and the city of Boston took a preemptive step of refunding $2.8 million in fees it had charged operators. Many industry insiders have long argued the fees had become abusive and unjust, and far outstripped whatever added cost the cannabis trade may have brought to the state.

A state analysis in 2022 found that Massachusetts towns and cities raked in more than $50 million in “impact fees” in just 54 of the state’s 351 municipalities.

A new state law signed that same year required towns to closely document the collection and use of “impact fees,” the Observer reported, but Caroline’s Cannabis alleged the town of Franklin didn’t bother following the new rule.

“For years, communities have been treating cannabis community impact fees as piggy banks with zero accountability and little transparency,” David O’Brien, the president of the Massachusetts Cannabis Business Association, told the Observer.

“The legislature has repeatedly made it clear that municipalities cannot legally collect fees that are not spent on reasonably related municipal costs, but cities and towns are holding on to millions of dollars that were unjustly collected over the past few years,” O’Brien said. “Communities need to immediately return all money that wasn’t spent on reasonably related costs.”

Caroline Frankel, owner of Caroline’s Cannabis said she was “happy” that the company reached a “mutual agreement” with the town of Franklin.

“Unfortunately, it took litigation for the town to recognize there are no known impacts, and to resolve the case. This case should help other operators and municipalities to work out an agreement,” Frankel told the Observer.

John Schroyer

John Schroyer has been a reporter since 2006, initially with a focus on politics, and covered the 2012 Colorado campaign to legalize marijuana. He has written about the cannabis industry specifically since 2014, after being on hand for the first-ever legal cannabis sales on New Year’s Day that year in Denver. John has covered subsequent marijuana market launches in California and Illinois, has written about every aspect of the marijuana trade, and was part of the team that built the cannabis industry’s first-ever trade show, MJBizCon. He joined Green Market Report in 2022.

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