Municipal leaders oppose new marijuana delivery licenses
Say delivery services could hurt local tax revenue
PROPOSED NEW STATE REGULATIONS that would authorize marijuana delivery companies to sell directly to consumers were already drawing fire from marijuana retail stores worried that they will lose business to the delivery enterprises. Now municipal leaders are raising red flags, too, asking state regulators to defer licensing marijuana delivery companies, citing the potential loss of local tax revenue, among other issues.
Brockton Mayor Robert Sullivan, in written comments to the Cannabis Control Commission, worried about the possibility of a small handful of delivery companies backed by third-party technology platforms dominating the industry with a handful of large warehouses in the state. “Such a scenario will result in effectively undermining the nearly seven years of investment in brick-and-mortar stores, the more than 15,000 jobs this new industry has to offer, and the municipal tax revenue generation the industry has already created for all participating municipalities – not just the small handful of communities hosting these large mega-warehouses,” Sullivan wrote.
The Cannabis Control Commission last month decided to allow a new business model for marijuana delivery companies and asked for public comment. They got it, by the earful. The commission received 123 pages of public comment on how marijuana delivery companies should be allowed to function. In addition to highlighting the debate between delivery companies and traditional retailers – who worry the new delivery companies will undermine them – the comments also illustrate the strong interest municipalities have in protecting their local retailers.
The commission will consider the issue at a meeting Tuesday.
Under state law, marijuana companies that locate in a municipality must sign a host community agreement. Those agreements generally give the community a 3 percent cut of gross sales, though some communities have asked for more through various donations and other fees. City officials worry that they will lose out on these fees if a delivery company based elsewhere lessens the business done by their brick-and-mortar stores.
Athol town manager Shaun Suhoski wrote that he just attended the ribbon cutting of Athol’s first marijuana retailer, Elev8 Cannabis. “The unforeseen and rapid process to carve out a new wholesale delivery license requires more time to study and understand its implications not only to the host communities, but also to small retail startups such as Elev8, that will undoubtedly face additional competition,” Suhoski wrote.
In Amherst, home to a large college-age population, town manager Paul Bockelman wrote that the community established clear local bylaws governing retail businesses, and he knows it is “a rich environment” for home delivery. He worries that home delivery services located in other towns would deliver to Amherst but not pay taxes there – and Amherst residents would no longer buy from local stores.
“We do not want this carefully crafted economic development model to be compromised by a new, unexpected new player in the field,” Bockelman wrote. “In short, I am concerned that these delivery services will siphon off much-needed financial support that has supported the community during these difficult economic times.”
Geoff Beckwith, executive director of the Massachusetts Municipal Association, warned that the type of delivery license being proposed – which lets delivery companies buy marijuana wholesale and market to customers –– may conflict with the state marijuana law by establishing a new class of business allowed to sell directly to consumers.
A group of 18 state legislators, led by Shrewsbury Republican Hannah Kane, also wrote to the commission questioning the entire legal underpinning of the new license type, saying the state marijuana law “deliberatively and intentionally created a license that made clear delivery of marijuana to consumers is directly and only linked to marijuana retail establishments.”
Beckwith wrote in public comments that municipalities, in addition to worrying about the impact on retailers and tax revenues, must also figure out how delivery companies fit within their bylaws. For example, a city or town can impose a cap on the number of marijuana retailers it hosts – but a delivery service can sell to consumers without being considered a retailer.
Several town officials said the process of licensing delivery companies felt rushed.
Shrewsbury select board chair Beth Casavant said local officials there spent a year developing bylaws to govern marijuana establishments in town. “The amendments currently under your consideration for adult-use delivery threaten to eviscerate the local restrictions adopted and reduce the limited financial benefits that were provided to municipalities to offset the costs of this industry,” Casavant wrote. She said under the delivery rules, “A seemingly endless number of companies, all of which can operate without any direct oversight of the Town, can enter and conduct business in a fledgling industry that should be closely monitored at the local level.”Worcester Mayor Joseph Petty asked the commission to give municipalities more time to develop planning and zoning changes that will let municipalities honor their agreements with existing retailers while accommodating the new delivery license. “It is important that the State not create a delivery model that bypasses local control and circumvents the current regulations,” Petty said.
Also opposing the delivery regulations were Lawrence Mayor Dan Rivera and Springfield Mayor Domenic Sarno.