WHAV (https://whav.net/2024/10/21/cannabis-retailer-says-haverhill-dragging-its-feet-on-host-pact-delay-threatens-state-license/)
Stem’s Caroline Pineau consults with Attorney Thomas K. MacMillan during a City Council meeting in 2019. (WHAV News file photograph.)
A Haverhill-based cannabis retailer says the city is delaying required renegotiation of its host community agreement which could cost the company its state license.
Stem, which has been embroiled in a legal dispute with the city since 2021 over impact fees assessed against the business, alleges Haverhill has refused to renegotiate terms of the host community agreement since contacted in March. Owner Caroline Pineau said a new agreement, conforming with revised state law, is a requirement from the state’s Cannabis Control Commission. Pineau provided emails addressed to the city March 14, June 21 and July 11, along with a March 14 letter indicating her intent to renegotiate her host agreement with the city.
“All I want is to be treated fairly like any other business,” she told WHAV.
Stem’s agreement no longer complies with Cannabis Control Commission regulations.
“Non-compliance could be they forgot to include information. It could just mean that they forgot to include a phone number, it sounds worse than it is,” a source at the Commission told WHAV on the condition of anonymity.
Host agreements are now under the jurisdiction of the Commission amid new regulations in 2022 following former Gov. Charlie Baker signing a new cannabis social equity law.
“Some communities were doing crazy stuff with HCAs,” the source said.
Besides an undisputed sales tax, the original agreement calls for the city to be paid 3% of Stem’s gross sales in so-called “community impact fees.” As WHAV reported last June, Superior Court Judge Jeffrey T. Karp refused Haverhill-based Stem’s request to immediately decide in its favor that city fees are overinflated and lack proof, but ruled Haverhill must properly account for any increased cost to the city by hosting cannabis businesses.
Pineau believes cannabis business’ impacts are overstated.
“The most frustrating element of all this for me is not just having Haverhill be so behind all other communities in acknowledging the unfairness of collecting cannabis impact fees when there have been no impacts,” she said.
According to data provided to WHAV from a public records request, Stem is the only cannabis business out of four operators in the city that has paid its community impact fee consistently through 2023.
Other operators, such as CNA and Full Harvest Moonz, paid in 2021 and 2022 respectively. The fourth operator, Mellow Cannabis, is not listed as having paid an impact fee.
According to a September 2021 report from MGT Consulting, Stem’s, along with CNA and Full Harvest Moonz reported impact on the Haverhill Police Department was each approximately $26,270 per month in annual costs. Stem’s aggregate impact on the Haverhill Police Department is stated as approximately $867,000.
In an email provided to WHAV, the Haverhill Police Department says it does not have records attributable to Stem.
The report also notes both CNA and Full Harvest Moonz has a monthly impact of $42,444, while Stem has a monthly impact of approximately $46,748. The discrepancy arises from disproportionately higher one-time legal fees attributed to Stem.
“Seeing the city refuse to renegotiate an HCA with someone who has paid so much in taxes to Haverhill and given so much to local charities. It’s disappointing and petty, and it’s unwise from both a business and moral perspective,” Pineau said.
In a Feb. 28, 2021 letter from former City Solicitor William D. Cox Jr., the city said it believes that retail marijuana stores have caused a substantial increase in costs across a spectrum of municipal departments, but specific figures are disputed. Karp, for example, knocked down one of Haverhill’s key arguments, deciding “marijuana use and abuse educational programming” is not a cost solely related to Stem. The judge left open the possibility that Haverhill could proportionally assess educational expenses against all cannabis retailers.
Before 2022, the city was not required to maintain detailed invoices for increased costs related to hosing the business. Karp explained in June that “reasonably related,” cited in both the old and new laws, suggests the city must show any expenses are “connected to a fair or moderate degree.”
According to expense data from the public records request, the city has spent approximately $485,000 on impacts, while collecting approximately $1.38 million in revenue.
WHAV asked city officials by email for additional information regarding negotiations. WHAV did not receive a response in time for this story.
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