Massachusetts city becomes first in state to dissolve cannabis impact fee

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The controversial added tax is slowly being repealed

The city of Northampton, Massachusetts has become the first municipality in the state to actually stop assessing the controversial 3% “community impact fee” on sales from licensed cannabis dispensaries. The 3% fee was originally assessed to address social equity, then, a concept ahead of its time. Now, no one talks about the cannabis industry legalization without the obligatory addition of social equity.

In the state of Massachusetts, the tax has proven to be a burden on most small marijuana businesses that are struggling to survive these troubled times, like everybody else. Should other communities follow suit and also eliminate that extra 3% hit, it could “ease some of the financial burden marijuana businesses face in the state.” This could benefit greatly the capital-constrained small businesses and social equity applicants.

According to The Boston Globe, Northampton city officials said that they had already collected over $2.6 million from that little 3% tax. However, cannabis sales are taxed at the normal rate for Massachusetts small businesses, which provides more than enough revenue for townships such as Northampton to spend at will. The extra added burden of 3% more is what this is all about.

The marijuana industry in general in the state of Massachusetts has been complaining for years that the municipalities were abusing the situation by charging the maximum 3% of gross sales “without evidence of negative impacts.” Northampton mayor David Narkewicz told the Boston Globe that the city will now charge the extra 3% only if the operations create a specific cost to the city.” The mayor also added that “local officials now recognize the impact fees are an ‘impediment to smaller marijuana entrepreneurs, in particular social equity applicants.”