City's marijuana money goes up in smoke

Beverly has returned $81,000 in 'impact fees' to a dispensary. Here's why.

I was driving by the city’s newest marijuana dispensary, Reverie 73, the other day and had two thoughts: First, what the heck does the ‘73’ stand for? And second, how much money is the city getting from these marijuana businesses, of which there are now three?

The first answer is easy — ‘73’ refers to 1973, the year the first state decriminalized cannabis (Oregon).

The second answer is a bit more complicated. But I’ll give you a heads-up on the most interesting part — at one point the city’s first dispensary, Panacea Wellness on Enon Street, paid $81,134 to the city as required by an agreement the two parties signed. Four months later, the city gave the money back.

The Panacea Wellness marijuana dispensary on Enon Street in North Beverly.

Here’s the explanation I got from the city. When Massachusetts legalized marijuana in 2019, the state allowed communities where dispensaries opened to charge the businesses “impact fees,” reasoning that the traffic and potential security issues caused by the businesses would cost the city money, such as for police overtime. Remember the long lines and traffic when Salem opened one of the first dispensaries? That was the idea behind the impact fees.

So when Beverly and Panacea Wellness signed their agreement in 2019, it included an impact fee of 3% of the business’ gross sales. That was pretty much standard among these ‘host community agreements’ around the state.

But it turns out the supposed impact of marijuana dispensaries was way overblown. There are now more than 380 of them in the state, and they’re pretty much like any other business. So the state’s Cannabis Control Commission changed the rules, saying communities could no longer charge blanket impact fees covering impacts that might or might not happen, but instead had to document any impact and show that it was “reasonably related” to the dispensary.

“Once you took a look, there were no impacts,” Mayor Mike Cahill told The Beverly Beat.

Panacea actually sent three checks to the city totaling $81,134.77 in October of 2023, before the rules changed. Cahill said the city never cashed those checks because of the uncertainty of the situation. Then in February of 2024, the city returned the checks to Panacea.

Hence the ‘up in smoke’ metaphor.

David O’Brien, president and CEO of the Massachusetts Cannabis Business Association, told The Beverly Beat that the city did the right thing. He said the impact fees amounted to an unjustified “money grab.” One city, he said, tried to attribute costs like hiring a school drug counselor and buying more bullets for police to a new dispensary in town.

“It was laughable,” he said.

O’Brien said anywhere from a half-dozen to a dozen cities have returned money to dispensaries, including Boston. He hadn’t heard about Beverly’s refund but said, “If they’re giving money back I applaud Mayor Cahill and his leadership on this. It’s something too few elected officials acknowledge.”

Other communities are not only refusing to refund the money but are continuing to assess the fees, he said. Several communities have been taken to court over the issue, with some being forced to refund the money.

The city did not charge impact fees to the other two marijuana businesses, which opened after Panacea Wellness. There’s a marijuana manufacturing facility on Sam Fonzo drive and the recently opened Reverie 73 on Rantoul Street.

The city, it should be noted, has received $296,055 from Panacea Wellness in a separate local tax that communities are allowed to charge marijuana businesses.