Reefer Refund: The Quiet Reversal of Cannabis Impact Fees

In the early days of legal marijuana in Massachusetts, towns across the state saw a green rush—not just in dispensary storefronts, but in municipal coffers. Thanks to a provision in state law, communities could charge cannabis businesses up to 3% of their gross sales as “impact fees,” meant to offset the costs of hosting these new enterprises. The idea was simple: more traffic, more policing, more public health concerns. But in practice, the fees often became a quiet windfall, with little oversight and even less documentation.

Now, the tide is turning. In Western Massachusetts, several towns are facing legal challenges, public scrutiny, and in some cases, the obligation to give the money back.

Take Great Barrington, a town that welcomed dispensaries early and enthusiastically. It’s now facing a $6 million lawsuit from three cannabis businesses—Farnsworth Fine Cannabis, Rebelle, and Theory Wellness—who argue that the town collected fees without proving any actual impact. The town’s own admission? It found “no significant costs” from hosting the businesses. That’s a costly confession.

They’re not alone. Uxbridge settled with Caroline’s Cannabis for $1.2 million after failing to justify its fees. Haverhill refunded 70% of what it collected from one dispensary. Even Boston, which had collected millions, reversed course and returned $2.86 million in late 2022.

What’s changed? In 2022, Massachusetts passed a reform law requiring towns to document how impact fees are spent and prove they’re “reasonably related” to actual costs. The Cannabis Control Commission (CCC) now has sharper teeth, rejecting host community agreements that don’t meet the standard. In 2024 alone, 75% of proposed agreements were sent back for noncompliance.

For towns, this is more than a legal headache—it’s a budgetary reckoning. Many used the fees for general expenses, assuming the money would keep flowing. Now, with refunds looming and new rules in place, they’re forced to rethink how they fund services. The 3% local cannabis tax still applies, but it’s separate from the disputed fees and often less lucrative.

For dispensaries, the shift is a win for transparency and fairness. Many argue they’ve been treated like ATMs, charged for impacts that never materialized. With the legal landscape changing, they’re pushing back—and winning.

But the story isn’t just about money. It’s about how communities adapt to new industries, and how old habits—like quietly padding budgets—don’t hold up under scrutiny. It’s also a reminder that legalization doesn’t just mean new storefronts and products; it means new relationships between businesses and towns, and new expectations for accountability.

In Western Mass, where small towns often punch above their weight in civic engagement, this reckoning feels especially pointed. Residents who supported legalization may now wonder where the money went. Town officials who once saw cannabis as a fiscal savior are now navigating a more complex reality.

As for the dispensaries, they’re not just selling weed—they’re reshaping local governance. And in doing so, they’re forcing a long overdue conversation: What does “community impact” really mean, and who gets to define it?