Holyoke 420, a cannabis business in Massachusetts, is requesting nearly $300,000 in refunds from the city of Holyoke. This demand was made through a letter from MacMillan Law Offices, representing Holyoke 420. The business is asking for the return of all community impact fees that have been collected over the years.
In 2019, Holyoke 420 entered into a Host Community Agreement (HCA) with the city, which mandated that the business pay a community impact fee of 3% of its gross revenue each year. This fee is separate from other taxes, including a 10.75% state excise tax, a 6.25% state sales tax, and a 3% local tax, which together can amount to a total tax burden of up to 20%. The gross revenue included money earned from production, sales, and services provided within the city.
Holyoke Cannabis, located at 380 Dwight St., received its final license in January 2021 and began operations the following month. As part of the agreement, Holyoke 420 paid approximately $198,000 in community impact fees for the year 2021, calculated at the 3% rate. However, in 2022, the city reduced this fee to 1%, leading to a payment of about $93,000 in 2023. Across the years, Holyoke 420 has paid nearly $300,000 and is now requesting documentation from the city to justify the assessed fees.
James Jaron, the owner of Holyoke Cannabis, expressed concerns about the lack of transparency regarding the use of these fees. He pointed out that the business has not collected this fee in the past two years and questioned whether the impact fees were being used for their intended purposes. He stated, “Think about it, if you thought this is something legit, why would you give it up? Why would you decide to stop? There was no impact on that 3% so technically, legitimacy, the city of Holyoke should have never collected that money from me, but they just took it.”
Jaron also mentioned that instead of the city using the collected fees, he had to cover expenses for necessary services such as police officers. He explained that the HCA was a requirement for opening the business, stating, “What happened is if you didn’t sign the host agreement agreeing to this 3%, they wouldn’t give you the host agreement, you couldn’t open.”
In a letter dated April 29, 2021, the city indicated that it was working on establishing a fund to address the actual and anticipated expenses from operating marijuana facilities in Holyoke. The Office of Planning and Economic Development prepared a “Cannabis Industry Impact Statement,” which highlighted the positive impacts of the cannabis industry in the area, such as job creation and tax revenues. However, it also addressed the challenges posed by the cannabis industry, including stress on the city’s infrastructure and resources.
After reviewing the statement, Jaron and his legal team argued that the issues mentioned were not caused by Holyoke 420’s operations but stemmed from the city’s aging infrastructure and other systemic problems. In 2023, the city announced that it was updating renewal and impact documentation for all license holders, yet Jaron claims that the city has not provided any documented costs to justify the community impact fees to date.
