Great Barrington — The town will soon find itself in court against two marijuana dispensaries over Host Community Agreements. Over two weeks after marijuana establishments Theory Wellness and Community Growth Partners, which owns Rebelle dispensary, threatened to sue the town over the previously signed Host Community Agreements, the companies filed their lawsuit in Middlesex Superior Court against the town on Thursday, March 14.
Back on February 27 through a letter from attorney David Rich with Todd & Weld LLP of Boston, marijuana establishments Theory Wellness and Community Growth Partners threatened to sue the town over the previously signed Host Community Agreements. The companies are demanding that the town return over $5 million that they paid the town over the years as part of the agreements.
Theory Wellness signed its Host Community Agreement with the town on October 17, 2016, and another one on June 18, 2018.
Community Growth Partners signed its Host Community Agreement with the town on March 20, 2019.
In his letter, Rich claims that both companies were “… forced to tender to the town millions of dollars in unlawful Community Impact Fees, legal fees and additional costs, payments, and reimbursements.” Rich also claims that the town “… is unjustifiably refusing to negotiate or enter into new HCAs, ones which comply with the actual requirements of Massachusetts law, with either of my clients until such time as each pays the town additional unlawful fees. The town’s conditioning its willingness to enter into a new, legally compliant HCA upon the requirement that my clients make patently illegal payments to the town is extortionate in fact, and reflects yet another violation of their legal rights.”
At its meeting on March 11, the Selectboard held an executive session to discuss the threatened litigation. In a public session during that same meeting, the board did not take any action concerning the potential litigation. However, several residents stated their concerns over what they call a lack of transparency with the way the town is handling the case.
On Wednesday afternoon, March 13, Town Manager Mark Pruhenski posted a statement concerning the potential legal case on the town’s website. In the statement, Pruhenski writes that the Host Community Agreements “… were willingly entered into when the businesses approached the town in connection with their requests for a license to operate from the Massachusetts Cannabis Control Commission.”
“A Host Community Agreement was a requirement to obtain a license from the state,” Pruhenski writes. “The town did not suggest or in any way require that these businesses seek to locate and operate in Great Barrington; they did so by their own determination that the town would be a favorable place to engage in the sale of marijuana products. By most, if not all, accounts, their operations have been financially rewarding.”
Pruhenski writes that, under the Host Community Agreements, the companies previously agreed to the amount of the community impact fees and a payment schedule for the fees. “They are now asserting that the fees were illegal, and that the town should make a full refund,” Pruhenski writes. “This demand is not based on a court ruling or a determination by the Cannabis Control Commission, or any other state agency, that the impact fees paid to the town were illegal. Rather, it is an ultimatum resting on the preferred view of businesses in the marijuana industry — a one-sided view.”
Pruhenski writes that the town “… has been diligent in monitoring the effects of marijuana sales in and around Great Barrington.”
“As would be the case with any new industry, some of those effects cannot be fully known for several years while some can be more apparent, such as the need for education and counseling for citizens young and old regarding marijuana use,” Pruhenski writes. “That need and others can be addressed with the help of community impact fees paid by marijuana businesses. To wisely manage the fees it receives, the town has created a Community Impact Funding Committee to evaluate applications for grants toward community support and resources.”
Pruhenski went on to accuse both companies of skipping Host Community Agreement payments that were due to the town, but did not go into detail in his statement. “In plain words, the failure to pay is a violation of the HCA’s [sic] and a breach of contract,” Pruhenski writes. “The town understands that these establishments will likely file legal action and ask the courts to order the town to issue refunds. If that happens, the town will respond accordingly, and will take the reasonable and appropriate action to defend the legality of the HCA’s [sic]. When two parties voluntarily enter into a contract, each has the right to expect that the other will continue to comply with the contract if they both keep their ends of the bargain and don’t breach the contract. In this instance, the town believes that it has complied with the requirements of the HCAs with Theory Wellness and Rebelle and that it has not committed any breach that would relieve the businesses from their obligations. Therefore, the town has relied on these businesses to fulfill the promises they made in the HCA’s [sic], and will continue to expect that they abide by their commitments.”
After Pruhenski posted his comments to the town’s website, The Berkshire Edge contacted Thomas Winstanley, chief marketing officer for Theory Wellness, for a response. As of press time, however, Winstanley has not responded to The Berkshire Edge.
The lawsuit against the town was filed a few hours after Pruhenski’s comments. A copy of the lawsuit filing can be found here.
Update March 14, 4:10 p.m.: A few hours after The Berkshire Edge posted this story on its website, Brandon Pollock, CEO of Theory Wellness sent via email a response to Pruhenski’s remarks. In Pollock’s statement, he revealed that a third dispensary, Farnsworth Fine Cannabis, has joined in the lawsuit against Great Barrington.
The following is the full statement sent to The Berkshire Edge by Pollock:
Theory Wellness, Rebelle, and Farnsworth Fine Cannabis, have jointly filed suit against the Town of Great Barrington, over the town’s unwillingness to return illegal impact fees which we have been forced to pay over the years despite the town’s repeated acknowledgement in writing that the operation of our businesses has not caused the town to incur any costs. We are not alone – there is a trend across the Commonwealth of dispensaries pushing back against the illegal and unethical treatment they have experienced over the past several years.
Our position is clear.
Massachusetts General Laws Chapter 94G requires that any Community Benefit Fees paid to a town under a Host Community Agreement (HCA) must only be used to offset actual costs incurred by the town.
These costs are required to be documented and reported to us in writing annually by the town. A copy of this report must be included in our license renewal with the Cannabis Control Commission (CCC).
Every year Great Barrington has written to us and confirmed in writing that they have incurred zero costs (copies of some of the town’s confirmatory statements were included in our lawsuit as exhibits).
It is important to note that Impact Fees are different and separate from the taxes we pay to the town. What many may not realize, is that we have paid to the town of Great Barrington over $5M in taxes, in addition to nearly $6M in impact fees over the past several years.
Several other cities and towns in the Commonwealth, including the City of Boston and the town of Uxbridge, have performed a legal assessment of the matters raised in our lawsuit and have determined that the Community Impact Fees paid, for which the municipality incurred no corresponding expense, should be refunded. Many more legal cases are pending, including cases in the Berkshires.
We did not want to have to file a lawsuit, as we are deeply invested in the community, its businesses, and the people we employ and serve here. Lawsuits are costly and time intensive. However, we have tried many times over the last year to engage directly and amicably with the town and have been repeatedly ignored and our concerns dismissed. On top of it all, the town is holding new, legal host agreements hostage unless we pay additional hundreds of thousands of dollars in disputed fees which we believe to be another illegal and coercive tactic.
While this dispute is ongoing, and in further defiance of the law, the town has recently voted to accelerate the spending of these impact fees with a recent $1.5M recommendation to invest in real estate development. Instead of the town using impact fees directly to offset documented costs as required by the law (and which they have admitted in writing there are no costs), they have instead been soliciting requests from organizations who want a piece of these funds. Great Barrington’s process of encouraging organizations to petition to receive funds from this protected pool demonstrates in and of itself their disregard to how impact fees must legally be used.
Our desire to resolve this amicably has not changed, however we are faced with no other option to stand up for our rights. We only ask that the town adhere to the law, return the illegal fees they have collected and avoid an elongated litigation process at the taxpayers’ expense.
