HOLYOKE — In a demand letter sent to the city from MacMillan Law Offices on behalf of Holyoke 420, the business is requesting that Holyoke refunds all community impact fees it has collected over the years totaling nearly $300,000.
The city and Holyoke 420 entered into a host community agreement in 2019 that required Holyoke 420 to pay the city a Host Community Impact Fee of 3% of Holyoke 420’s gross revenue from all its operations in the city during each full calendar year.
This impact fee does not include a 10.75% state excise tax, a 6.25% state sales tax and 3% local tax, totaling up to 20% in taxes.
The gross revenue was defined to include revenue from production, sales, operations or services in the city.
Located at 380 Dwight St., Holyoke Cannabis was granted its final license in January 2021 and commenced operations in February 2021.
In accordance with the HCA, Holyoke 420 made annual payments of the community impact fee to the city. They paid approximately $198,000 in 2022 for its 2021 CIF at the rate of 3% of gross revenue.
The city reduced the CIF to 1% for 2022 and Holyoke Cannabis paid approximately $93,000 in 2023.
In total, Holyoke 420 has paid nearly $300,000 and has made a request for the city to provide its documented costs to support the assessed CIF.
Holyoke Cannabis owner James Jaron told Reminder Publishing that they have not collected this fee over the last two years and feels as if the impact fees were not being used for its intended purpose.
He said, “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 explained that he had to pay for police officers among other things the business needed instead of the city asking to use the fees they have been collecting.
When asked why he signed the HCA, Jaron said, “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 stated it was “currently in the process of establishing a fund and determining actual and anticipated expenses resulting from the operation of marijuana facilities in Holyoke.”
A summary was prepared by the Office of Planning and Economic Development titled “Cannabis Industry Impact Statement.”
The Cannabis Industry Impact Statement said, “The cannabis industry is providing many positive impacts in the city and greater Holyoke area, such as jobs, rehabilitation of old mills and tax dollars. These benefits do not come without some struggle, [hundreds] of staff hours, strain on an aging infrastructure, increase social inequities and a ripple effect on other businesses and housing projects.”
It continued, “Navigating both the local and state regulations has become an overriding demand for many city departments, putting additional stress on a lean municipal team as well as our volunteer boards. Planning, inspections and security of these new businesses has an impact on the city’s ability to address other issues and projects within the city.”
After reading the statement, Jaron and his representation felt that none of the alleged impacts referenced in the summary were the result of the operations of Holyoke 420 but were related to the aging infrastructure or other problems inherent to Holyoke.
In 2023, the city said it was in the process of updating all renewal and impact documentation for licensee holders in the city and was reviewing and continuing to document impact costs.
To this date and according to Jaron, the city has not provided any documented costs in conjunction with its required renewal with the Cannabis Control Commission each year.
This is not the first time Holyoke 420 has requested a refund. In February 2024, they set forth an objection to the city’s collection for a percentage of Holyoke 420’s gross revenues because they felt the city collected such fees without proper documentation of any costs.
Holyoke 420 reiterated that a letter sent in response to their complaints in 2023 did not comply with the general law and demanded a return of all CIFs from Holyoke 420 within 60 days. The city did not refund the payments.
In a final attempt, Holyoke Cannabis was hoping to receive a refund before April 1 and stated in the letter that they would seek legal action if they did not.
Jaron told Reminder Publishing that they have not received a refund, and he has filed the paperwork in the court to sue Holyoke for the money.
“It’s not more of just a demand at this point, it’s become a legal matter,” he stated, “My feeling is they didn’t leave me any other option. I don’t want to file a lawsuit against the city of Holyoke, you think I have nothing better to do but we’ve asked, we’ve sent letters, we documented, we sat in meetings, we told them not spend the money, we explained it to them. It’s just been going on for years.”
Mayor Joshua Garcia acknowledged the request from Holyoke 420 and explained to Reminder Publishing that the impact fee money collected by the city of Holyoke is put in a cannabis stabilization account.
Garcia has no ability to remove any money from this account without City Council approval and brought the matter to the City Council as a communication for their April 1 agenda.
There is an executive session of the City Council scheduled for Tuesday, April 15, to further discuss the communication, according to Garcia.
