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Date: 11/8/2022
NORTHAMPTON – The Northampton City Council Finance Committee invited key city players to their Oct. 26 meeting to talk about the possible financial implications of capping the number of cannabis dispensaries within the city.
Background
The discussion was a continuation of other roundtable conversations conducted throughout other subcommittee meetings to see how the cannabis industry has impacted Northampton in multiple facets since the first dispensary opened in 2018. Currently, the city has 12 dispensaries open.
The conversations are a direct result of public outcry about a proposed dispensary called “Euphorium” that was planned for Florence Village, until Mayor Gina-Louise Sciarra declined the community host agreement, which is necessary for a shop to open in Massachusetts. The area allows dispensaries by-right.
Despite declining to sign the agreement, Sciarra is opposed to instituting a cap on the number of dispensaries with this statement: “While I respect the process underway with the City Council to consider a cap, Northampton has been and should continue to be a city supportive of a well-regulated and equitable cannabis industry that expands our tax base,” she said. “Artificially constraining the cannabis market is unnecessary at a time when neighboring states…are entering the retail cannabis market, and applications for new Northampton licenses have already waned in the past two years. Furthermore, an arbitrary ceiling could inflate a secondary market for licenses that helps large corporations box out smaller businesses, Social Equity Program participants, and Certified Economic Empowerment Priority entrepreneurs.”
When the Florence shop was proposed back in the middle of summer, residents living in that area expressed opposition to the idea of a dispensary in their neighborhood, citing concerns about cannabis addiction, their suspected influence of cannabis on children and families in the area, as well as a belief that 12 dispensaries are more than enough.
As a result of these concerns, committees in Northampton have invited different panelists and experts across their committee meetings to discuss the effects of the cannabis industry on the city. The goal is to see if a cap on the number of dispensaries is necessary.
So far, they have looked at health benefits, youth substance use, safety and regulations, and much more.
Cannabis revenue is declining
For this meeting, the Finance Committee invited the city’s Finance Director Charlene Nardi and Amy Cahillane, the Downtown Northampton Association (DNA) executive director, to discuss the financial impact of the cannabis business.
The committee also invited City Solicitor Alan Seewald to answer questions about the impact of capping on social equity applicants, among other things.
According to Nardi, the total cannabis revenue since 2019 has decreased, mainly because the market is adjusting itself as more businesses in other states come online.
“Our revenue is dropping as the market adjusts itself,” said Nardi, who added that the amount the city budgeting for cannabis dropped 15 percent between 2022 and 2023. “Until it levels out, I’m still projecting downward revenue for this particular source.”
Nardi said that with it still being a novel market, there is not a lot of historical data to really determine a pattern, but she did say that any excise money from cannabis goes straight into the city’s General Fund account.
Regarding a cap on dispensaries, Nardi generally felt like this could potentially restrict other new revenue sources, like an on-site social consumption business. “If you needed a different license to consume on-site, I would want to make sure if the city wanted to move forward that a cap would not impact that,” Nardi said.
In addition to those thoughts, Nardi also noted the possibility of turning a cannabis license into an expensive commodity if a cap were instituted. “With a cap, the concern is that…we would be boxing out the smaller businesses,” said Nardi. “We would create a market where we would just have the larger businesses being able to afford them, and the whole point of the state with their laws was to make sure that this was available to those who have already [been] disadvantaged.”
The business district
Meanwhile, according to Cahillane, the general downtown business district felt the impacts of the cannabis dispensaries more before the period of COVID-19 since that is when the business was first introduced. Specifically, many businesses saw a spike in their sales as a direct result of the cannabis industry.
However, once COVID-19 hit, which caused a change in the country’s financial situation, the impact has not been felt as much.
“No business that I reached out to, or they reached out to me, is feeling a direct impact from the dispensaries,” said Cahillane, who added that she did not speak with every business.
They are, however, seeing an indirect impact from a positive and negative standpoint, according to Cahillane.
“There are certainly plenty of [businesses] who report that they have customers coming in complaining that Northampton is becoming all pot shops,” said Cahillane. “On the other hand, they say a dispensary that fills a vacant storefront is better than a vacant storefront.”
Many businesses, according to Cahillane, are less concerned with the number of cannabis dispensaries, and more concerned with local control over corporate, out-of-state control.
As far as caps go, Cahillane said businesses “were all over the place” when it came to their beliefs. A lot of people felt that a cap is not needed since the market will sort itself out, while others worried that if a cap is instituted, then that could prevent “exciting new business model” from entering the fold.
“On the other hand, there’s a fear that because many of these cannabis places are coming in very well-financed that they are taking up space that could be [used] for another creative small business that isn’t cannabis and doesn’t have that financial backing,” said Cahillane.
Cahillane did say that there have been some instances where a cannabis business owner has been able to pay rent to a landlord so they can hold a space vacant until the licensing and application process is completed – which usually takes years.
“This choice is made feasible because the cannabis companies had the capacity and capital to [do] that, which your small business retailer doesn’t have,” said Cahillane. “Not faulting the landlord for making that charge…it’s just a financial difference.”
People can watch the full meeting on YouTube: https://www.youtube.com/watch?v=B71jBhmX5n4&t=6251s.