The City of Newton has been ordered to pay back $2.4 million in community impact fees (CIFs) it collected from three marijuana retailers in Newton: Ascend, Cypress Tree and Garden Remedies.
The city has announced a plan to appeal the ruling.
These community impact fees are intended to offset potential negative externalities created by stores selling cannabis within a municipality.
Judge Asha White, however, ruled that Newton improperly used these fees to pay for goods and services, such as Narcan and a community police dog, that were not reasonably associated with the effects of the marijuana retailers.
When Massachusetts legalized marijuana in 2016, part of the legislation included a provision that municipalities may impose a community impact fee on a cannabis-selling business, but that this must be “reasonably related to the costs imposed upon the municipality by the operation of the marijuana establishment.” Additionally, the fee may not exceed more than three percent of the gross sales of the store, and the CIF may not last longer than five years.
Some of these rules were changed in 2022, but because the retailers entered into the agreement before 2022, the court did not consider the post-2022 changes.
In January 2025, the three retailers announced their plan to sue Newton over what they considered an unfair collection of fees. In 2024, the town of Uxbridge was ordered to pay back over a million dollars to a marijuana retailer when the courts ruled the town had collected the CIF improperly. The Newton businesses felt they had a similar complaint.
The judiciary agreed. The CIFs must be spent to offset actual, demonstrated costs. But the city spent the CIF money on items such as a community resource dog, a pilot project for the redevelopment of Washington Street, substance abuse counseling services, educational programming about substance use in the Newton Public Schools and substance use counselors, a drug drop-off kiosk and Narcan kits for community distribution.
The plaintiffs argued that these were not “reasonably related” to their businesses, which is a legal requirement for the usage of the CIFs.
Part of this is that Newton could not provide evidence that the businesses were creating the harms that the CIF money was being used to pay for. For example, while Assistant Superintendent of School Services Casey Ngo-Miller said that high school counselors reported an increased usage of marijuana by high schoolers since the marijuana retailers opened, there was no evidence that this increased usage is stemming from the retailers’ products, which may only be sold to those over 21. Further, Chief Financial Officer Maureen Lemieux testified that a Newton Public Schools Youth Risk Behavior survey showed that marijuana usage among high schoolers had actually gone down between 2012 and 2023. Likewise, Shin-Yi Lao, Commissioner of Health and Human Services, said that there is a risk of those with mental health challenges developing substance use problems and that Newton PATH (a city drug task force) evaluated the impact of the marijuana retailers, but did not provide further details about this evaluation.
Likewise, the ruling maintains, Newton did not prove that other services paid for through CIF money were required due to the impact of legal marijuana. While marijuana can be an addictive substance that requires counseling services, the City did not provide evidence that there was an actual increased need for counseling services caused by the legal marijuana. Nor could they provide evidence that the marijuana retailers on Washington Street caused such an immense increase in traffic that spending $500,000 of CIF money on a Washington Street redevelopment design was necessary, and records also show the City was planning to redesign this street even before the retailers opened. Other payments were even less related: the Narcan kits, for instance, are used to reverse opioid overdoses, and have no impact on someone who has consumed too much cannabis.
For these reasons, the City has to return the money it collected in fees from the retailers.
“The City points to no record evidence sufficient to establish even an issue of fact concerning whether the seven items on which it spent CIF funds were connected to a fair or moderate degree (to) actual costs imposed on it by the operation of the plaintiffs’ marijuana establishments,” wrote White in his ruling.
The court declined to enter a declaration saying that Newton could not collect CIFs from the retailers in the future, or that the retailers were entitled to attorneys’ fees.