City of Cambridge Eliminates Local Tax on Recreational Cannabis

The Cambridge City Council unanimously passed a policy order repealing a three percent “Community Impact Fee” tax on recreational marijuana in a meeting Monday evening.

The policy order eliminated the tax, currently part of Massachusetts state law, in a move to “support the viability” of recreational dispensaries in Cambridge, according to an early version of the policy order.

Though Massachusetts legalized recreational marijuana in 2016 and Cambridge began issuing permits for recreational dispensaries in 2019, retail weed shops have been slow to open. The city’s first recreational dispensary, Yamba Market, will open to the public next week.

Sean D. Hope, a co-owner of Yamba Market, said that dispensaries are “not set up to be profitable” under the existing tax regime.

“[Taxing] 3 percent of gross in a startup business is unheard of, especially when it’s a business that the city is trying to incentivize to be in Cambridge,” Hope said.

In addition to the community impact fee, sales of marijuana are subject to a 10.75 percent excise tax and a 6.25 percent state sales tax.

Under the current law, the community impact fee compensates the city for “additional expenses and impacts” on municipal services such as law enforcement and public health.

The policy order, however, argues that evidence from Northampton, Mass. suggests the repeal of the tax “would not have any appreciable impacts” on Cambridge finances.

Northampton waived its own community impact fees for recreational dispensaries in January.

In an interview with The Daily Hampshire Gazette, then-Mayor of Northampton David Narkewicz said community concerns about dispensaries in Northampton “have not materialized.”

“A lot of the concerns, potential concerns, about this industry mostly came from people who opposed legalization and thought there would be increases in crime, or there would be increases in drug abuse, etcetera,” he said. “We certainly haven’t seen that here in Northampton.”

Since it started issuing recreational dispensary permits in 2019, Cambridge has prioritized applicants of color or with prior drug-related criminal offenses.

Councilor E. Denise Simmons, the primary author of the policy order, said in the meeting that eliminating the tax would “bring some relief and some fairness” to these applicants.

Hope said the move shows the city is “really sticking by” its commitment to progressive values in its approach to the budding legal marijuana industry in Massachusetts.

“We're really hoping that other cities and towns will look at Cambridge, look at the bold, progressive step, look at how many of these minority businesses we have opened, and would hopefully follow suit,” Hope said.

—Staff writer Elias J. Schisgall can be reached at elias.schisgall@thecrimson.com. Follow him on Twitter @eschisgall.