Orleans Officials Discuss Fees Associated With Pot Manufacturing

By: Ryan Bray

Topics: Business , Orleans news , Marijuana

Seaside Joint Ventures, LLC, plans to conduct both retail and manufacturing operations out of property at 14 Lots Hollow Rd. The business is one of two that has a host community agreement with the town to sell marijuana. RYAN BRAY PHOTO

ORLEANS – The select board has host community agreements in place for two businesses seeking state licensing to operate retail marijuana businesses in town. But one of the businesses is seeking a separate agreement that would allow it to also manufacture its product.

Seaside Joint Ventures, LLC, plans to operate a manufacturing facility out of the same space it will occupy to run retail operations at 14 Lots Hollow Rd. Town Counsel Michael Ford presented a draft host community agreement covering the business' manufacturing operations to the select board Dec. 15, which led to closer discussion about fixed fees associated with the agreement.

The board's existing retail agreement with Seaside Joint Ventures calls for the business to pay an annual 3 percent impact fee to help the town recover costs associated with allowing the business to operate in town. The manufacturing agreement called for the business to pay an additional impact fee of 1 percent. An annual charitable contribution to Orleans organizations would be voluntary under the manufacturing agreement.

Ford proposed that the 1 percent fee be applied for the first year of the manufacturing agreement. That fee could then be waived if the town finds that it hasn't incurred any additional expense through manufacturing operations, he said.

But Tim McNamara, the attorney representing Seaside Joint Ventures, argued that there should be no impact fee associated with the manufacturing agreement unless it is demonstrated that there are additional costs to the town. He noted that the 3 percent fee associated with the business' retail agreement with the town is by itself enough to cover the cost of funding five full time police officers annually.

"The idea that the retail license, or the manufacturing, would rise to that level I think is probably a stretch," he said.

Fixed impact fees, which the state caps at 3 percent, have become controversial in some towns, where marijuana businesses say they are being overcharged in covering costs associated with traffic and public safety.

In an effort to avoid such a problem in Orleans, select board member Andrea Reed said the town should align any fees assessed to Seaside with the actual cost to the town.

"I'm nervous about the 1 percent or the 3 percent, because I don't think it's going to hold up," Reed said, noting the disputes that have cropped up statewide over the impact fees.

Town Administrator John Kelly agreed, cautioning the board that the impact fee is not "a windfall," and that some accounting needs to be taken of costs absorbed by the town.

"If you cannot document that you have impacts, you should not be taking that money," he said. "That's why these other towns and cities are getting into trouble, because they're using it as a general cash flow."

Ford said the town could revise the agreement in such a way where there is no impact fee to start, but that the town could impose a fee later if it is found to have incurred expenses from Seaside's manufacturing operations. Kelly supported this approach, especially considering the costs to the town are not yet known.

"I think it protects the town, and I would certainly recommend that that be something you consider," he told the select board.

The board also asked that the manufacturing agreement be revised to address a system for accounting the costs incurred by the town. Ford said he would revise the agreement and bring it back to the board for further discussion.

Email Ryan Bray at ryan@capecodchronicle.com