Northampton sets limit on number of cannabis shops allowed

The Northampton City Council set a new limit on local cannabis dispensaries Thursday night, electing for the first time to cap the number of retail cannabis sellers in a community with among the largest populations of dispensaries in the state.

The new regulation will hold Northampton to 12 dispensaries, though that number can be eclipsed under certain conditions.

Since the summer, shortly after Northamptons 12th dispensary opened for business, the possibility of a cap on cannabis retailers has driven vigorous public debate. Though now home to 11 operating dispensaries after one closed in December, the city still has roughly the same number of pot shops as Boston but under 5% of the population.Read more: Northampton has emerged as the retail cannabis capital of Massachusetts, but can a city of 29,000 sustain 12 dispensaries?

The ordinance passed Thursday night will not mandate that any operating dispensaries close. Rather, it deals with potential future shops.

Northampton will be limited to 12 dispensaries, with an exception for proposed businesses that already have a host community agreement a required contract with the city before the business can apply for a state dispensary license. The rule will also not apply to social equity dispensaries participants in a state assistance program for business owners from backgrounds most affected by the War on Drugs.

Proponents of the dispensary limit offered varied reasonings, though one central thesis argued the city simply had enough cannabis sellers and that it was within the city councils authority to reel in the market.

A sign points out onto Pleasant Street in Northampton from the entranceway of The Source dispensary. The store opened in spring of 2022 but closed in December. (Will Katcher/MassLive).

Multiple city councilors also said they were swayed by warnings from local public health officials of the risks correlated with having a high number of dispensaries in a community particularly the impact on young people.

Some opponents and outside experts had raised doubts about whether data credibly showed that having more dispensaries led to higher cannabis use among teenagers, as public health officials suggested.Read more: Northampton proposed cannabis dispensary limit brings dispute over possible effects

Councilors opposed to the proposed cap also argued that such a measure was an unnecessary regulation that would artificially alter the local market, potentially leading to unforeseen effects. Councilor Garrick Perry was among those who cautioned that the new regulation may not lead to fewer dispensaries, but could instead inadvertently set Northampton up to have about 12 dispensaries in perpetuity.

He, other councilors and Mayor Gina-Louise Sciarra warned the cap would create a secondary market for selling retail cannabis licenses, akin to the high-priced trades that occur on the finite number of licenses to sell alcohol in a town. When the only way for an entrepreneur to start a restaurant or liquor store is to buy out a license from another business, those limited permits can sometimes sell locally for over $100,000.

Perry said creating a similar limit on cannabis businesses would incentivize failing pot shops to stay in the game long enough to find a buyer, thus keeping a dispensary open that may otherwise have shuttered.Read more: Northampton rejects cannabis shop for first time after Florence uproar

Councilor Rachel Maiore, who co-sponsored the dispensary limit, on Thursday pushed back on the notion that the council was over-intervening in the market with the new regulation.

A line queues in the rain at the NETA dispensary in Northampton, Nov. 20, 2018, for the first legal recreational sales of marijuana on the East Coast. (Hoang 'Leon' Nguyen / The Republican)

The state of Massachusetts is not giving municipalities powers lightly. They have given us this one. Most municipalities have taken them up on it, she said. Nearby, Amherst, Holyoke and Easthampton all limit their number of dispensaries.

This is no overreach, Maiore said. This is showing up and taking responsibility for the direction of our community development.

City councilors voted on the measure just before midnight, passing it by a vote of 6 to 3. Councilors James Nash, Marissa Elkins and Perry were the opposition.

Councilors also debated at length the exception for social equity dispensaries. Northampton currently has one dispensary from the states social equity program Enlite, on Damon Road and some councilors hoped the carve out would keep similar shops from missing out on Northamptons market.

But others raised concerns that the social equity exception could provide a loophole that could be nefariously exploited to work around the limit on dispensaries.

I am not against the idea of a cap. But I am firmly against this cap as presented, Perry said. If councilors wanted to lower the density of dispensaries in Northampton, this measure would not do that, he said.

This is not a draconian proposal, Councilor Stan Moulton said. He voted in favor of the new cap. Were essentially establishing the status quo for a period of time and were going to allow further data to be gathered.

Northampton is home to one of the state and the East Coasts first recreational dispensaries NETA. The pot shop drew thousands of customers on its busiest early days in Nov. 2018.

But even as other dispensaries packed Northampton, the overall local cannabis market has cooled. Today, no dispensaries draw anywhere near NETAs initial crowds.

In the fiscal year 2020, the first full year collecting local cannabis taxes, Northampton pulled in $1.6 million. The next year, the city collected about $1.4 million. In the recently completed fiscal 2022, the tax levy dropped further, to $1.15 million. There may be more dispensaries, but as shops open across Massachusetts and other states, the local stores are generating fewer collective sales. Across Massachusetts, cannabis revenues are similarly falling.

With the exception of a new dispensary proposed over the summer which the mayor, within her power, rejected there have been no new applications to enter the crowded local market since the summer of 2021.