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Hopes Are High

After recreational marijuana use became legal in Massachusetts in 2016, the expectation was that retail stores would pop up quickly within a couple of years. That hasn’t happened, as the state — and host communities — have taken a deliberately measured approach to permitting. But with early returns strong from a few shops, and towns reporting solid tax benefits and no real community disruption, the pace of openings should begin to increase — and so will the economic benefits of this new industry.

If Western Mass. was full of people who thought the sky was falling when recreational marijuana was legalized, well, Mark Zatyrka thinks fewer of them are saying the same thing now.

“I knew it would change. But I feel like it’s changed at a more rapid pace than I would have expected,” he said of public perceptions about the new access to cannabis products in the Bay State. “When we held our public meetings, we had a few folks who thought we were going to destroy the world and everything would come crashing down once we opened. But the opposite has been true.”

Take the location of INSA, the cannabis dispensary he owns in Easthampton, which has sold marijuana for medical purposes since February 2018, but began selling for recreational, or adult, use in December. Tucked beside Eastworks at the rear of the Keystone Mills building on Pleasant Street, he said some may have worried about INSA’s proximity to a nearby park where people hike.

“But, really, we bring more people to the area, we have cameras all over the place, it’s well-lit, so it’s actually a safer place to be,” Zatyrka said. “If the perception was that customers are hoodlums who come in, go out back, and get high and do crime, well, look around — we serve almost every demographic you can imagine, from seniors to millennials, rich and poor, and they’re not violent criminals. They’re not here to cause trouble. Yeah, the perception has changed pretty rapidly.”

Perceptions — pro and con — of this new industry have undoubtedly shaped a permitting process, on both the state and local levels, that has moved more slowly than first expected when recreational use became legal in 2016. The state’s first adult-use retail shops were expected to be open last July, but instead, the first two opened in November, and the pace of new shops since then has been leisurely at best.

But they’re coming. And the ones that are open are changing those worst-case perceptions.

Mark  Zatyrka says INSA has attracted a diverse array of customers

Mark Zatyrka says INSA has attracted a diverse array of customers since starting recreational sales in December.

Take New England Treatment Access (NETA) in Northampton, the Bay State’s first retailer of cannabis products for recreational use.

“For us, it’s been a positive experience,” Northampton Mayor David Narcewicz told BusinessWest. “We’re starting to see some of the economic benefits in terms of taxes, and I know our local businesses have been creative in embracing the new industry. Businesses back in November were offering specials to people who came into town and showed a receipt for shopping at NETA. If anything, I think the business community has been receptive.”

He noted that Northampton’s voters were among the most enthusiastic in their support of legal cannabis, both during the 2012 statewide vote to legalize medicinal marijuana, then for adult use in 2016. As mayor, he said, his approach has been to respect the community’s voice.

“So we’ve been very open and proactive; we created zoning regulations that essentially treat this new industry like any other business, and we did not impose caps on the number of retailers like many communities did.

“We also had the experience of having one of the first medical dispensaries in the state,” he added, speaking of NETA’s original business plan. “We had a track record of seeing how they had operated and had the chance to see what the potential impacts were. They’ve been a good member of our business community; they worked with us to make sure their opening went smoothly, and have been working with surrounding businesses to make sure there’s no disruption.”

Stories like this are why, despite the slow rollout of pot shops so far — and state tax revenue well under early projections — proponents are confident that the trends toward greater public acceptance of this industry, and tax revenues to match, will soon accelerate.

“As an industry, we’ve done a good job to ensure that things are done correctly, and the state’s done a good job putting measures in place to help ensure it is a safe industry and people are getting a safe product and it’s dispensed in a safe way,” Zatyrka said. “The state did a lot of things right, which is why we’re seeing a successful rollout. I know some people wish it moved quicker, but I understand why it didn’t. There are thousands of applications, a lot of inspections, a lot to oversee. It takes time. It’s a new industry for everybody.”

Green Growth

As part of its new marijuana laws, Massachusetts imposes a 17% tax — a 6.25% sales tax plus a 10.75% excise tax — on cannabis businesses, while cites and towns take another 3%, plus whatever else they may choose to impose as part of their host-community agreements.

In Northampton’s case, that’s an additional 3%, called a ‘community-impact fee.’ The city received two checks recently: $449,825 from the Department of Revenue representing the 3% tax rate for recreational marijuana sales in November, December, and January, and $287,506 from NETA itself, reflecting the 3% community-impact fee on recreational sales for December and January.

“When we held our public meetings, we had a few folks who thought we were going to destroy the world and everything would come crashing down once we opened. But the opposite has been true.”

Other towns are seeing their coffers benefit as well. Theory Wellness opened in Great Barrington in December, paying $90,000 in taxes to the town in its first month.

“They opened to long lines, which should level off as they get more competition,” Ed Abrahams, vice chair of the town’s Select Board, told BusinessWest last month. “This is new for all of us, but so far, there have been logistically few problems.”

Southern Berkshire County communities that embrace the cannabis trade are sure to benefit from the continued illegality of the drug in both Connecticut and New York, though leaders in both states have been talking about whether that should remain the case. Brandon Pollock, CEO of Theory Wellness, told the New York Post last week that about 15,000 New Yorkers have made purchases there since its Jan. 11 opening.

“I’d say we get dozens, if not hundreds, a day from the greater New York City area,” he noted. “We get people coming up in Zipcars, people carpooling, people who say they hardly ever drive at all — but will drive to purchase cannabis.”

That sort of consumer response is intriguing to towns that see this industry as a new economic driver.

“Some cities have been great to work with, some a little more difficult to work with,” Zatyrka said. “Easthampton is very progressive city, and early on it was very obvious they wanted us here.”

That’s important from a competition perspective, he said, because the application process is already time-consuming, and communities that want to make it even more difficult to move through permitting and craft a host-community agreement can tie up a project for years, while other shops in more amenable towns are opening and picking up crucial market share and customer loyalty.

“Easthampton was great,” he went on. “Everyone wants to find a solution instead of putting up roadblocks. They want us to be successful, to get their name on the map, and they saw the benefits early on.”

He’s seeing a gradual shift, too, in where proposed projects will be located, noting that, when INSA started cultivating marijuana for medical use, most such outfits were setting up in old mill buildings or industrial parks. “Now it’s not so restrictive — people can open up on Main Street, and wind up in locations that are made for retail use, for people to come visit.”

That’s certainly the goal in Northampton, which is looking at myriad applications from cannabis manufacturers, cultivators, testing labs, and retail establishments, Narcewicz noted. It welcomes them because it sees value in how NETA, which isn’t even located downtown, has impacted business.

“NETA has created good-paying jobs in the community, and it’s an important way to expand our tax base and grow our local economy,” he said. “We have a local economy focused on retail, dining, entertainment, and a very vibrant cultural economy. And I think this complements it.”

There have been traffic and parking challenges, he added, “but if you talk to most retailers, downtowns having too many visitors is never a bad thing. We’re kind of equipped to handle a lot of visitors. And NETA has been very responsive in terms of renting additional parking from neighboring businesses, which helps them as well by providing an income stream. So far, it’s been a very positive experience, and there’s no reason to believe that’s going to change.”

Making a Name

BRIGADE has certainly benefited from this new industry. The Hadley-based brand-services company has worked with INSA extensively, including the creation of the designs for all its products and marketing.

“Everyone calls cannabis the wild west, and it is from a branding and design perspective, too,” said Kirsten Modestow, BRIGADE’s owner and executive creative director. “The rules for a whole category are being written overnight. That’s challenging, but it’s also some of the most exciting stuff we’ve ever worked on.”

With some cannabis businesses coming out with 100 or more products, it presents a unique branding challenge, she added, because the goal is not only to create a memorable look, but to help customers, many of whom have little experience with marijuana, navigate the products.

“One of the upsides of this industry is the impact it’s having on our communities, and it’s providing a lot of new opportunities and jobs,” she said. “It’s providing a lot of work for people, even tapping into farmers and other people who have services to offer and know what they’re doing.”

The education aspect Modestow touched on is one that continues in the store, Zatyrka said. The sales associates — he prefers that title to the flip industry term ‘budtenders’ — are the same ones who have worked with medical patients for a long time, and they have the training to dig deep into the science behind the products, so they can effectively explain them.

“We understand it’s a product that needs to be consumed safely, and we take that seriously,” he said. “We don’t want to be liable for someone who doesn’t know what they’re doing and eats an entire chocolate bar and has to go to the ER. We do all in our power to prevent that from happening.”

The coming months and years will see more education (and more tax revenues) as pot-shop openings pick up the pace — including Evergreen Strategies, LLC, which recently inked a host-community agreement with Belchertown to bring a facility to that town as early as this fall.

The Boston Globe recently cited industry analysts who say Massachusetts has a much slower local approval process and a more complex system to navigate than other states, and the state Cannabis Control Commission has placed a premium on an adult-use regulatory structure that supports public health and public safety. The measured pace ensures that stores pass inspections, sell lab-tested products, hire vetted workers, and track their products.

“It’s a growing industry, and will continue to grow,” said Zatyrka, who plans to open an adult-use dispensary in Springfield and has a cultivating and manufacturing license in Pennsylvania as well. Meanwhile, INSA is doubling its cultivation — located directly above the Easthampton store — and is looking to triple it in the future. “We’re still a few years out before we can meet the demands of the state. So it’s going to be hard work until then to keep up our supply with demand.”

The work is rewarding, though, especially for someone who treated his chronic pain for more than 15 years with oxycontin, oxycodone, morphine, and methadone, and suffered side effects that drastically outweighed the benefits.

“Thanks to cannabis, I was able to stop taking them,” Zatyrka said. “Cannabis helped with the withdrawals, and now I only use cannabis to treat my chronic pain, and it works 100 times better than all the opioids. I know firsthand the power of cannabis versus painkillers.”

He tells that story not because it’s unique, but because it’s representative of many people he comes across, with stories about how cannabis has helped them with seizures, Crohn’s disease, arthritis, and multiple sclerosis. And if legal adult use is helping to tear down the last bits of stigma around cannabis, he’s all for it.

“It’s incredibly gratifying to hear the stories and how grateful people are,” he said. “They’re able to get benefits from cannabis, and don’t have to hide it like they once did.”

Joseph Bednar can be reached at [email protected]m

Local Business Advice

The Wealth Technology Group

By: Gary F. Thomas, JD, LLM, CLU, ChFC, AIF, CDFA

 

Earlier this year, I was conducting a workshop for a small group of clients and their friends. Most had not retired yet, and the discussion turned to Social Security.

After the workshop, a guest of one of my clients approached me somewhat timidly. For example’s sake I’ll call her Mary. Mary left college to support her husband, who was in dental school. Almost immediately after his graduation and licensure, they started a family. She devoted her time to bringing up the children with the intention of finishing her education once the kids were in high school. Unfortunately, the marriage did not survive the stresses of a growing dental practice along with a growing family. The couple divorced. She received child support and additional alimony so that she could finish her education and rejoin the workforce. At 46 years old, she began her new life working for a non-profit social service agency at a very modest salary. Although she remained single, her ex-husband remarried shortly after the divorce was finalized. He continued to work in his practice even though he had also reached full retirement age (FRA).

Because of her shortened working career and modest salary, Mary’s Social Security benefit was $1,150 monthly at her FRA. Mary had decided to keep working and delay collecting benefits because she thought that this strategy would accumulate additional credits and would boost her Social Security benefit by a few hundred dollars a month.

I began to work with Mary in order to discover if delaying benefits would be beneficial.

We determined Mary’s ex-husband’s Social Security benefit at FRA was $2,950 per month.

She was surprised to learn that because they had both reached FRA, she could still claim the greater of her benefit or 50 percent of his benefit, even though they had been divorced for more than 20 years and one had a new spouse. Mary was immediately entitled to $1,475 per month.

Mary shared that she was in a committed relationship and was curious to learn whether, if she were to marry again to an individual with a modest salary history, she would lose the benefit earned from her prior marriage.

In Mary’s case, she would not, because she was over the age of 60. If one remarries before age 60, different rules apply.

Before she left, Mary asked whether her claiming the spousal benefit would reduce either her ex-husband’s benefit or that of his second spouse. The answer was no. Claiming on a former spouse’s account does not reduce their benefit, or that of their new spouse should they remarry.

There is plenty of information on the internet offering incorrect or conflicting advice about Social Security claims. There is no one-size-fits-all answer. Changes to Social Security claiming strategies that go into effect this year add still new twists.

Social Security rules affecting divorced couples can be confusing. The law governing divorce finance is complicated, and often not obvious, and making the right decisions about Social Security and other aspects of property division requires the services of a professional with specific training and experience.

Gary Thomas is an attorney and is the Registered Principal of The Wealth Technology Group. He holds a master’s degree in Tax Law and is a Chartered Life Underwriter (CLU), a Chartered Financial Consultant (ChFC), a Certified Divorce Financial Analyst (CDFA), and an Accredited Investment Fiduciary (AIF).

Social Security Informational Workshop: May 7 & 9th • 6:30 pm

Wealth Technology Conference Center – 130 Southampton Rd, Westfield, MA

 

 


Gary F. Thomas

JD, LLM, CLU, ChFC, AIF, CDFA

“Because it’s not what you make … it’s what you keep!”

Gary is the President of The Wealth Technology Group, with offices in Pittsfield and Westfield. His company serves over a thousand individuals and businesses in Massachusetts, Connecticut, and across the country, helping them reduce taxes, diversify their portfolios, and keep more of what they have.

Gary is a native of Pittsfield and is a graduate of the Massachusetts College of Liberal Arts and Western New England University Law School. He is a member of the Massachusetts Bar and holds the prestigious Master of Laws in Taxation degree from Boston University Law School. Gary is a Chartered Life Underwriter and a Chartered Financial Consultant. He is also certified as an Accredited Investment Fiduciary, having met the ethical and education standards of a prestigious network of forward-looking investment professionals dedicated to advancing fiduciary responsibility.

Gary has conducted courses on retirement planning, financial management, and estate planning at General Dynamics Corporation, Tubed Products, the Massachusetts Nurse’s Association, Plumbers and Pipefitters Locals 4 and 104, Westfield State University, Berkshire Community College and the Massachusetts College of Liberal Arts, and has lectured financial planning and insurance professionals throughout the U.S. and internationally on best practices and customer service. He specializes in education about safe money management and the maximization of pension and Social Security benefits, so that his clients enjoy a stress-free retirement.

Gary is a member of the Massachusetts Bar Association, the Financial Planning Association, the National Association of Insurance and Financial Advisors, and the International Association of Financial Planners; he sits on the Board of Directors of the MCLA Foundation. Last year, Gary was honored to be appointed a member of the Board of Trustees for Western New England University. He also underwrites programming for WHMP, Channel 57, and is a member of the Westfield Chamber of Commerce and the Better Business Bureau. He was chosen Outstanding Philanthropist of the Year for 2013 by the Western Mass Association of Fundraising Professionals.

Gary is a presence on local media and is sometimes called upon to comment on financial news. Every few weeks Gary also has some fun talking about financial topics with Bax & O’Brien on Rock102. His programs are available on the station websites, and are podcast on iTunes and at www.wealthtechnology.com. He has appeared nationally on Fox Business News, and has been quoted on the Forbes and CNN Money websites.

(800) 266-6793

[email protected]

www.wealthtechnology.com

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