Brockton poised to cash in on budding marijuana industry

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Brockton Mayor Bill Carpenter said another potential location for a marijuana dispensary overlay district is an industrial area near the railroad tracks on the south side of Brockton. As the marijuana industry starts to take root in Massachusetts, the city of Brockton wants to be ready to reap the economic rewards that the state is sowing. “It’s another stream of revenue,” Carpenter said.

BROCKTON – As the marijuana industry starts to take root in Massachusetts, the city of Brockton wants to be ready to reap the economic rewards that the state is sowing.

A second proposed medical marijuana facility in the city gained crucial approval from the Brockton Zoning Board of Appeals last week.

The Commonwealth Alternative Care medical marijuana dispensary is planning to open early next year. It would be located within 1,000 feet of the In Good Health facility that opened in September 2015, in a small medical marijuana zoning overlay district on West Chestnut Street.

Mayor Bill Carpenter is considering how the city could create a second zoning overlay district to accommodate a couple more dispensaries in the city, allowing the city to capture some sorely needed revenue from a budding young industry.

This comes as the Massachusetts Legislature is working to modify the state’s recreational marijuana legalization law that was approved by a ballot referendum last year.

“Whether some of us like it or not, medical marijuana is a reality now that’s here to stay, and I think it’s very clear that recreational marijuana is not far behind,” said Carpenter, who once opposed marijuana legalization. “So I think that there’s a role for a city like Brockton. If these are going to exist, we have an opportunity to generate revenue.”

Brockton has already received about $200,000 from the first full year of In Good Health through a host community agreement with the dispensary. And that doesn’t include about $72,000 that the In Good Health group gave this year, as part of the host agreement, to local organizations involved with recovery from opiate addiction. The $72,000 represents 1 percent of its total sales for its first full year, while the roughly $200,000 is 2.5 percent, Carpenter said.

That would mean that the Brockton dispensary took in $7.2 million last year. The Enterprise left messages seeking comment and information from In Good Health, but there was no response in time for this story.

Recently, when Commonwealth Alternative Care made a presentation to the zoning board, the company said its proposed host community agreement mirrors that of In Good Health, including the annual donation to local nonprofits.

The introduction of another dispensary in the city is likely to lead to some decline in revenue by In Good Health, said a Boston-based medical marijuana industry consultant.

But, overall, Brockton will be hauling in a lot more marijuana-related revenue with two dispensaries instead of one, especially as limited supplies have sometimes discouraged patients from going the legal route.

“It may cut into In Good Health some, but overall you’ll see more total revenue in Brockton,” said Kris Krane, of 4Front Ventures, which he co-founded in 2011. “It depends on what the products are like, what the patient experience is like and how the store is set up. Patients will make the determination.”

The host community agreements that Brockton has negotiated thus far are “pretty generous” to the city, when compared to others, Krane said.

“That’s a nice payout,” Krane said.

There are currently 12 medical marijuana dispensaries in the state that have been approved to sell, with many more in the pipeline.

But with Brockton already gaining some experience with medical marijuana dispensaries, it will be poised to capitalize on recreational marijuana when that comes online in Massachusetts.

That’s partly because, when the recreational marijuana law is enacted next year, medical marijuana facilities will have first dibs at applying for a recreational license, Krane said. Or, in the alternative (the law is still being modified), the medical marijuana dispensaries would be credited for their previous permitting efforts to gain a medical dispensary license from the state, giving them a head start and a leg-up on the recreational pot competition, he said.

“Either way, they’ll have some sort of head start,” Krane said about the Brockton medical dispensaries.

And, with the introduction of recreational marijuana, the state’s lawful customer base for the green, leafy substance becomes much, much larger, Krane said. Statewide, based on the latest statistics from the Department of Public Health, there are about 37,000 active medical marijuana patients with legally required state certifications. The certifications are cost-prohibitive, Krane, with total expenses for the process around $300 or more. Once the substance becomes legalized to the general adult public, the number of potential customers is only limited by the amount of people in Massachusetts who are 21 or older, Krane said.

Recreational marijuana facilities will also be required to pay taxes to their host community under the state law, at a percentage that’s now being decided by state politicians, Krane said. The House of Representatives set the local tax rate at 2 percent, and the Senate has it at 6 percent.

As the legal recreational market starts to blossom, Krane said, the estimated tax revenue will grow exponentially over the next few years.

Statewide, the medical marijuana market had an estimated worth of $7.9 million in 2015, which includes the first four months of business at In Good Health in Brockton, according to research by data and investment firms ArcView and New Frontier. Last year, the value of the Massachusetts medical marijuana market was $78.7 million, according to a projection by the research firms.

The firms project that the recreational marijuana industry would generate $300 million in revenue in 2018. That figure would nearly triple to $900 million by 2020, the firms said, but when coupled with remaining medical marijuana sales, the total legal marijuana market in Massachusetts would amount to $1.17 billion.

“That tax revenue could be a huge economic boon to the towns that are hosting these earlier dispensaries,” Krane said.

Krane said it’s not just about taxes and revenue derived from host community agreements. The marijuana industry also creates full-time jobs, including sales and processing, along with associated work like construction and the installation of HVAC systems.

“That can’t be overlooked, especially in a city like Brockton, which could really use the economic development and the job creation,” Krane said.

Carpenter said he’s on board, but wants to do it properly. He wants to keep the dispensaries away from schools, in place that doesn’t bother anyone.

Carpenter said one potential location for a second overlay district is an industrial area near the railroad tracks on the south side of Brockton. Carpenter said part of the reason he’s confident going forward with another marijuana overlay district is the absence of public safety problems at In Good Health thus far.

“In an area like that, I think one of these facilities would be perfectly acceptable,” Carpenter said. “Now that I think we have some positive experiences in terms of no impact, and knowing that others are looking to come, it’s probably time for us to revisit the zoning and think about it. ... It’s another stream of revenue for the city.”

Rebecca Rutenberg