I’m a little concerned that with two retailers here, neither are going to flourish. Additional fees would really be difficult for the company to pay.”

Attorney Phil Silverman

Put simply, if we remain required to pay ... our business will not survive.”

Coastal Healing’s David Bullis and Diego Bernal, in a letter to the town

The owners of Westport’s first and still only marijuana retailer want to renegotiate the agreement they signed with the town before opening two years ago, saying the document, and specifically the fees it authorizes Westport to collect, will drive them out of business in an increasingly competitive and saturated market.

“Put simply, if we remain required to pay ... our business will not survive,” Coastal Healing’s David Bullis and Diego Bernal wrote to the town.

Bullis and attorney Philip Silverman spoke before the select board Monday evening as they seek to rework Coastal Healing’s Host Community Agreement (HCA) with Westport, saying a lot has changed since the shop at 248 State Road opened in October 2022 for medical patients, and in December 2022 for recreational use customers. The cost of marijuana has dropped sharply, there are more retailers competing for fewer dollars, and a significant change in state law has completely changed the regulatory landscape, they said. Not only that, a new retailer, Westport’s second, just received town approval to open next door.

HCAs, state-required agreements between retailers and the towns that host them, allow towns like Westport to collect fees of up to 3 percent per year to defray any negative impacts retailers have on the town, as well as a 3 percent tax levied and collected by the state that is then returned to the town. Coastal Healing is also required to pay a flat $25,000 yearly impact fee to the town under its HCA.

But new regulations passed by the state soon after the shop opened have change the impact fee structure, requiring that towns must now show receipts to justify them. In Westport, town administrator James Hartnett said, “we haven’t identified any specific impacts.”

Though Silverman said Monday that Coastal Healing is willing to pay the fees if they can be justified and quantified, the business should not be forced to pay if the need can’t be proven. Retailers across the state are asking for similar changes to their HCAs, he said, and some have brought suit, saying state law is on their side.

“We have no desire to get into litigation or anything of that sort with the town,” Silverman said. Still, “in just about every instance the towns basically determined that they want to settle, and they end up paying back money that they received — it’s very difficult, in most situations, to show that there was a negative impact on the town from the operation of these businesses.”

Hartnett acknowledged Monday that its HCA with Coastal Healing does not require the town to justify the fees. The question, he said, is whether the agreement is valid under the new regulations.

“Our town counsel believes it is,” he said.

Port Supply

The request comes less than one month after the select board approved an HCA with its second marijuana retailer, Port Supply, which now has approval to open at 260 State Road, directly next door to Coastal Healing.

Unlike the agreement with Coastal Healing which came before the new regulations, Port Supply’s HCA does not include provisions for the 3 percent surcharge or the $25,000. That’s one of the reasons he voted against that agreement, board member Steve Ouellette said:

“The fees you folks had ... I didn’t think it was fair that they (Port Supply) didn’t have,” he said to Silverman. “That was one of the main reasons.”

Fellow board member Craig Dutra agreed, adding that the playing field has certainly changed.

Dutra said he voted against the Port Supply HCA last month for a variety of reasons, including the new regulations — “I didn’t read a level of certainty (over the impact fees’ applicability) on the part of town counsel,” he said.

Among other reasons, he added, “I voted against ... based on the fact that this environment that they’re operating in has vastly changed in the past few years.”

“When people entered this business around 2020, prices were higher. There were less players in the game.”

Now, “the pricing has gone down, the market became a little crowded. I would be inclined to not enforce fees” called for in the original agreement.

Select board members didn’t take any action on a potential modification of its HCA with Coastal Healing Monday, but suggested to Silverman that he officially propose a new host agreement at a future meeting. Silverman said he would.

In the end, the matter comes down to about $100,000 to date — Westport agreed to “put a hold” on Coastal Healing’s fees last year, while the new regulations were being adopted, and has not collected anything from the retailer since, apart from the 3 percent sales tax. Currently, Coastal Healing owes the town about $100,000, from a combination of two $25,000 yearly payments and the proceeds of that 3 percent surcharge.

It’s not an insignificant amount, Silverman said — “We’re sort of in a very different environment, a very tough retail environment, right now. This company is just starting to break even.”

“I’m a little concerned that with two retailers here, neither are going to flourish. Additional fees would really be difficult for the company to pay.”