Salem joint hearing: council considers raising retail marijuana cap to 8, residents and local retailers urge caution

A joint public hearing of the Salem City Council and the Planning Board on Nov. 13 considered an ordinance to amend zoning and the city code to increase the cap on marijuana retail licenses from five to eight and to prioritize at least two licenses for social equity and economic empowerment applicants. Council President Prozniewski opened the hearing and Mayor Pengalo told the bodies the change aligns Salem’s rules with recent Cannabis Control Commission regulations and an updated city social equity policy.

Local business owners who operate existing Salem dispensaries urged the council not to raise the cap. "When we opened, we were the third store here in Salem," said Chip Tuttle, owner and CEO of Seagrass on Dodge Street, who said his company invested $1.8 million to open and employs 24 people. He told the council his store’s gross sales this year will be "35% of what they were in 2022," and he warned that an influx of new stores has driven prices down and created an "existential crisis" for many retailers. "I would respectfully suggest that this is not at all the business climate where the city should be considering adding licenses," Tuttle said.

Elizabeth Childs, owner of City Gardens, and Tim Hague, director at Starbird, echoed that view. Childs said the market is "not like it was in 2019 and 2020" and called adding three stores "absolutely devastating." Hague described federal tax restrictions that limit deductions for cannabis businesses, saying many dispensaries operate at a loss under current federal tax rules and that the industry is "holding out for federal legalization." (The transcript references the Internal Revenue Code provision commonly cited by cannabis businesses as Section 280E.)

Councilors and planning board members asked staff to verify technical details the ordinance depends on — including whether the baseline number of package-store licenses used to calculate the 20% cap has changed since the city set the current limit — and whether any existing licensees already meet social-equity criteria. Mayor Pengalo said the city solicitor was not present and pledged to provide the planning board with the licensing-history detail before the board’s decision.

After testimony and discussion, Councilor Hathworth moved to close the joint hearing and then moved to refer the matter to the Planning Board for a recommendation; both motions carried. The referral means the Planning Board will consider the ordinance and advise the council before the council takes final action.

What happens next: the Planning Board will review the zoning amendment, staff will supply the requested licensing-history information and any comparable-municipality research, and the council will receive the board’s recommendation before a decision on adoption.