Salem hearing on raising cannabis license cap draws opposition from local retailers; matter referred to planning board

Salem officials on Nov. 13 presented a proposed amendment to city zoning and general ordinances that would raise the limit on marijuana retail licenses from five to eight and prioritize social equity and economic empowerment applicants when new licenses are issued or returned.

Mayor Pengalo told the joint City Council and Planning Board hearing that the change aligns Salem’s local rules with Cannabis Control Commission regulations and the city’s 2023 equity policy and would reserve at least two of the additional licenses for social equity applicants. "We're updating [the policy] now, and this is in tandem with that update to prioritize future licenses," Pengalo said.

The proposal met sharp opposition from incumbent, locally owned retailers during public comment. Chip Tuttle, CEO and owner of Seagrass on Dodge Street, said the state market is oversupplied and that his store’s gross sales this year are about 35% of 2022 levels. "The green rush is over in Massachusetts," Tuttle said, arguing that adding three licenses now would further dilute market share and could force established local businesses to close. Tuttle said Seagrass invested about $1.8 million to open in 2020 and employs 24 people, most of them Salem residents.

Elizabeth Childs, owner and CEO of City Gardens, also opposed increasing the cap, saying, "If 3 more stores were to open in Salem, it would be devastating for the ones that are currently here." Tim Hague, a director at Starbird in Salem, described federal tax limits that prevent many standard deductions for cannabis retailers and said some dispensaries are operating at a loss pending federal legalization; he said municipalities with perceived oversaturation have seen store closures and license surrenders.

Planning board members pressed officials on technical details. Josh Turiel asked whether the city’s cap, which is tied to a percentage of packaged store licenses, should have automatically increased if the packaged/store count rose; Mayor Pengalo said the city solicitor was not present to confirm recent license counts but would report back. Jonathan Burke asked whether a license reverts to the city when a business closes; Chip Tuttle answered that a licenseholder can transfer a license to another operator but the buyer must have a valid host community agreement with Salem, so the license does not automatically revert to municipal control.

Council members acknowledged the competing goals of protecting existing resident-owned businesses and advancing state-directed social equity priorities. Councilor Cohen said he was "as affected by public testimony" as others and warned against injuring local businesses; Pengalo replied that the city previously had few, if any, equity-designated applicants when the initial five licenses were awarded.

After public comment and board questions, the council voted by show of hands to close the joint public hearing and to refer the ordinance to the planning board for a formal recommendation. No final vote on the ordinance was taken at the Nov. 13 meeting.

What happens next: The planning board is expected to review the ordinance and provide a recommendation to the City Council before any final action. The ordinance text and any updated license-count data will be considered during that review.