By Colin A. Young, State House News Service
Courtesy State House News Service

BOSTON – State law around the required contracts between marijuana companies and their host communities is not clear enough, the Cannabis Control Commission concluded Thursday as it agreed to formally request that the Legislature amend the law to give it the power to review and regulate the contracts.

The CCC has wrestled with the issue of host community agreements (HCAs) for months as activists and business owners point to the required agreements as one reason for the slower-than-anticipated rollout of the retail marijuana market.

Because the CCC will not consider a license application until an HCA has been executed, businesses and advocates say municipalities are using the required agreements to extract more than 3 percent of the marijuana business’s gross sales, the cap in place under the law.

In August, the CCC voted down a proposal to include a review of host community agreements as part of its licensing process, with chairman Steven Hoffman declaring at the time that the CCC lacks the legal authority to intervene or reject an application based on the HCA.

On Thursday, Commissioner Kay Doyle shared her own legal analysis of the statute, which also concluded that the agency does not have the power to regulate the terms of HCAs.

“To be able to take substantive action on these payments we are going to have to, in my opinion, go back to the Legislature,” Doyle, who prepared a report on HCAs and drafted the CCC’s initial legislative recommendations, said. “We are in a place where our regulatory authority is not very clear. If we are challenged doing this, we would face increased scrutiny by the court and an uphill battle. Rather than engage in litigation that ties up commonwealth resources, I think it makes more sense to go back to the Legislature and talk about what needs to be done to address the problem.”

The CCC voted Thursday to “seek statutory authority to review and regulate” HCAs. Commissioners debated how the agency should seek that new authority, with some thought given to trying to submit legislation ahead of the Jan. 18 bill filing deadline. Ultimately, the CCC agreed to make the request of the Legislature, but not to propose specific bill language.

“I think we’re going to probably submit a request. I don’t think it’s our place to submit language, but we will submit a request to the Legislature around what the issues are and what help we’re looking for,” Chairman Steven Hoffman said after the meeting.

The CCC also voted to forward to the Legislature Doyle’s report on HCAs and the issues surrounding them, a report which included her own other recommendations.

“Some municipalities apparently would prefer not to go through the host community agreement process and would prefer to treat marijuana establishments like any other business,” she said. “So I would recommend that the Legislature consider making host community agreements optional at the discretion of the municipality.”

She also recommended that the Legislature consider allowing the CCC to waive the requirement for an HCA or a community impact fee for certain businesses, like marijuana research facilities, and that the Legislature establish a process by which a city or town can petition for a community impact fee greater than 3 percent of the business’s gross sales if it can prove that the impact to the town is more expensive.

The lone vote Thursday against making a request that the Legislature change the law was Commissioner Jennifer Flanagan, who served in the Massachusetts House and Senate before being appointed to the CCC.

“I think that if the Legislature wants us to have statutory authority that they’re going to give it to us,” Flanagan told the News Service after Thursday’s meeting. “Given the new legislative session and the process that they’re all going through right now of crafting bills, I’m leaving it up to them to decide whether or not we should have the authority.”

Key lawmakers disagreed with previous suggestions from Hoffman and others at the CCC that the law is not clear enough and needs clarification. Marijuana Policy Committee Chairman Rep. Mark Cusack has said the issue “has less to do with ambiguity than it does reading comprehension.” His co-chair, Sen. Patricia Jehlen, said the CCC’s decision not to review the agreements meant “any enforcement of the law will be left to the courts.”

Also Thursday, the CCC approved final licenses for Temescal Wellness of Massachusetts, which will open a retail store in Pittsfield on Jan. 15 and a second retail store in Hudson at a later date, to grow up to 10,000 square feet of cannabis and also to produce marijuana products at its facility at 141 SW Cutoff in Worcester.

The facility will be allowed to grow, harvest or otherwise procure marijuana immediately, but it must be inspected by CCC staff again before it will be cleared to move any of its inventory into the public market. It has taken companies three to five weeks from final licensure to be cleared to open.

The CCC also voted Thursday to approve eight provisional licenses. Regulators issued provisional licenses for Holyoke Gardens to grow up to 50,000 square feet of marijuana at 5a Appleton St. in Holyoke; for LDE Holdings to grow up to 10,000 square feet or marijuana at 6 Thatcher Lane in Wareham; for Mass. Alternative Care to grow up to 20,000 square feet of marijuana, manufacture marijuana products and operate a retail store at 1247 East Main St. in Chicopee; for Pioneer Valley Extracts to manufacture marijuana products at 6 Ladd Ave. in Northampton; and for Rise Holdings to grow up to 100,000 square feet of marijuana and manufacture infused products at 28 Appleton St. in Holyoke.

Asked whether the geographic distribution of the retails stores approved to open — they are in Northampton, Easthampton, Leicester, Salem, Wareham, Great Barrington, Pittsfield and Hudson — is concerning to the CCC, Hoffman said, “not yet.”

“I think it’s just really a question of where the applications are coming in from, also which cities and towns have moratoriums or bans,” he said. “I think it would be a concern down the road if the distribution continues to look the way it does right now, but right now it’s not a concern it’s literally just random, where the applications are coming from and where the cities and towns are in their processes.”

 

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