House bill gives CCC power over host agreements

BOSTON -- The Cannabis Control Commission would be explicitly empowered to "review, regulate and enforce" the legally-required contracts between marijuana businesses and their host communities under a new House bill teed up for debate and a vote Wednesday.

The House Ways and Means Committee voted unanimously Tuesday morning to give a favorable report to a committee bill (H 4367) addressing one of the most vexing issues confronting the still-young legal marijuana industry in Massachusetts and the regulators tasked with ensuring equitable access to the sector.

Representatives are expected to discuss the bill in a House session Wednesday, the first time since the Legislature rewrote the 2016 legalization ballot law in the summer of 2017 that lawmakers will get under the hood of the Massachusetts marijuana laws.

Host community agreements (HCAs) have been a thorn in the side of regulators, marijuana entrepreneurs and advocates almost since the CCC began licensing businesses. Business owners, lawyers and lobbyists have shared stories about cities or towns demanding more from businesses than the state's laws allow. Others have pointed to the required agreements as one reason for the slower-than-anticipated rollout of the retail market and as a barrier that's keeping small businesses from establishing themselves in the industry.

State law requires applicants for marijuana business licenses to enter into an HCA before the CCC will consider an application. The law stipulates that those agreements cannot run for more than five years and that the community impact fee paid to the municipality by the licensee cannot exceed 3 percent of the establishment's gross sales.

In addition to giving the CCC clear authority to regulate and enforce HCAs, the bill that came out of House Ways and Means this week would allow a municipality to waive the requirement to have an HCA, make clear that an HCA may not require any financial obligations beyond the maximum 3 percent of gross sales fee and clarify that the five-year term of an HCA begins on the day the business opens to customers.

In January 2019, the CCC voted to formally request that the Legislature grant it "statutory authority to review and regulate" HCAs. The commission had previously voted down a proposal to include a review of HCAs 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.

"To be able to take substantive action on these payments we are going to have to, in my opinion, go back to the Legislature," Commissioner Kay Doyle, who prepared a report on HCAs and drafted the CCC's initial legislative recommendations, said a year ago. "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."

Key lawmakers who led the Cannabis Policy Committee through the 2017 rewrite and the first legislative session with legal marijuana -- Rep. Mark Cusack and Sen. Patricia Jehlen -- disagreed with the suggestions from Hoffman and others at the CCC that the law is not clear enough and needs clarification.

Since then, HCAs and municipal transactions related to the agreements have caught the attention of federal law enforcement. U.S. Attorney for Massachusetts Andrew Lelling has brought charges against former Fall River Mayor Jasiel Correia, alleging that he solicited bribes from at least four marijuana companies that applied to open in Fall River by telling them he would only issue local approvals needed -- a responsibility that only rests with the city's mayor -- if he personally collected hundreds of thousands of dollars.

In November, the Boston Globe reported that a federal grand jury was looking into HCAs and that at least six communities -- Great Barrington, Eastham, Leicester, Newton, Northampton and Uxbridge -- had received subpoenas from Lelling's office seeking details on the communities' HCAs with marijuana businesses.

Fall River Rep. Carole Fiola announced legislation in September that would require every municipality across the state to involve its top locally elected board in the approval process for marijuana businesses. Fiola's bill, which remains before the Cannabis Committee, would mandate that retail marijuana companies cannot open unless they secure agreement, support or non-opposition from a majority vote of a town's select board.

The House is taking a somewhat odd path to considering the legislation.

Lawmakers on the Joint Committee on Cannabis Policy late last month advanced a redrafted bill (H 4327/S 2479) that would give the CCC express authority to review and regulate the mandatory agreements and payments. The House sent the Cannabis Committee's bill to the Committee on Health Care Financing, where it remains.

Instead of taking up the Cannabis Committee's bill, the House is planning to put a separate Ways and Means Committee bill -- technically part of a supplemental budget bill the committee had held onto -- onto the House floor Wednesday.