Host agreements seen as impeding marijuana sector's growth
Photo | State House News Service
Sen. Patricia Jehlen and Rep. Mark Cusack, co-chairs of the Marijuana Policy Committee
Two years and a day after Gov. Charlie Baker signed the state's marijuana law into effect, lawmakers on Monday morning weighed two issues that have proven to be the among the thorniest for regulators -- the statutorily-mandated contracts between marijuana businesses and their host communities and legal social consumption of marijuana.
The Cannabis Control Commission has been wrestling with host community agreement (HCA) policy for nearly a year while activists and business owners have pointed to the required agreements as one reason for the slower-than-anticipated rollout of the retail marijuana market and as a barrier that's keeping small businesses from establishing themselves in the new industry.
State law requires applicants for marijuana business licenses to enter into agreements with host communities 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.
"Simply stated, they don't work. It is not working, it isn't even close to working," Jim Smith, an attorney at Smith, Costello and Crawford who represents dozens of marijuana businesses, told lawmakers of HCAs. "Your statute is very specific ... it says that the community impact fee shall be reasonably related to the cost imposed upon a municipality. That is not happening. It also says that it should be no more than 3 percent of gross sales. That is not happening. In fact, nothing in this section of the law is being respected."
Smith said he's had clients who have been pressed to sign HCAs that call for a 4 percent impact fee, require an up-front payment to the town and that require the business to make "voluntary" donations to various town organizations. He testified Monday morning before the Joint Committee on Cannabis Policy as lawmakers on that panel consider bills (S 1126 and H 3536) that seek to rein in some of the issues with HCAs and give the CCC the explicit authority to regulate the agreements.
Sen. Patricia Jehlen, one of the chief negotiators when the Legislature rewrote the 2016 ballot law legalizing marijuana, said Monday that it's "frustrating" to see parts of the law she helped write be misapplied or not applied at all.
"We work really hard to pass legislation and then it doesn't turn out to be applied and have the results that we expected. So I hope the committee will require that this law be enforced by passing" S 1126 and H 3536, Jehlen said.
She said that HCAs were meant to help incentivize communities to embrace legal marijuana businesses so that the legal market can grow, become more widely accessible and establish some competitive pricing to attract consumers away from the illicit market. Since the HCAs aren't being enforced, she said, the illicit market is benefitting.
"The excessive demands made by the municipalities, probably for benevolent reasons, have meant that there is a higher price and less competition for the illicit market and less access and therefore less availability," Jehlen said. "So the illicit market has continued to thrive."
Last August, the CCC voted down a proposal to include a review of host community agreements as part of its licensing process and the agency determined that it lacks the legal authority to intervene or reject an application based on the HCA. The CCC made a formal request that the Legislature amend the law to give it the power to review and regulate the contracts in January.
The CCC did not submit testimony to the Cannabis Policy Committee on Monday. Commissioner Shaleen Title, who led the push last summer to have the CCC review HCAs as part of the licensing process, submitted testimony on her own behalf.
"From my perspective as a commissioner appointed for expertise in social justice, the lack of enforcement of the legal limitations of host community agreements is a major barrier to entry for small businesses," she wrote.
After hearing about 90 minutes of testimony Monday on the issue of HCAs, committee co-chair Sen. Sonia Chang-Diaz said she is "hardpressed ... not to conclude that host community agreements are a significant barrier to the social equity goals" of the state's marijuana law.
Threshold for Social Consumption
The committee also took testimony Monday on social consumption of marijuana, or a policy that would allow adults to use marijuana in some form in a social setting. The CCC has laid out the framework of a social consumption pilot program, but the agency said the pilot "would not be able to begin without a change in state law or the passage of legislation that will first allow cities and towns to authorize social consumption in their communities."
Current state law speaks to voters using local initiative process to "request that the question of whether to allow, in such city or town, the sale of marijuana and marijuana products for consumption on the premises where sold be submitted to the voters of such city or town at the next biennial state election."
The committee on Monday heard from Sen. Julian Cyr, who filed a bill (S 1125) that would allow any municipality that allows retail marijuana sales to authorize on-site consumption "through an ordinance or by-law" rather than a community-wide vote.
Cyr, who represents Cape Cod, laid out a situation in which an of-age visitor to Provincetown buys marijuana legally, pays the state's taxes on the product and then has no place to legally consume it because they are staying at a hotel or some other place where consumption is not allowed.
"There really is no legal space to consume those products and I have a real concern that if we don't find a pathway for people to legally be consuming this product they're able to buy that we're going to have some problems around public safety," he said.
Rep. Hannah Kane, who also served as a negotiator on the rewritten marijuana law, said she is uncomfortable with the idea of changing the law from requiring a vote of the residents to a decision of a town's legislative body.
"I agree there is clarity needed. The bill before us isn't necessarily providing clarity, it's providing a different method," Kane, a Shrewsbury Republican said. "Clarity, I'm all for and I can buy into that. Changing the method by which it goes before communities, that's what I have an issue with."
She added, "it makes it much easier to have it than the current law."
Cyr said he supports allowing towns that already permit retail marijuana sales to OK social consumption through an ordinance "because we may need to move quickly on this issue" and the next biennial state election is not until November 2020.
A group of advocates from the Massachusetts Prevention Alliance testified before the committee Monday, urging lawmakers to not go along with the CCC's plan to allow social consumption, which one advocate said is akin to big tobacco getting a carve-out to allow cigar bars when states put anti-smoking laws on the books.
"Under current law, consuming marijuana where smoking tobacco is prohibited is illegal until the local people vote to permit such consumption," Jody Hensley, policy advisor for the Prevention Alliance, said. "This [bill] eases the process for opening of marijuana consumption sites and favors commercial marijuana interests over public and community health considerations."
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