Response to Massachusetts Municipal Association’s Recent HCA Article
My name is Blake M. Mensing and I am proud to have served as associate town counsel for seven towns throughout the Commonwealth for three years. I’ve also served as a Conservation Commissioner and so am particularly sensitive to the demands placed on local regulators. I have the utmost respect for the dedication and hard work that municipal officials devote to represent their respective citizenry. Today, I represent aspiring cannabis businesses in Massachusetts and I help my clients to navigate the complexities of the municipal and state regulatory processes. I felt compelled to write this response to the Massachusetts Municipal Association’s Executive Director & CEO Geoff Beckwith’s recent article entitled “Local host community agreements should remain local” because I strongly believe that it inaccurately and unfairly describes the Massachusetts cannabis industry. The article used very broad strokes and was seemingly based on the faulty premise that the cannabis industry is an adversary of local government, which based on my experience representing both viewpoints, simply isn’t the case.
As of August 22, 2018, all nineteen of the host community agreements (“HCAs”) held by provisional Cannabis Control Commission (“CCC”) licensees appear to violate M.G.L. c.94G, §3(d) and the CCC’s guidance on HCAs. See Dan Adams, “Payments for marijuana licenses appear to skirt state law,” Boston Globe, Aug. 22, 2018, available here. The statutory underpinnings of this new regulatory regime are based on the goals of promoting restorative social justice, lowering barriers to entry for folks that are not exceedingly wealthy, and preventing monopolization and consolidation by placing limits on the scale of cultivation and the number of business entities a person or corporation may own. Mr. Beckwith’s article ignores those goals and creates a false dichotomy that I hope to unravel below.
Apparently, all lobbyists are to be scorned and never to be trusted. At the outset of the article, Mr. Beckwith describes a coordinated campaign by “paid lobbyists for the billion-dollar commercial marijuana industry” and ascribes to the lobbyists a goal of marginalizing and restricting local government’s role in the process of licensing cannabis businesses. There are two major issues with this first sentence: 1) describing cannabis advocates as “paid lobbyists” is a clear attempt to suggest that people advocating for the cannabis industry cannot be trusted because they are paid to present the industry’s concerns; and 2) labeling the nascent cannabis industry a “billion-dollar” industry is disingenuous—that figure is merely a projection for future years and the adult-use industry today comes nowhere close to that lofty figure and in fact there have been zero sales to date—and again appears calculated to ascribe a measure of wealth and power that simply doesn’t exist in all corners of today’s cannabis industry. Both of these improper characterizations can only be read as an attempt to appeal to municipal officials’ role of defending their constituents’ interests against an enormous and well-funded monolith dead set on steamrolling municipal concerns. The cannabis lobbyists that I know personally—Kamani Jefferson of the Massachusetts Recreational Consumer Council and Peter Bernard of the Massachusetts Grower Advocacy Council—work tirelessly to make the Massachusetts cannabis industry safe, fair, and transparent for adult-use consumers and growers, respectively. Both gentlemen are by no stretch of the imagination motivated or influenced by money, as Mr. Beckwith unfairly charges.
The goal of this mischaracterization was clear to this reader: Mr. Beckwith sought to appeal to overworked and underpaid municipal officials and employees by painting a picture of well-monied cannabis entrepreneurs seeking to impose their collective will on municipalities. This attempt at othering members of the cannabis industry is a thinly veiled tactic to create an “us” versus “them” paradigm that is a disservice to municipalities, Question 4 voters, and the cannabis industry. Mr. Beckwith either intentionally ignored, or remained willfully ignorant, of the fact that the members of the cannabis industry are simply attempting to see that M.G.L. c.94G, §3(d) is enforced as its drafters intended. Perhaps Mr. Beckwith will charge that my opinion on the matter cannot be trusted because of my clientele, but take it from Senator Jehlen and Representative Cusack, the primary authors of Chapter 94G:
…[P]ursuant to §3(d) of Ch. 94G M.G.L., all marijuana establishments must have a host agreement in order to be considered compliant with said chapter—a requirement for licensure and approval by the CCC—it is our interpretation, and intent, that the CCC has the authority and is required to therefore review any such community host agreements to ensure their compliance with statute. Such review should take particular note of any agreements which include mitigation fees or contributions of any kind, ensuring they conform with the restrictions imposed by statute. This includes that such fees or contributions of any kind are ‘reasonably related to the costs imposed upon the municipality by the operation of the marijuana establishment,’ do not equal, in total, to more than ‘3 percent of gross sales of the marijuana establishment,’ and that the agreement is not effective for longer than a total of five years.
Sen. Jehlen and Rep. Cusack, Co-Chairs of the Joint Committee on Marijuana Policy, letter to CCC Chairman Hoffman, July 13, 2018.
There is no nefarious campaign to marginalize or restrict municipal authority, but rather small businesses that make up the cannabis industry are merely attempting to encourage the CCC to take up its responsibility to enforce the statute as its drafters intended. Mr. Beckwith likely knew this when he wrote his article, which, using his logic, is an opinion that should not be trusted because he is paid by the Massachusetts Municipal Association. In life (and in the law), things are rarely as black and white as Mr. Beckwith has suggested.
Next, Mr. Beckwith utilizes an invective to charge that the cannabis industry’s valid concerns are “industry hysteria and harping” with regard to the multitude of municipalities that have imposed moratoria. There is no question that local control is of paramount importance under the statute and regulations, but labeling industry concerns over the prevalence and duration of municipal moratoria as whining ignores the fact that municipalities have had since early 2017 to update local zoning bylaws to appropriately address local concerns based on studies and citizen input. I’ve helped draft and revise many zoning bylaws governing other hot button issues, but even the most complex regulatory scheme can be instituted following an in depth policymaking process, with robust public participation, in the time that has elapsed since voters weighed in on Question 4. In the legal world, charges of the use of “fuzzy math and other distorting tactics” have to be supported by citations to facts, which were conspicuously absent from Mr. Beckwith’s assertion of impropriety. Moratoria are permissible and have met with the Attorney General’s approval, but their prevalence is a valid cannabis industry concern because aspiring entrepreneurs in this space need a location to begin regulatory review and there are far fewer municipalities open for business than there are those with moratoria or bans. I believe to the core of my being that those municipalities that have punted on this industry will come to regret the decision to eschew direct participation in the fastest growing industry in the United States.
Mr. Beckwith states, again without support, that the cannabis industry is pressuring the CCC and Legislature into micromanaging and restricting local host community agreements. Again, the cannabis industry is attempting to have the CCC fulfill its statutory duty to enforce Chapter 94G, whose legislative authors have gone on record to say that the cannabis industry’s interpretation of the very clear statutory language is the correct one. Municipalities are limited, by statute, to the collection of up to 3% of a marijuana establishment’s gross revenue for costs actually imposed on the municipality by dint of the cannabis businesses presence in the community and for a period of no longer than five years under the mandatory host community agreement. The constant calls of statutory ambiguity coming from four of the five CCC Commissioners, the Massachusetts Municipal Association, and the state’s largest municipal law firm, belie the fact that the statutory numerical limits are clear on their face and the intent of the drafters has been reinforced by the drafters themselves. As Senator Jehlen so astutely analogized:
A municipality finding a marijuana establishment willing to consent to additional fees outside the framework of a host community agreement is akin to an employer finding an employee willing to work for less than minimum wage … Such agreements are prohibited regardless of consent because they violate a clear public policy directive.
Christian Wade, Pot industry pushed back on host agreements, Salem News, Aug. 29, 2018, available here.
There is no greater misstatement than Mr. Beckwith’s claim that negotiations between municipalities and cannabis businesses “have taken place with both sides coming to the table to reach agreement freely and in good faith.” I have had clients that were told by a town administrator that if there was a single redline change proposed to the HCA that the town would not sign it despite the presence of mandatory payments above and beyond the statutory 3% community impact fee. Other clients have faced assent to an up front 3% commitment under the HCA regardless of any actually incurred costs to the municipality as a condition of municipal signature and that was presented as a take-it-or-leave it proposition. Charitable giving is a noble and to-be-encouraged practice that many in the cannabis industry take upon themselves independently to fulfill their commitment to being good citizens and neighbors. However, when charitable contributions, in specified dollar amounts to named charities, are included in HCAs at the insistence of municipalities and with the threat of a withheld signature, it is simply not philanthropy and is instead coercive and extremely prejudicial to small businesses that cannot afford those extra dollars that are a drop in the bucket to the well funded cannabis businesses. I have also seen town managers insist upon indemnification provisions that bind the cannabis business to defend against any lawsuit that materializes against the municipality for hosting the cannabis business. Similarly, HCAs that contain renewal provisions that extend the term of the agreement beyond five years are in patent violation of the statute.
A particularly egregious provision included in many of the HCAs that I’ve laid eyes on, is the “reopener/review” clause, which requires a cannabis business to amend its contract with a municipality if it gives more money under the terms of another HCA to some other municipality. In the context of respecting the sanctity of a contract between two parties, the notion that a cannabis business would have to match or contribute more than what the business is contractually obligated to pay some other municipality, is anathema to fulfilling the goals of the regulations applicable to this new industry. In what universe is the impact to another municipality in any way related to the impact on the first municipality? The statute provides that HCAs may contain community impact fees to offset direct impacts to the municipality for hosting that cannabis business. Those community impact fees, because they are limited to 3%, may result in a net impact to the host community. Community impact fees are not intended to be revenue generators for municipalities, instead, that’s what the (up to) 3% local option tax is designed to accomplish. Mr. Beckwith and similarly minded individuals will cite to the companies that have executed HCAs and state that the parties on both sides are happy with the terms of the HCAs even if they blatantly exceed the statutory limits. Those companies with HCAs underpinning provisional CCC licensure already granted, are, by and large, registered marijuana dispensaries that came to the table with the money to make a six-figure “voluntary” payment financially feasible. Such large payments are particularly insurmountable for small cannabis businesses that are required to accept the same HCA terms as the monied RMD, in the pursuit of municipal uniformity without acknowledgement that there are a wide range of cannabis businesses, some with large coffers and some with far less.
Chapter 94G in no way impacts a municipality’s ability to enter into contracts under Chapter 40 and the cannabis industry, to my knowledge, has not ever made such an argument in the host community agreement, or any other, context. However, host community agreements are required by law for cannabis businesses to open and operate within a municipality’s borders, which is a requirement of both the host community and the cannabis business itself. Chapter 40 already clearly limits the types of contracts a municipality may enter, and in fact explicitly states that “[a] city or town may not contract for any purpose, on any terms, or under any conditions inconsistent with any applicable provision of any general or special law.” See M.G.L c.40, §4. Host community agreements that require a cannabis business to contribute more than 3% of its gross revenues (or any contribution under 3% not tied directly to an actually imposed cost) for longer than five years are illegal under Chapter 94G and Chapter 40’s broad grant of contracting authority is specifically limited to contracts that do not offend any other law. I agree with Mr. Beckwith’s statement that “Chapter 94G (the marijuana law) does not erode this authority, although it does cap the community impact fee at 3 percent, require the community impact fee to be reasonably related to costs imposed upon the community, and limits the community impact fee agreement to five years.” In the very next sentence, Mr. Beckwith writes “The marijuana statute does not prevent, limit or cap other payments, fees or arrangements that are mutually agreeable,” which would be true, but for the fact that mutual agreement cannot be predicated upon take it or leave it terms that are wielded against the cannabis industry because municipalities know that the business cannot even apply for state licensure without an executed HCA.
Mr. Beckwith also wrote: “In its own regulations, the CCC also notes that while HCAs should address all of the responsibilities of each party under the law, the agreements are not limited to the community impact fee alone. Therefore, the HCAs can include other items that are mutually agreed to.” However, the CCC’s regulations at 935 CMR 500.000 et seq. contain no such language. The words “host community agreement” appear in only two places in the CCC’s regulations, 935 CMR 500.101(8) and 500.103(4)(d), and community impact fees are not referenced at all. It is unclear what regulations Mr. Beckwith is referring to, but I’ll give him the benefit of the doubt and guess that he was referring to the CCC’s recently finalized Guidance on Host Community Agreements, which states:
Under the statute, HCAs must include the terms necessary for a Marijuana Establishment to operate within a community. As with any agreement, terms should be negotiated between willing parties to the contract. In this context, the parties to the HCA are the owners or otherwise authorized representatives of the Marijuana Establishment and the contracting authority for the municipality. The parties should negotiate and agree to their respective responsibilities. The parties should also be aware of and abide by the constraints imposed by the plain language of M. G. L. c. 94G, § 3(d). It is clear from the statute, that the Legislature intended for a municipality to act reasonably in negotiating with a Marijuana Establishment that seeks to operate within its community. The costs and impacts of hosting a Marijuana Establishment will understandably vary from municipality to municipality and negotiated HCAs should reflect the particular impacts on the host community.
The common thread here is the premise that municipalities and cannabis businesses are free to negotiate terms that are mutually agreeable. However, that is not the experience of the small cannabis businesses that I represent nor myriad others who have been strong armed into signing agreements with monetary, temporal, and other overreaches. Mr. Beckwith goes on to cite examples of host community agreements in other contexts as evidence that cannabis HCAs aren’t any different, but of course that ignores the fact that except for the gaming industry, host community agreements are not mandatory and there is therefore no threat of municipal non-execution of the agreement to be used as a persuasive tool to meet monetary demands.
Mr. Beckwith states that, presumably, all of the 95 completed marijuana establishment licensing applications pending before the CCC are accompanied by HCAs that were mutually agreed upon. My experience and that of many small cannabis businesses, resoundingly and unequivocally rebuts that presumption. I agree that cannabis companies should be encouraged to provide public benefits and minimize public detriments. Requiring more money than the statute allows, whether in the form of contributions above 3% of gross revenues or in charitable giving, goes beyond what a municipality may contract for and every one of those HCAs is doing the citizens of this state a disservice. The host community agreements are not vehicles for providing net-positive public benefits, but rather the community impact fee was intended by the statute’s drafters to ensure that cannabis businesses have no net-negative to the host community if those negative impacts cost less than 3% of gross annual revenues.
As a former municipal attorney that was involved with host community agreement negotiations with large electric utilities, I am well aware that towns often feel like they get steamrolled by an army of high-priced attorneys who are backed by nearly unlimited corporate coffers. There are large cannabis businesses that may act similarly, but to paint the whole industry with that broad brush is inaccurate, disingenuous, and needlessly divisive. In fact, the 100,000 square foot cap on cannabis canopy was intended to allow smaller businesses the chance to enter the cannabis industry here in Massachusetts and to guard against monopolization. Mr. Beckwith’s and the Massachusetts Municipal Association’s true fears were laid bare here:
The MMA opposes state intrusion into the HCA process, and is urging the CCC and legislators to resist pressure from the marijuana industry’s lobbyists. Contracting between local governments and private entities is a long-established practice, and state interference could have long-term effects on the ability of municipalities to contract freely, even outside the marijuana industry. Additionally, it is likely that once the marijuana industry becomes more established in Massachusetts, and the market becomes saturated, private marijuana firms will gain the upper hand in the negotiations. Tying the hands of municipalities now would severely limit their ability to come to the table as equals later, and could undermine local government’s ability to represent the public’s interest in a balanced setting.
Strong arming small cannabis businesses today out of fear that your municipality won’t have an equal bargaining position at some point in the future is not good governance, it’s pretending to act in the interest of constituents under the false specter of a boogeyman that is not as pervasive in the Massachusetts cannabis industry as Mr. Beckwith would like the MMA’s membership to think. The cannabis industry does not want special treatment, it just wants host community agreements that are actually negotiated and that are not based on anticipated impacts that may never materialize.
The cannabis industry is here to stay in Massachusetts. It is made up of some of the most passionate, hardworking, and dedicated professionals that I have ever had the privilege of working with. The small cannabis businesses that I represent are run by Massachusetts natives, or long-term residents, that are already woven into the fabric of their respective communities. It is appalling to me to read the vitriol aimed at the people that make up this industry. Fears of cannabis are ingrained and the stigma its enthusiasts and proponents deal with is a reality we have to face and one that cannot be legislated away. Mr. Beckwith has proudly continued the 80-year American tradition of hurling falsehoods and half-truths at this plant, its consumers, and the burgeoning industry it supports. I remain hopeful that people will look at cannabis from a neutral scientific standpoint and come to the conclusion that I believe to be inevitable: as far as human vices go, cannabis is the far better choice for people, and society as a whole, when compared to alcohol and tobacco. Prohibition at the state level is over. I, and the cannabis industry at large, are here to stay and we look forward to working with municipalities to bring jobs, revenue, and to ultimately diminish or eliminate the stigma that the cannabis plant has been unjustly saddled with for near a century. I would welcome the chance to sit down with Mr. Beckwith to discuss his concerns with this industry as it relates to municipal oversight and would gladly do so on my own time and dime. From this vantage point, there is ample common ground for municipalities and the cannabis industry to work cooperatively.
Public Comments to the Cannabis Control Commission
FROM: Blake M. Mensing, Esq.
TO: The Commissioners of the Massachusetts Cannabis Control Commission
101 Federal Street, 13th Floor Boston, MA 02110
(via email: CannabisCommission@mass.gov)
RE: Public Comment on Draft Guidance on Host Community Agreements and Draft Guidance on Local Equity
Dear Commissioners Hoffman, Title, McBride, Doyle, and Flanagan:
My name is Blake Mensing and I am an attorney exclusively practicing cannabis law in the Commonwealth and I’m writing to provide public comments on the recently released draft guidance documents on host community agreements (“HCA(s)”) and local equity. I am writing in my individual capacity as a citizen and not on behalf of any of my clients that are in the process of seeking local permits prior to their application for licensure by the Commission. As a former municipal attorney who represented seven towns throughout the Commonwealth as associate town counsel, I am intimately familiar with a broad range of the laws applicable to local government. In addition, I am a former conservation commissioner and so also come to the table with the viewpoint of a local regulator.
At the outset, I would like to respectfully highlight that one of the Commissioners requested that these public comments be “Supreme Judicial Court brief” quality. I believe that that statement may have had a chilling effect on the submission of comments on the draft guidance documents from the general public. I note that said Commissioner later clarified that statement by saying that it was intended to be applicable solely to attorneys, which I do not believe does much in the way of fostering additional public participation from non-attorneys as it was issued outside of the Commission’s meeting and I think is honestly a deterrent to attorney participation in the public comment period given how much work goes into researching and drafting briefs for submission to the SJC and the short window of opportunity for public comment. While I have included some case law citations here, I respectfully decline to abide by that request and believe that the format, other than the media of its transmission, of a public comment should be something left to the members of the public making the decision to provide the requested input.
HOST COMMUNITY AGREEMENTS
The Commission’s issuance of the draft guidance relative to HCAs appears to have been catalyzed by what’s been termed “anecdotal evidence” of municipal overreach in terms of fees and the duration of HCAs. I believe that the Commission has only received anecdotal evidence of municipal overreach because aspiring marijuana establishment licensees simply do not enjoy an equal bargaining position with any of the towns that remain open for this type of business, and the municipalities are well aware that their sign off on an HCA is a condition precedent to applying for state licensure. The decision to accept a single page certification by municipalities that they have entered into an HCA with the proposed marijuana establishment, pursuant to M.G.L. c.94G, §3(d), without looking at the substance of those contracts is likely an additional factor that has emboldened municipal overreach in some instances. If a town knows at the outset that its HCA will never be examined by the state, then they can (and have) include terms within an HCA that do not adhere to the simple numerical parameters of HCAs as laid out in the statute.
The draft HCA guidance states: “As with any agreement, terms should be negotiated between willing parties to the contract… It is clear from the statute, that the Legislature intended for a municipality to act reasonably in negotiating with a Marijuana Establishment that seeks to operate within its community.” This hortatory language bears no resemblance to my experience in dealing with municipalities in pursuit of HCAs for my cannabis clients. Out of fear that my clients might be blacklisted by municipalities for my views here, I will regrettably only be able to provide further anecdotal evidence of municipal overreach with respect to HCA “negotiations.”
One town official told my client that the “draft” HCA it presented to them would not be signed by the contracting authority if there were any proposed revisions to it. The substance of that HCA, while it stated in its prefatory clause that it was entered into pursuant to M.G.L. c.94G, §3(d), contained provisions that patently fell outside of the realm of permissible community impact fees and for a period of time longer than the five years permitted by statute. Town Counsel for that town, in response to my challenge about the payments being required by the HCA that were not for demonstrably incurred community impacts, and for a period of longer than five years, said that those dollars weren’t “community impact fees” and that the town and my client could “agree” to whatever terms they “negotiated.” A situation where a town official indicates an unwillingness to accept any revisions to an HCA cannot possibly be considered by anyone with a shred of intellectual honesty to be the actions of a municipality acting reasonably in negotiations with a potential cannabis business. Every single HCA is ultimately a take or leave it deal because there is no statutory recourse for a town’s refusal to enter into HCA negotiations aside from a possible challenge under the Administrative Procedures Act, M.G.L. c.30A et seq. It requires no great legal or strategic mind to conclude that suing the town you hope to locate your business is not a viable option for any business, much less a cannabis business that already bears the brunt of stigma that is simply disproportionate to a neutral scientific view of the cannabis plant.
In another municipality, while the “community impact fees” in the HCA were labeled as such and limited to 3%, the contractual language required that the cannabis business agree in advance to pay the town 3% of its gross revenues irrespective of any actually incurred community impact costs as a condition of receiving an executed HCA. As the Commission correctly noted in the draft guidance:
Fundamentally, the fee must be voluntary in nature. … Assessments characterized as ‘fees’ that do not meet these requirements risk being regarded as a tax, which, unless explicitly allowed under chapters 64H and 64N, are prohibited.
Accordingly, any HCA structured consistent with G. L. c. 94G, § 3(d), may include a community impact fee, provided that the fee is authorized under the statute and meets the legal requirements of permissible fees. A community impact fee included in an HCA must be more than simply called a community impact fee; it must be structured appropriately.
The draft guidance also states that: “The Commission views [community impact] fees that are ‘reasonably related’ as those that compensate the municipality for its actual and anticipated expenses resulting from the operation of the Marijuana Establishment.” An HCA may provide for the collection of up to 3% of gross revenues as a community impact fee, not an anticipated impact fee. An impact that hasn’t happened yet could not possibly be one that a municipality has had “imposed” by the siting of a marijuana establishment within its borders. HCAs may only include language that mirrors the statutory language, which provides that:
An agreement between a marijuana establishment or a medical marijuana treatment center and a host community may include a community impact fee for the host community; provided, however, that the community impact fee shall be reasonably related to the costs imposed upon the municipality by the operation of the marijuana establishment or medical marijuana treatment center … [and] Any cost to a city or town imposed by the operation of a marijuana establishment or medical marijuana treatment center shall be documented and considered a public record as defined by clause Twenty-sixth of section 7 of chapter 4.
M.G.L. c.94G, §3(d) (emphasis added).
The statute uses the past tense of the word “impose” and notes that the documentation to support an imposition of cost by the marijuana establishment shall be a public record. Anticipated costs are not collectible under an HCA because the statute provides that municipalities have to document the costs it actually incurs by allowing a marijuana establishment to operate within its borders. To those that would read what I have just written as hamstringing a municipality’s ability to be compensated for the presence of a marijuana establishment, I note that HCAs do not have to spell out the specific costs that it will incur by hosting a marijuana establishment because the legislature had the foresight to limit what can be collected to up to 3% of gross revenue for costs actually incurred by the municipality. This means that there are costs that may be imposed on a municipality that in fact represent a dollar figure greater than 3% of a marijuana establishment’s gross revenue but which nonetheless cannot be offset by a community impact fee under the statute. The statute does not contemplate anticipated costs, but rather only permits a municipality to collect a community impact fee for costs actually imposed—past tense—on the municipality for a dollar figure limited to 3% of a marijuana establishment’s gross revenues. The precise dollar figure collected as a community impact fee should vary by town and by the type of marijuana establishment present in the municipality. If the Commission’s guidance allows for anticipated community impacts, then the statutory language dictating that the costs imposed be documented as a public record has no meaning. See M.G.L. c.4, §6 (“Words and phrases shall be construed according to the common and approved usage of the language…”); see e.g. Commonwealth v. Welch, 444 Mass. 80 (2005) (“We apply the general rule of statutory construction that a statute is to be interpreted ‘according to the intent of the Legislature ascertained from all its words construed by the ordinary and approved usage of the language, considered in connection with the cause of its enactment, the mischief or imperfection to be remedied and the main object to be accomplished, to the end that the purpose of its framers may be effectuated.’) (internal citations omitted).
Furthermore, because of 80 years of disinformation, propaganda, and outright hypocrisy1 on the part of the federal government, a municipality is very likely to anticipate community impacts that will simply never materialize. I was present at a community outreach meeting during which a city councilor in attendance asked a question to the effect of “what about all the deaths from marijuana?” despite the fact that there isn’t a single recorded overdose death from ingestion of cannabis in all of human history.2 Fact-free fear abounds with respect to cannabis and our municipal (and state) officials are not immune to the influence of unwarranted and disproportionate fear and stigma. If the HCA guidance leaves the door open for the collection of community impact fees based on anticipated impacts rather than costs that were actually imposed by the presence of the cannabis establishment, and documented as being imposed in the form of a public record, then municipalities will undoubtedly anticipate costs that will never materialize and the clear statutory language limiting community impact fees will be rendered meaningless.
It is beyond belief that any town counsel would advise their municipal clients that requiring a cannabis business to enter into an HCA for a period of time longer than five years is somehow permissible in the face of the statutory language. It should be deeply troubling to the Commission that many towns have in fact executed HCAs with marijuana establishments that last longer than five years in light of a plain reading of the words that HCAs, and community impact fees that come with it, cannot “… be effective for longer than 5 years.”
As the Commission well knows, 935 CMR 500.101(8) requires applicants to submit: “Documentation in the form of a single-page certification signed by the contracting authorities for the municipality and applicant evidencing that the applicant for licensure and host municipality in which the address of the Marijuana Establishment is located have executed a host community agreement…” Every single municipality that has “certified” to the Commission that it has entered into an HCA that contains terms outside of the bounds of the clear statutory language must have those contracts closely examined by the Commission because those documents simply are not HCAs under the statute. Each of those “certifying” municipalities have made material false statements to the Commonwealth and have abused their power with respect to legitimate businesses, likely because of personal fears of cannabis as a substance and/or fear of political repercussions of public opposition to cannabis. If the Commission believes that a regulatory revision is required to afford the Commission the right to examine the contents of an HCA, it should promulgate such regulation post haste because municipalities have in fact required assent to the substantive terms of HCAs as a condition precedent to execution of the HCA and have extracted contractual commitments for payments (and “voluntary donations”) above and beyond what the statute allows under the guise of arm’s length negotiations. I truly hope that an aspiring or existing cannabis business has the resources and the fearlessness to bring an illegal HCA, or proposed HCA, into the light through the courts. Local control is a critically important component of the regulatory framework for adult use cannabis in Massachusetts, however, that control is explicitly limited by statute and I believe that the Commission has the responsibility to review HCAs for compliance with the statute to reverse and prevent local abuse of cannabis businesses that is likely driven by the unwarranted stigma that cannabis carries.
First, and please forgive my brief digression from the specific topic at hand, are a few comments on equity in general. I wholeheartedly support the intent behind both the state law and the Commission’ guidance with respect to ensuring that this nascent industry makes restorative social justice a regulatory focal point. However, I believe that the Commission has made a grave procedural error in how it chose to review and certify Economic Empowerment Priority Applicants. Having a single, two week window to apply to benefit from disproportionate enforcement by dint of a prior cannabis conviction, race, residency in a municipality that made the list of disproportionately impacted, or history of promotion of economic empowerment in those disproportionately impacted municipalities, amongst other criteria, seriously undercuts the statutory intent to make restorative justice a priority. That two week window during which people could apply for priority certification was far too short and the publicity the program received was similarly inadequate in duration and scope. The Commission’s recent survey in which it sought responses from Economic Empowerment Priority Certificate holders, from the pool of 123 such certified people and entities, was apparently intended to gauge why the majority of natural persons holding such certificates have not yet applied for licensure. A better question to ask, in my view, is why the window to get a leg up against those uncertified applicants was so short if the goal is truly to right some of the wrongs of the failed drug war? Eighty years of disproportionate enforcement spurred by institutional racism and fear-based propaganda simply cannot be undone with a certificate that the great majority of eligible and aspiring cannabis business owners did not apply for during that short window of review. I understand that the priority review certification period could not have been indefinite, but the two week period was patently insufficient to give the statute’s restorative justice any actual legs. As the Commission’s issuance of the recent survey demonstrated, even those people who were fortunate enough to have had knowledge of the priority review certification period and the means and wherewithal to actually apply have not been able to compete with the certified registered marijuana dispensaries or even uncertified well financed applicants and have not applied to benefit from that certification. I truly believe that the Commission, through its social equity program and regulatory efforts, should be commended for bringing restorative social justice to the forefront of public discussion surrounding cannabis in the Commonwealth. That noble intent has unfortunately not translated to much actual measurable restorative social justice at present, in my view primarily because of that incredibly brief priority certification review period.
Two aspects of the guidance on local equity stand out to me as needing additional meat on the bones. First, as the Commission wrote with respect to local buffer zones enshrined in municipal zoning:
Like overly restrictive zoning, buffer zones between Marijuana Establishments prolong inequities by exacerbating the scarcity of appropriate real estate. If buffer zones between Marijuana Establishments are enacted, municipalities may consider waiving or reducing the size of the buffer for state-certified economic empowerment applicants or for state-designated participants in the Commission’s Social Equity Program. For more information on these programs, see the Commission’s Summary of Equity Provisions.
The ignominious title of poster child of cannabis-NIMBYism has to go to the City of Boston and its half mile buffer rule that applies to registered marijuana dispensaries and future adult use marijuana establishments and that is boxing out aspiring cannabis businesses. I understand that not all Boston neighborhoods merited inclusion on the list of disproportionately impacted areas, but the City of Boston’s half mile buffer rule applies indiscriminately throughout the city and has left scant real estate available to residents of those designated areas. There are a great many areas that fall within the designated census tracts in Boston that are within half a mile of more affluent areas that have not been disproportionately impacted by the failed drug war, but if a well funded entity plants its flag on the border between those neighborhoods, even a priority certificate holder could be excluded by the local zoning ordinance. I am well aware of the control that municipalities have over local zoning and the limits of state action to change the contours of that zoning, but again, the restorative social justice underpinnings of the statute have been absolutely gutted by virtue of Boston’s half mile buffer rule. The Commission should specifically encourage the City of Boston to reexamine that zoning ordinance because it is our most populous city that holds a great number of people who have been wrongfully targeted and jailed for cannabis use.
Second, as the Commission’s draft guidance highlighted, the disparate local processes to obtain the requisite local approval have not been required to even acknowledge the existence of the statutory mandate to foster restorative social justice. Again, I’m aware that the Commonwealth and the Commission have legal limits on what they can require of a municipality and its internal regulatory processes, but the very fact that guidance on local equity is even necessary demonstrates that the intent of the statute will never be upheld as long as municipalities proceed as if equity was not a foundational pillar of the state law. I strongly support what the Commission wrote here:
• SELECTION PROCESS: In deciding which companies with which to negotiate a host community agreement, the Commission recommends instituting an objective, transparent selection process intentionally focused on repairing past inequities, beginning with prioritizing review for state designated economic empowerment applicants. Consider preferences for state-designated Social Equity Program participants, or applications from companies owned by marginalized groups. As 8 part of the selection process, consider evaluating the company’s diversity plan and plan to positive impact communities disproportionately harmed, either in the municipality or generally.
Recognizing that neither the statute nor the Commission’s regulations presently contain provisions to implement this suggestion, I think that there should be some monetary or other incentive at the state level to reward those municipalities that adopt the above suggested selection process approach to properly incentivize participation in the statutorily mandated restorative justice efforts. Whether it is a grant program to fund eduction and training in those municipalities that enact zoning or other bylaws to meaningfully foster economic empowerment certificate holder participation in the cannabis industry or some other mechanism, it is clear to me that state legislators and/or the Commission need to take additional steps to live up to the legislative intent behind Chapter 94G.
Thank you for considering these public comments and I look forward with great hope that the Commission will continue to act in the best interest of all of the citizens of the Commonwealth whether they be pro- or anti-cannabis.
/s/ Blake M. Mensing
1 Under the Controlled Substances Act, 21 U.S.C. 812(b)(1)(A)-(C), cannabis has a Schedule I classification, and is purported to be a substance that has a high potential for abuse, has no currently accepted medical use in treatment in the United States, and there is a lack of accepted safety for use of the drug or other substance under medical supervision. The United States Department of Health and Human Services holds Patent No. 6,630,507, issued in 2003 and which outlines how certain compounds found in cannabis can be beneficial in the medical treatment of certain neurological diseases. That patent cannot be squared with Schedule I’s criteria that cannabis has “No currently accepted medical use in treatment in the United States.”
2 See U.S. Dep’t of Justice, Drug Enforcement Agency, Drugs of Abuse, at p. 75 (2017 ed.) available at https://www.dea.gov/pr/multimedia-library/publications/drug_of_abuse.pdf (“What are its overdose effects? No deaths from overdose of marijuana have been reported.”); see also World Health Org., The health and social effects of nonmedical cannabis use, at p. 19 (2016) (“There are no reports of fatal overdoses in the epidemiological literature (Calabria et al., 2010b). The lack of respiratory overdoses is consistent with the absence of cannabinoid receptors in brain stem areas that control respiration (Iversen, 2012).”).