The Massachusetts Cannabis Control Commission will not look into agreements between state municipalities and marijuana companies — despite the fact that cannabis advocates and legal experts believe the arrangements are unfair.
Last month, for example, thousands lined up to visit Cultivate Holdings in the town of Leicester to be among the first to purchase adult-use marijuana in the state. But while the crowds frustrated residents, the town administrator pointed out at an emergency meeting that the company was adhering to its end of the agreement.
“Cultivate is paying for everything they need to pay — they pay the police details, everything that they do as a business is not being borne by the town,” David Genereux said, according to The Boston Business Journal. “When the lines and the traffic go away, it's going to be another business, but it's a business that is contributing a disproportionate share of revenues back to the town.”
Currently, a company looking to obtain a provisional adult-use license in Massachusetts must have a host community agreement. In addition to a maximum 3 percent local tax on gross revenue, municipalities can charge a community impact fee that also may not exceed 3 percent of gross annual revenues and must be, “reasonably related to the costs imposed on the municipality by the operation of the marijuana establishment.”
In addition, any payments made to a municipality must be kept as a public record, and the agreement cannot last longer than five years.
“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,” according to a CCC guidance document.
In April, Cultivate agreed to pay Leicester a 3 percent annual community impact fee of no less than “$75,000 and shall not exceed $250,000.”
And any money not used to cover Cultivate’s operational costs — or to fund town parks and an economic development plan — will be placed into the town’s general fund.
“I think that would fall outside the bounds of the statute,” attorney Blake Mensing noted. “You have to incur a cost, it can’t be forward looking. The community impact fee is meant to offset impacts actually incurred by the community, up to 3 percent, so there is no minimum amount. I am not saying there won’t be, but if there are no impacts, the statute does not allow the town to collect a single dime."
But Geoff Beckwith, executive director and CEO of the Massachusetts Municipal Association, defends these types of agreements. “This was not created as part of a revenue scheme on the part of state government or local government.” Instead, he argued that it “works to bring municipal officials together to develop and advocate for unified policies and to work together to increase efficiency and effectiveness of municipal government.”