A group representing Massachusetts marijuana growers officially petitioned the Cannabis Control Commission last week to review and regulate the statutorily-required agreements between marijuana businesses and their host towns, and says it plans to sue the commission if it does not act.
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 and as a barrier that’s keeping small businesses from establishing themselves in the new industry.
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.
Earlier this month, the CCC agreed to formally request that the Legislature amend the law to explicitly give the commission the power to review and regulate the contracts. Peter Bernard, president of the Massachusetts Grower Advocacy Council, said the CCC should not have to request authority it has already been given.
“We see this as them kicking the can down the road, as the Joint Committee on Marijuana Policy gave them permission quite publicly this past fall,” Bernard said, referring to comments from key lawmakers who said they disagreed with the CCC’s interpretation of the law. “The CCC’s request for clarity does nothing but let the HCA problem drag out, and a legislative fix may never come. The Commission is acting on bad advice, and it is causing them to shirk their responsibility.”
On Friday, the Massachusetts Grower Advocacy Council sent the CCC a petition for rulemaking — a process under which state law allows any person to “petition an agency requesting the adoption, amendment or repeal of any regulation” — asking that the CCC adopt regulations to enforce the legal limit on payments marijuana businesses can be required to make. The council also provided its recommended draft of the regulations it is seeking.
“The CCC has refused to take any action to curb this systemic problem, instead insisting that they lack authority to issue regulations despite the fact that they have already issued regulations under the authority delegated to them,” the council wrote in its petition. “The result of the Commission’s refusal to exercise its authority to ensure HCAs comply with the law has resulted in small business owners and especially economic empowerment applicants being excluded from participating in this industry.”
Bernard said his organization hired lawyers from Gersten Saltman who requested copies of all HCAs executed by Nov. 20 for review. Based on the 77 HCAs obtained, the lawyers found that 79 percent of the agreements “require marijuana establishments to pay annual contributions to the town that either plainly violate the statutory terms or may result in unlawful community impact fees,” the council said.
The CCC said it is reviewing the Grower Advocacy Council’s petition and declined to comment beyond that. Previously, commissioners have said the authority of the CCC to regulate HCAs is unclear and that the agency should not move forward with reviewing or regulating them unless the Legislature makes clear that it is empowered to do so.
“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 for the commission, said two weeks 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.”
Key lawmakers have disagreed with previous suggestions from 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.”
Committee assignments for the new legislative session have not yet been made and legislative business is largely on hold as the new Legislature gets settled. It is unclear what, if anything, the committee might do with the CCC’s request. The CCC is planning this year to make changes to its regulations and could address the issue of HCAs via that route.
Bernard said the Grower Advocacy Council is “not accepting it when they say they’ve asked for permission now. They have been given it already.”
“If they do nothing with the legal petition, off to the courtroom we go,” Bernard said.
It is not clear what the CCC’s next steps could be. State law requires that each state agency “shall prescribe by regulation the procedure for the submission, consideration and disposition of such petitions,” but the CCC’s regulations appear to make no mention of the process for consideration of a rulemaking petition. The agency said it is gathering information about rulemaking processes at other agencies and may formalize its own procedures as part of its 2019 regulatory review.