Massachusetts marijuana retailers battle host community and licensing agreements

A marijuana leaf.(United States Fish and Wildlife Service WikiMedia Commons)

By Rickie Houston
BU News Service

The State Cannabis Control Commission announced on Friday Nov. 16  that the first two recreational marijuana stores in Massachusetts, Cultivate in Northampton and NETA’s Shop in Leicester, passed exhaustive scrutiny and will open today. 

The road to getting licensed has been long and many other marijuana ventures have reported discomfort with the obstacles to get licensing.

Marijuana retailers in Massachusetts are struggling to open retail pot stores due to problems with licensing and “host community agreements”— an issue that several cannabis industry advocates blame on the Cannabis Control Commission (CCC).

The CCC had hoped to launch the marijuana retail industry in Massachusetts by July 1, 2018, but they have failed to do so due to issues with host communities. Host community agreements are the contracts retailers must arrange with their city or town’s local government in order to establish a business or development. Municipalities then determine a yearly fee, called a “community impact fee,” which allows retailers to continue operating.

Following the legalization of recreational use two years ago, these advocates claim that the progression of the retail marijuana market is being suppressed by restrictive zoning contracts and licensing. Zoning contracts, which are administered by municipalities, determine which buildings and land developers can purchase or build in a particular city or town.

But the community impact fees associated with such contracts also come with legal limits — which cannabis industry advocates claim the CCC is doing a poor job in monitoring. They argue that the CCC should implement a stricter approach to ensuring municipalities follow the legal limits involved with impact fees. The legal limit represents the maximum amount of money municipalities can charge retailers for establishing new developments.

However, some businesses like Wicked Chronic, a Natick retail store, are already selling cannabidiol products, which suggests that some retailers have broken through the arguably difficult process of licensing.

In addition, organizations like the Massachusetts Grower Advocacy Council are considering legal action to compel the CCC to review community host agreements and prevent municipalities from overcharging retailers.

Peter Bernard, the president of the Massachusetts Grower Advocacy Council, explained in email how retailers can access the marijuana industry in Massachusetts.

“Host agreements are a vital and necessary step in the licensing process,” Bernard wrote. “The law is clear about what a town may expect in the way of community impact fees.”

In addition to host agreements, impact fees are the charges a city or town’s local government can impose on developers for new projects or developments. Municipalities charge such fees to ensure that they can institute the necessary public services to accommodate new developments.

“There is no oversight on these agreements besides verification that they exist, leaving this section of the law in a state of salutary neglect,” Bernard wrote.

He added that the CCC acts as the authority over host agreements and is therefore legally responsible for reviewing such agreements within license applications.

Maryalice Gill, press secretary for the Cannabis Control Commission, wrote in an email that the CCC is currently working to ensure a more transparent and organized legal structure between host communities and marijuana retailers.

“The Cannabis Control Commission continues to gather data on this issue and has published guidance to help municipalities and applicants work cooperatively to structure host community agreements in compliance with state law.”​

But other industry advocates express that the marijuana market is not solely being hindered by host agreements.

Eric Shwartz, co-founder of Farm Bug Co-op, said that although host agreements are vital in getting licensing, marijuana advocates and retailers should consider that host agreements are not even possible if a town’s zoning laws prevent people from using certain land for marijuana cultivation.

“Many of the growers that I work with, unfortunately, are not even getting zoned for cultivation,” Shwartz said. “If they’re not zoned for cultivation, a host community agreement can’t even be negotiated.”

In Massachusetts, zoning regulations vary in different cities and towns. This allows towns to control the use of land, structures and buildings, according to Chapter 40A of the Massachusetts General Laws. In other words, a host community agreement is not possible if retailers cannot get authorization for cultivation in a designated zone. This decision lies in the hands of the municipalities.

Shwartz added that restrictive zoning laws make it significantly harder for farmers and retailers to enter the market because they effectively prohibit farmers to cultivate cannabis products.

“The more restrictive laws are, the worse off it tends to be for both farmers, but also just small players in general in the cannabis industry,” Shwartz said. “In a lot of these rural towns across Massachusetts, if they’ve zoned cultivation, they’ve essentially disenfranchised every farmer from that community from entering the cannabis industry.”

Despite statewide difficulty with licensing, the CCC just issued four recreational marijuana licenses to two retail stores in Leicester and Northampton. The licensing applies to the New England Treatment Access (NETA) medical dispensary and to three divisions within Cultivate Holdings: cultivation, processing and retail. Cultivate Holdings operates as a registered medical marijuana dispensary in Leicester, Massachusetts.

However, the Massachusetts Grower Advocacy Council still has plans of influencing a stronger oversight of host community agreements and feels that the CCC should divert more of its attention to license applications.

“A lack of oversight leaves towns able to extort license applicants and gives big money the opportunity to bribe municipalities and push smaller businesses out of that community,” MGAC president Peter Bernard said. “MGAC believes there is a conflict there that needs to be resolved.”

Nonetheless, the marijuana market is expected to boom in the coming years. Americann, a facility designer and developer for cannabis producers, says the marijuana market is estimated to be valued in around $1.8 billion.

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