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What Some Massachusetts Cities And Towns Are Getting From Marijuana Businesses

Steven Hoffman, chairman of the Massachusetts Cannabis Control Commission, speaks during its first meeting in September 2017.
Jesse Costa
Steven Hoffman, chairman of the Massachusetts Cannabis Control Commission, speaks during its first meeting in September 2017.

Massachusetts cannabis regulators decided Thursday they won't wade into a murky area of the fledgling industry — the agreements between marijuana businesses and the communities in which they plan to operate.

Called "host community agreements," they allow a municipality to collect a fee of up to 3 percent of a business's gross sales for up to five years — so long as the fee is "reasonably related" to the impact of the marijuana establishment. That would cover issues like traffic congestion, public safety costs or more drug prevention programming.

But many of those agreements — including dozens reviewed by WBUR — appear to go beyond the law, getting extra payments in the form of donations and extending the five-year timeline.

Cannabis Control Commissioner Shaleen Title proposed that the panel start reviewing the agreements as part of the licensing process, to make sure they meet the legal requirements. But her four fellow commissioners rejected her suggestion Thursday, floating concerns ranging from getting sued, to causing more delays to an already-delayed industry, to questioning whether the commission even had the authority to review the agreements.

Commission Chairman Steve Hoffman pointed to conversations he had with several lawyers, some of whom thought the extra payments, directed toward charitable entities in communities, were legal, while others thought they overstepped the bounds of state law.

"I don't live my life trying not to get sued, but we will get sued," Hoffman said. "But more importantly I think if we were to do this, we'd be taking action on the basis of something that's legally disputed."

Title said the decision not to assess the agreements will most hurt the groups the commission is obligated to help: people of color, women, those impacted by the drug war and small businesses.

"There's this gigantic barrier to entry that we could choose — if we'd just enforce the law — to remove," she said. "But we're willingly going to look the other way. I think this is going to be a historic decision."

The commission will keep collecting host community agreements, and has a municipal survey out now to gauge how cities and towns are dealing with cannabis businesses. But it won't necessarily take action. Commissioners said they want the legislature to give guidance, such as whether required "donations" need to be included in the statutory 3 percent cap.

However, the legislature is already aware of the host agreement issues. Last month, the authors of the cannabis law sent a letter to the commission urging it to address the practice of cities and towns going beyond the 3 percent cap.

WBUR has reviewed more than 40 agreements so far -- some for businesses already granted a provisional license from the commission, but the majority are for businesses still in line to get a license.

Many agreements include some kind of donation. Newton charities would collect $2,500 a year from Garden Remedies, while businesses Alternative Therapies Group in Amesbury and New England Treatment Access in Brookline would gift $25,000 apiece annually. Northampton could see at least $55,000 in donations for "marijuana education and prevention" if the six businesses it's signed agreements with get up and running.

Other agreements have minimum community impact fees, rather than a percentage — like the $150,000 East Coast Organics and Cannassist would each pay Leicester to hold two licenses apiece. Sira Naturals in Milford, meanwhile, would pay the town $250,000 a year — no matter how much product it sells or how much money it makes.

Other agreements have so-called "reopener" clauses — meaning that if a business negotiated a more lucrative contract with a different city or town, that first municipality could get that same deal.

Fitchburg's agreements seem to stretch the bounds the furthest. In one, with NS AJO Holdings, which is seeking a retailer license, the company would be charged $50,000 as soon as it breaks ground on its store, plus a minimum of $75,000 a year or 3 percent gross sales, whichever is higher. On top of that, the company has to create a "community relations board" funded by the company that would make $75,000 in donations each year. The agreement does add that if the payments exceed state law, they can be reduced.

Christine Tree, Fitchburg's assistant solicitor, pointed out that only retailers would pay the 3 percent fee, since they'll have the most impact. Other agreements for different licenses ask for lower percentage points.

She defended the fees and donations in part by pointing to the equity provisions in the law. Fitchburg is one of the communities the commission says has been disproportionately impacted by the war on drugs. She says just as there are equity provisions in the law for individuals, cities and towns have the right to ask for their own equitable treatment.

"We do hope they're going to have a positive impact on us as a community," she said. "Not just one person."

WBUR reporter Zeninjor Enwemeka contributed to this report, which was originally published by WBUR.

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