Grow, Gift, Repair

Drama at the state level around Host Community Agreements


In a letter to the Cannabis Control Comission late Friday, state Senator Patricia Jehlen and state Representative Mark Cusack urged the agency to stop turning a blind eye to illegal “host community agreements” that last too long or require pot operators to make excessive payments.

In a contentious 3-2 vote last December, the commission decided it didn’t have the authority to approve or reject the terms of the contracts marijuana operators must sign with their host municipalities in order to get a state license. Instead, it only checks to make sure an agreement has been signed.

Jehlen and Cusack — co-chairs of the Legislature’s joint committee on marijuana policy — think that was a mistake.

The lawmakers decried the “widespread practice” of municipalities and cannabis operators agreeing to deals they said “undermine state statute and our collective efforts to disincentivize and successfully migrate the illicit consumption of marijuana within the Commonwealth into a legalized, well-regulated, tested, and taxed system.”

They insisted the commission is required by law to review all host community agreements and ensure they don’t exceed limits on the duration and size of payments. They also said the agency should scrutinize any side agreements that include additional fees or “contributions.”

“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,” the legislators wrote. “It is our hope that the CCC will… prevent municipalities from using community host agreements as a form of prohibition.”

The commission did not immediately have a comment.

Under the law, no cannabis firm can get a recreational license from the state unless it has signed an agreement with its host municipality. Those contracts usually require the operator to pay the community a cut of its sales, and spell out security requirements and other conditions.

But the law says the agreements can’t last more than five years, and caps payments at 3 percent of a company’s annual revenue. Even payments below that cap must be “reasonably related” to actual costs the company imposes on the city or town — expenses such as legal services, police responses to the facility, infrastructure, and so on.

In addition to making it more affordable for small businesspeople to enter the marijuana industry, the restrictions were intended to prevent a repeat of the municipal rent-seeking seen under the state’s medical marijuana system; without caps in place, some medical dispensaries have paid towns hundreds of thousands of dollars.