Grow, Gift, Repair

Most HCAs are not compliant

Out of the nearly 500 contracts reviewed by WGBH News, 314 — that’s roughly two thirds — ask for more than the standard fees from marijuana applicants.

Hundreds of incentives are written into agreements across the state, requiring businesses to contribute extra costs and labor, from charitable donations to community service pledges. The extra sums range from a few thousand dollars to six figures in extra payments.

In Chelsea, one agreement calls for a one-time $100,000 donation to local drug and substance abuse programs and an annual $25,000 donation to local youth sports leagues. City officials told WGBH News that the fees were volunteered by the applicant as a way to give back to the community.

In Athol, the majority of marijuana shops have paid between $2,000 and $20,000 for legal and other fees. Athol’s town manager said in a statement that the costs were suggested by the town, but mutually agreed to — without objection — by the applicant.

In some cases, the suggestion to pay more than the standard fee seems to come from the cities and towns themselves. In other cases, bigger companies volunteer these payments, which makes their applications more competitive.

Mark Zatyrka is the CEO of INSA, a multi-state marijuana business with agreements in communities across the state, and one of the larger marijuana companies competing in Massachusetts.

In INSA’s contract with Springfield, the company agreed to pay the standard fees, plus an annual $20,000 to Springfield public schools and $20,000 per year to beautify a local park. That’s in addition to financing a police detail outside the shop.

Speaking to a scrum of reporters about his Springfield contract last September, Zatyrka didn’t seem to have a problem with extra payments.

“We’re happy to work with the city and provide as much back to the city as we can,” he said, “which we would have done anyways.”

Springfield officials did not immediately respond to a request for comment.

Cannabis Control Commissioner Shaleen Title says communities began this process with good intentions, but somewhere along the way, strict rules went out the window.

“What [the process] has turned into is essentially a shakedown where not only are [communities] charging for their own costs, but they’re charging more,” Title said. “They looked at the law. They decided that 3 percent tax wasn’t enough, and just started designing absurd schemes to extract more.”

The KP Law firm represents many of these towns and cities, including New Bedford. In a statement to WGBH News, the firm says the agreements do not violate the law. They say the majority of marijuana businesses that communities work with are “large corporations and entities” that have “willingly and voluntarily offered generous benefits to municipalities.”

KP Law says these types of “community benefits” are needed to help convince local residents to accept marijuana businesses in their neighborhoods.

But Massachusetts-based attorney Blake Mensing, who represents marijuana companies, has a different name for it.

“It’s extortion, straight up,” Mensing said. “If it is charity, it should not be present in a legally binding contract. When someone is requiring that you give a specified dollar amount to a specified entity, that is no longer charity.”