A new bill signed into law by Gov. Charlie Baker will enact much needed regulatory reforms of Massachusetts’s Cannabis industry.
The marijuana industry is booming in the Bay State, as officials recently announced that Massachusetts has sold nearly $3 billion worth of pot since adult-use sales began in 2018.
However, the state’s dirty little secret has long been the host community agreements (HCAs) that Cannabis companies are forced to sign with cities and towns in order to open in their jurisdiction. These agreements – which essentially amount to pay-to-play deals, along with “impact fees” that allow municipalities to charge up to three percent of a Cannabis company’s annual revenue in preemptive fees – were written into the state’s adult-use law with the intention of offsetting any costs to the host community created by pot companies. However, impact fees have frequently been misused and have not been subject to any oversight.
Addressing A Broken System
According to a study by Northeastern University, Cannabis companies in Massachusetts have forked over far more than $50 million in so-called “impact fees” since the state launched retail sales in 2018.
A study by a Boston law firm back in 2019 found that nearly 80 percent of the state’s host community agreements are illegal. And, of course, former Fall River Mayor Jasiel Correia was convicted of extorting cash from Cannabis companies and is currently serving a six-year prison sentence.
Fortunately, Massachusetts lawmakers are attempting to crackdown on the widespread corruption around Cannabis industry licensing. The new bill would give oversight of HCAs to the Cannabis Control Commission (CCC), which oversees the state’s marijuana industry.
The new law also cuts down on the scope of HCAs and impact fees, stipulating that the CCC must review and approve any such agreement between a jurisdiction and a Cannabis company, according to The Eagle-Tribune.
The new law also creates a Social Equity Trust Fund that will receive 15 percent of the cash from the Marijuana Regulation Fund.
Additionally, the new legislation moves the state closer to the eventual licensing of social consumption lounges, where people can consume Cannabis in an indoor public space.
Caroline Pineau, who owns the dispensary Stem in Haverhill and sued the city over HCAs is encouraged by the reform, saying, “This new law addresses the municipal extortion that has hampered small entrepreneurs and it helps social equity applicants move forward. This is a big win for fairness and industry growth.”