Massachusetts committee advancing marijuana cafe, host agreement Bill

By Colin A. Young

JAN. 27, 2022…..The Joint Committee on Cannabis Policy is polling its members on legislation that appears to address the persistent issues with host community agreements and social equity in the new cannabis industry, and that would pave the way for social consumption sites in Massachusetts.

Members of the committee have until 5 p.m. Friday to weigh in on redrafted legislation that would put tighter restrictions on the legally-required contracts between marijuana businesses and their host communities, establish a Cannabis Social Equity Trust Fund and lay the groundwork for cities and towns to allow on-site cannabis consumption establishments within their borders. The poll opened late Wednesday afternoon.

The legislation, which a spokesperson said is a priority for House Speaker Ron Mariano, appears to address some of the issues that the Cannabis Control Commission has most vocally been asking lawmakers to act on.

Committee co-chairs Rep. Daniel Donahue and Sen. Sonia Chang-Diaz recommended favorable reports for two bills (H 174/S 72) that were redrafted in committee to incorporate parts of about a dozen other related proposals. The new bill, titled “An Act relative to social equity and host community agreements in the cannabis industry,” will be referred to the House as H 174 and to the Senate as S 72. Some of its provisions mirror those of a bill that the House passed in early 2020 but which never surfaced in the Senate.

The bill would create a $10 million Cannabis Social Equity Trust Fund “for the purpose of making grants and loans, including no-interest loans and forgivable loans, to social equity program participants and economic empowerment priority applicants to encourage the full participation of entrepreneurs from communities that have been disproportionately harmed by marijuana prohibition and enforcement.” In addition to the initial $10 million in funding, the bill creates other ways for the fund to grow.

Last week, CCC Chairman Steven Hoffman pointed to what he said were “predatory financing deals” being offered to participants in the CCC’s social equity program and other economic empowerment applicants and renewed his call for the Legislature to make an alternate funding source available.

Massachusetts was the first state in the country to mandate that equity and inclusion be part of its legal cannabis framework and was the first to launch programs specifically designed to assist entrepreneurs and businesses from communities disproportionately harmed by the decades of marijuana prohibition.

Access to the capital necessary to start a business has repeatedly been singled out as a serious impediment facing social equity program participants or economic empowerment priority applicants as they try to break into the industry. Out of more than 1,000 applications submitted to the CCC as of November, just 232 came from social equity program participants or economic empowerment priority applicants.

On the issue of host community agreements (HCAs), the bill being polled would do more to define what can and cannot be included in the contracts, codify a municipality’s right to waive the requirement to have an HCA as a handful have already done, and would direct that the CCC “shall review each agreement required by this subsection prior to a licensee’s submission of a complete marijuana establishment license application; provided, that the commission shall not approve a final license application unless the commission certifies that the agreement complies with this section.”

HCAs have been a thorn in the side of the regulators, marijuana entrepreneurs and advocates almost since the CCC began licensing businesses. Business owners, lawyers and lobbyists have shared stories about cities or towns demanding more from businesses than the state’s laws allow. Others have pointed to the required agreements as one reason for the slower-than-anticipated rollout of the retail market and as a barrier that’s keeping small businesses from establishing themselves in the industry.

The bill also directs the CCC to implement a “safe harbor period” during which host communities, marijuana establishments and medical marijuana treatment centers “shall renegotiate in good faith any existing host community agreement that is out of compliance with this act.” It also instructs the CCC to “review all host community agreements that have received their final license and commenced operations as of the effective date of this act and strike any provision of a host community agreement that is not in compliance.”

The committee bill appears to address a quirk that has kept so-called marijuana cafes — establishments where an adult could both purchase and use marijuana — from becoming a reality in Massachusetts.

More than two years ago, the CCC approved regulations that paved the way for establishments where adults could use marijuana together in a social setting. But the agency says the pilot program it has designed for up to 12 communities “would not be able to begin without a change in state law or the passage of legislation that will first allow cities and towns to authorize social consumption in their communities.”

“The language of the legislation, aside from saying that we can establish social consumption, there’s another part … that states that municipalities must submit a ballot question to the residents of the city or town to authorize social consumption establishments. The statute requires these ballot questions conform to the provisions of the general laws relating to initiative petitions at the municipal level,” Hoffman said last week when the CCC discussed making a renewed push to get lawmakers to address the social consumption issue. “All makes sense until you get to the next part, which is there is no state law governing initiative petitions at the municipal level. So the statute contains a requirement that is impossible for the municipalities to fulfill.”

The committee bill includes language that appears to create that process by which residents could “request that the question of whether to allow, in such city or town, the sale of marijuana and marijuana products for consumption on the premises where sold be submitted to the voters of such city or town.”

The Joint Committee on Cannabis Policy is also polling out a bill (S 73) relative to the expungement of convictions for marijuana possession. That bill is bound for the Senate, but a spokesperson said that Mariano has asked Donahue, the chairman of the cannabis committee, to work with Rep. Michael Day, the House chair of the Judiciary Committee, on the expungement piece.