MMA urges CCC to protect existing cannabis contracts and issue interim guidance

Cannabis Control Commission
Attn: Shawn Collins, Executive Director
Union Station
2 Washington Square, Worcester

Delivered electronically

Dear Chair O’Brien, Commissioner Camargo, Commissioner Concepcion, Commissioner Roy, and Commissioner Stebbins:

On behalf of cities and towns in Massachusetts, including the many communities with existing recreational cannabis licensees operating within their borders, we are writing to offer suggestions on the implementation of Chapter 180 of the Acts of 2022, An Act Relative to Equity in the Cannabis Industry. Recognizing that cities and towns are vital stakeholders in the successful development of the cannabis industry in Massachusetts, we are writing to offer the municipal perspective on how the upcoming regulatory process through the Cannabis Control Commission (CCC) can meet the important goals related to social equity while also protecting the interests of municipalities and their residents and taxpayers.

Protecting Existing Host Community Agreements and Moving the Industry Forward
As you know, cities and towns led the way in deciding whether to open neighborhoods to commercial marijuana enterprises and have negotiated in good faith to execute host community agreements (HCAs), including mutually-agreed-to provisions on community impact fees. More than 1,000 such contracts have been put in place, establishing the platform for growth of the industry in Massachusetts. While constitutional tenets protect existing contracts from statutory encroachment, the process outlined in Chapter 180 has opened the door to interference in these properly executed HCAs by licensees and special interests in the cannabis industry.

As the CCC moves forward in the regulatory process in relation to HCAs within the context of this new law, we strongly urge a two-tiered approach: one for renewal of existing HCAs, which were negotiated in good faith and are protected by the Contract Clause of the Constitution, and one for the licensure and renewal of new HCAs, executed after the new law’s effective date. This would move the industry forward by avoiding statutory encroachment of existing HCAs, prevent extensive legal challenges, and match the intent of legislators by holding municipalities and their taxpayers harmless.

Interim Guidance to Protect All Stakeholders
Many municipalities have already reported they are being pressured by licensees to renegotiate their HCAs in advance of the date of expiration, or even end their current HCA altogether. In fact, there are a number of licensees that are refusing to pay their negotiated community impact fee, forcing municipalities to weigh the cost of litigation for a breach of contract claim over the loss of the negotiated fees. While the multi-billion-dollar cannabis industry has repeatedly downplayed the direct and indirect impact of the industry on municipalities, the contracted agreements reflect real local costs and needs. Preventing the collection of these fees by municipalities may additionally constitute an unlawful taking of revenue sources, as prohibited under M.G.L. Ch. 29, §27C.

Many municipalities are eager to embrace the industry, but without assurances that current lawfully executed HCAs will be honored by licensees, there is little incentive for communities to enter into additional ones. We urge you to release interim guidance to make sure that all parties understand the facts while final rules are being developed by the CCC. This would clarify that the new law has made no changes to existing HCAs and clear a path forward for a fair and balanced public comment period focused on new HCAs.

Thank you very much for your consideration and attention to this important issue for the Commonwealth and our cities and towns. If you have any questions regarding our comments or require additional information, please do not hesitate to have your office contact MMA Legislative Analyst Ali DiMatteo at 617-426-7272, ext. 124, or adimatteo@mma.org at any time.

Sincerely,

Geoffrey C. Beckwith
MMA Executive Director & CEO