PLEASE OPPOSE H. 4367, WHICH WOULD WEAKEN THE ABILITY OF CITIES AND TOWNS TO NEGOTIATE HOST COMMUNITY AGREEMENTS IN THE PUBLIC INTEREST

Dear Representative,

On behalf of cities and towns across the Commonwealth, the Massachusetts Municipal Association is writing to express our strong opposition to H. 4367, An Act relative to host community agreements.

As the recreational marijuana industry has been legalized here in Massachusetts, municipal officials have been on the front lines, working to implement Chapter 55 of the Acts of 2017 in a responsible and balanced way that maximizes the benefits of the new industry, while giving appropriate consideration and weight to local health and safety concerns, addressing the impacts on residents, business, neighborhoods, economic development plans, and other important factors. As part of the implementation process, municipalities and private recreational marijuana establishments have been negotiating terms in host community agreements pursuant to Chapter 94G section 3(d) of the General Laws, and we have heard from a large number of communities that these negotiations have largely been a positive experience with both sides coming to the table to negotiate freely and in good faith.

This is why the MMA strongly opposes H. 4367. The MMA believes that this bill is an overreach that would unwisely interfere with local authority. Contracting between local governments and private entities is a long-established practice, and the changes reflected in this bill could have a long-term impact on the ability of municipalities to contract freely, even outside the marijuana industry. The MMA strongly supports existing municipal contracting authority that allows for the negotiation of monetary and development considerations to benefit the public interest. Some examples include private development contracts or Tax Increment Financing (TIF) agreements, host community agreements with the gaming industry, contracts with the movie industry, cable franchising agreements, and mitigation contracts with industrial and residential developers. In this context, municipally negotiated host community agreements are an extension of common practice.

Additionally, municipal actions over the past three years, including passing zoning bylaws and ordinances to allow marijuana establishments to locate within their communities, was predicated upon the existing legal framework, which would be upended by this proposal to impose limitations on municipal contracting authority. Further, this measure seemingly seeks to invalidate existing contracts, which would be entirely inappropriate. Ironically, passage of this measure to make it more difficult for cities and towns to ensure adequate consideration and resolution of public interest concerns could lead the residents in some cities and towns to call for further limits on the number of marijuana establishments allowed in their communities. When ballot question 4 passed, the voters in most communities were closely divided. Making it more difficult for local officials to verify that adequate provisions are in place to ameliorate traffic, safety or development impacts could reduce growth opportunities for the industry.

The marijuana industry’s public relations and lobbying campaigns have sought to diminish and weaken the municipal role in the permitting and licensing processes. This is entirely predictable and expected – that’s what industry trade groups do on a regular basis to court their members and build a constituency. Almost every industry seeks to limit government’s role at all levels, but this frequently runs counter to the public interest. In the area of marijuana licensing and permitting, cities and towns have an essential role in determining the number of establishments in their communities, permitting those businesses, and negotiating host community agreements that serve the public interest for the people of their communities. Again, it is expected that the marijuana firms and their lobbyists will seek to flatten the landscape and remove municipal discretion and flexibility in the negotiation process. However, that is not in the public interest.

The marijuana public relations campaign has asserted claims that host community agreements create a barrier to entry for social equity businesses and smaller firms. That is clearly a self-serving distortion of reality. There are major barriers to entry in any new and emerging industry. For the marijuana industry in Massachusetts, the true barriers are access to capital, the cost of legal services given the complex interplay between state and federal law, the lack of business and retail experience, and competition from a small number of very large firms that are attempting to consolidate their dominant positions in the marketplace through mergers, associations and other legal maneuvers.

Additionally, the community impact fee already has a sunset clause of 5 years. Meaning, after 5 years of operations, the municipality and the marijuana establishment will be required to renegotiate the fee. At this point, municipalities will be required to look at the costs incurred by allowing marijuana establishments to locate within their community and come back to the table.

Instead of squelching municipal authority to negotiate on behalf of the public interest, as H. 4367 attempts to do, we recommend that policymakers focus on how we can create innovative programs so that small players can get the assistance they need. Municipalities want diversity in their communities and they want to welcome businesses run by local entrepreneurs. The lack of participation by these candidates should not be blamed on municipalities, or on the modest cost of host community agreements that have been mutually and freely agreed to by both parties.

As of January 16, there are 437 complete applications before the Cannabis Control Commission for review, and 258 licenses in the approval stage. This means at least 695 fully executed host community agreements could be on the line if this bill passes. Invalidating or altering 695 existing contracts, which were negotiated in good faith on behalf of the public, would certainly invite challenges that H. 4367 or any regulatory intrusion by the CCC stemming from the bill, violates the Contracts Clause of the U.S. Constitution.

If you represent a municipality that has a signed host community agreement, we urge you to contact your local officials before voting on H. 4367 to make sure that the bill would not interfere with their already-existing contract.

We ask you to oppose the passage of H. 4367, as it would tie the hands of municipalities and place a thumb on the scale in favor of industry. The bill would weaken local government’s ability to represent and serve the public interest in a balanced setting.

Thank you for your interest on this very important local government matter. If you have any questions, please do not hesitate to have your office contact us at any time by reaching out to MMA Senior Legislative Analyst Brittney Franklin at 617-426-7272 or bfranklin@mma.org.

Sincerely,

Geoffrey C. Beckwith
Executive Director & CEO