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After receiving a report from Commissioner Kay Doyle, the Cannabis Control Commission voted, 4-1, on Jan. 10 to request express authority to review and enforce host community agreements.
Doyle authored the report after reviewing more than 50 host community agreements as well as comments submitted to the commission during the public comment period, legal analysis from municipal and industry lawyers on the state’s adult-use marijuana law, legislative history, and marijuana laws in other states.
A host community agreement is a contract negotiated between a municipality and a marijuana establishment that establishes terms for the establishment to operate in the municipality. A marijuana establishment must execute a host community agreement in order to obtain a state license.
Last August, the commission voted, 4-1, not to wade into the regulation of host community agreements, with CCC Chair Steven Hoffman arguing that the commission lacked the legal authority to do so.
Doyle’s report, which the commission voted to submit to the Legislature, points out that there are a number of areas where the commission has the express authority to regulate, but reviewing host community agreements was left off the express authority list. The commission could review the agreements under its general authority, according to the report, but if challenged in court, the commission’s actions would be highly scrutinized. The legislative history indicates that the commission was given the express authority to regulate host community agreements at one point in the development of legislation, but the language was removed from the final law.
Doyle’s report also addressed the issue of community impact fees. Host community agreements are required by statute to include a stipulation of responsibilities between the municipality and the applicant. On top of these stipulations, the host community agreement may include a community impact fee to be capped at 3 percent of gross sales and lasting no longer than five years.
State law creates the opportunity for these payments, and because state agencies cannot be in conflict with an enabling statute, Doyle said the commission must go back to the Legislature if commissioners want to change the law regarding CCC review of the agreements. Rather than engaging in a legal battle, she said, it would be better to engage with the Legislature.
Doyle identified other points that she believes would be best addressed by the Legislature, such as:
• Making host community agreements optional at the discretion of the municipality
• Clarifying what can be included in the community impact fee
• Clarifying whether payments to other organizations should be allowed
• Determining whether to allow community impact fees to be waived for particular license types, such as research facilities
• Empowering the commission, in extraordinary circumstances, to review community impact fees in cases where the applicant argues they are too high or the municipality argues they are too low
• Considering if there should be a lower cap on community impact fees for smaller businesses
• Looking at the five-year term on community impact fees
Because Legislative action on these points could affect existing contracts, or contracts currently being negotiated, Doyle recommends adopting a plan for how these contracts would be affected, with a timeline for both parties on how to proceed.