For Immediate Release
May 11, 2021
Contact: David O’Brien, (617) 784-2088, david.obrien@masscba.com
Report Finds Little Oversight Over Nearly $12 Million in Municipal Revenue from First Year of Legal Adult-Use Cannabis Sales
BOSTON – A new analysis (LINK) of ‘host community agreements’ made by Massachusetts municipal governments and local cannabis business operators reveals that the agreements regularly violate state law, which states that “community impact fee[s] shall be reasonably related to the costs imposed upon the municipality by the operation of the marijuana establishment.”
The report, written by Dr. Jeffrey Moyer of the McCormack Graduate School of Policy and Global Studies at the University of Massachusetts Boston and sponsored by the Massachusetts Cannabis Business Association, conducted a systemic review of 460 Host Community Agreements (HCAs), covering over 85 percent of issued cannabis business licenses in Massachusetts. The reports were obtained through public records request to 149 municipalities across the Commonwealth.
“A significant proportion of the agreements we analyzed required additional payments from business beyond the legal limit, amounting to an excess of at least $2.46 million whether through reimbursements, local charity donations, so-called “community benefit payments,” or donations of employee time to education efforts,” said Dr. Jeffrey Moyer, the author of the report. “A further records request to towns that had already collected funds showed that few municipalities had any plan for spending them, and those plans that were provided did not align with the guidance of the Cannabis Control Commission. Many of the agreements obligate operators to make payments toward poorly defined or inadequately operationalized impacts, with little provision for review or accountability.”
With over $393 million in sales during Massachusetts’ first year of adult-use cannabis retail sales, between November 20, 2018 and November 20, 2019, localities are poised to benefit from nearly $12 million in revenue, for which the report finds there is little oversight.
“We also find that the oversight structure for these agreements, and for the money localities collect under them, to be weak and inadequate,” reads the report. “While the Legislature was correct to clearly indicate in the statute that HCAs themselves and any spending resulting from funds collected under the agreements were explicitly defined as public records, this has not led to a robust accountability structure for this funding.”
Of the agreements reviewed, 60 percent covered retail operations, 41 percent covered cultivation, 32 percent covered product manufacturing, 10 percent covered some form of medical operation, with all other license categories including microbusinesses, transportation, and independent laboratories below 3 percent.
The report makes several recommendations:
· that the Legislature promptly authorize the Cannabis Control Commission to issue regulations on Host Community Agreements.
· that the Cannabis Control Commission establish standards for what agreements can pay for as well as a more robust and transparent accounting structure to track funds, including a provision allowing the Commission to void unlawful portions of agreements or to decline license renewal to operators under agreements that include unlawful financial incentives—to include “voluntary” donations to local groups and reimbursements for costs beyond the impact fee; and
· that municipalities assess their Host Community Agreements in compliance with state law and guidelines issued by the Cannabis Control Commission.
"The Commonwealth’s failure to clearly enforce the law around host community agreements has resulted in a regulatory state where legalized extortion is the norm. Cannabis businesses are happy to pay their fair share of reasonable municipal costs related to their operation, but municipalities can’t just ask for a blank check with no accountability.” said MassCBA President and CEO David O’Brien. “As we’ve seen clearly in the trial of former Fall River Mayor Jasiel Correia, this lack of transparency and oversight creates opportunities for corruption and wrongdoing. This report makes it clear that it’s time for the legislature to set things straight and give the state’s Cannabis Control Commission clear authority to review and monitor host community agreements.”
Recently, some Massachusetts municipalities have reconsidered their approach to host community agreements. The City of Northampton recently moved to amend host community agreements to waive community impact fees unless the city is required to expend funds to mitigate specific impacts from a particular marijuana establishment.
“Treating the cannabis industry like any other industry in Massachusetts is an important step towards equity and access, especially for entrepreneurs with limited access to start-up capital,” said Northampton Mayor David Narkewicz. “Our experience has been that cannabis retailers have not caused any of the major impacts that were predicted before legalization, and waiving unnecessary community impact fees is a way we can reduce barriers to the industry, especially for small entrepreneurs and equity applicants.”
The full UMass McCormack School report can be found here (LINK).
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The Massachusetts Cannabis Business Association (MassCBA) brings together entrepreneurs, related professionals, and allied organizations to support the responsible, equitable growth of the cannabis industry in Massachusetts. As advocates and conveners, we speak in a singular voice to the economic, political, and social issues that impact our members. We are also building a network for sharing best practices, fostering meaningful relationships, and creating opportunities for success.