Lawmakers again weigh reforms to local marijuana agreements

State Senator Patricia D. Jehlen of Somerville at a hearing of the Legislature's Joint Committee on Cannabis Policy in 2018.Pat Greenhouse

Massachusetts lawmakers on Tuesday took blistering testimony from attorneys, entrepreneurs, and advocates who slammed the state’s local approval process for marijuana companies as little more than a form of legal extortion — one they said has allowed municipalities to collect and spend millions of dollars in unjustified fees without accountability or transparency.

The virtual hearing by the Legislature’s Joint Committee on Cannabis Policy centered on a handful of proposed bills that would reform how prospective cannabis operators and local officials negotiate so-called “host community agreements.”

The contracts are required for state licensure and typically include substantial fees. The money is nominally required to offset the impacts of a pot facility, but in practice is often spent on projects with only tenuous connections to the advent of marijuana sales in a community. Meanwhile, cities and towns typically make cannabis firms pay for police details and other services out of pocket, separately from the annual fee.

Cannabis business leaders and advocates have long fought to impose greater oversight of the process, saying the system overestimates the problems caused by marijuana facilities and unfairly excludes smaller businesses that lack deep pockets.

Negotiating a host community agreement “is a ‘take-it-or-leave-it’ proposition, with the municipality holding all the cards,” David Torrisi, president of the Commonwealth Dispensary Association, told lawmakers. “The impacts that these establishments have on a city or town are de minimis . . . A Dunkin’ Donuts shop has more detrimental impacts.”

The public feedback session came on the heels of a new industry-funded analysis of 460 host community agreements by researchers at UMass Boston’s McCormack Graduate School of Policy and Global Studies. The report found widespread abuses, including a statewide total of at least $2.46 million in impermissible local fees and mandatory “donations” imposed on top of the maximum legal fee of 3 percent of a firm’s annual revenue.

The researchers also concluded that nearly all municipalities have failed to document the actual impacts supposedly covered by the fees they charge, which by law must be “reasonably related.”

Frustration over the fees recently prompted Northampton to drop them altogether. In Haverhill, the Stem marijuana store is suing its host city over fees it says are unjustified.

The State House passed a bill tightening the language around fees and granting the Cannabis Control Commission greater oversight of the deals in February 2020, following the arrest of former Fall River mayor Jasiel Correia for allegedly seeking bribes from local marijuana operators. The state Senate did not take up the measure, however, and the legislative process has since reset.

Some of the proposals on the table Tuesday would build on last year’s proposal, adding requirements that municipalities publicly disclose the actual costs covered by their fees and also pass policies prioritizing the licensure of people from communities disproportionately targeted for marijuana arrests.

That last provision would answer standing complaints by advocates and entrepreneurs that the expensive and onerous local process has stymied the state’s legal mandate to ensure equity in the industry.

“Without equity at the city and town level, there cannot be equity at the state level,” said attorney and advocate Shanel Lindsay, who helped shape the state’s 2017 legalization law.

The reform efforts also drew support from Shaleen Title and Britte McBride, two former members of the state cannabis commission — which itself has formally requested authority over the compacts.

McBride suggested legislators craft a law deferring the negotiation of local fees until after each operator had been open for a year, removing the “guesswork” from the process..

Some local leaders and state legislators pushed back, arguing companies and municipalities had freely negotiated their agreements in good faith. They insisted pot facilities have imposed significant administrative costs, not to mention traffic headaches, and said it would be unfair to claw back fee revenue that has already been stirred into municipal budgets.

“We are public servants . . . doing the best we can for our communities,” said Shaun Suhoski, the town manager of Athol, which has signed agreements with seven cannabis firms.

Advocates countered that local governments should never have collected fees except to pay for specific impacts in the first place.

“Greed is its own reward,” sneered Peter Bernard of the Massachusetts Grower Advocacy Council, referring to the prospect of municipalities having to forfeit some of their revenue.