The Massachusetts Cannabis Control Commission will not scrutinize the contracts between marijuana companies and municipalities, and instead may ask the state Legislature for clearer authority to do so, a decision critics panned as opening the door for local officials to demand large sums from pot entrepreneurs.
After a bitter debate, the agency’s five commissioners voted 4-1 Thursday against a proposal by Commissioner Shaleen Title to review each marijuana firm’s “host community agreement” before issuing a final license.
Title had argued that many of the agreements signed so far last too long and call for excessive payments, violating a state law that imposes caps on such deals. She said that issuing licenses to companies that agreed to payments beyond those caps — no more than 3 percent of annual revenue for no longer than five years — would send a signal that deep-pocketed companies could buy their way into cities and towns at the expense of smaller operators who lack the cash to outbid them.
“The local approval process is the mother of all barriers to entry,” Title said at the meeting. “If we continue in the path that we’re on now, what is to stop a big marijuana company from coming in and offering to pay. . . a million-dollar flat fee? . . . Are we saying we’ll just turn and look the other way?”
After the meeting, Title added that the decision threatened to undermine the commission’s efforts to include minorities and other groups disproportionately affected by the war on drugs in the recreational marijuana industry.
“With today’s decision, not only did we decline to fight existing inequities, we set up our own systemic form of inequity against the smaller applicants who need the protection of the law the most,” she said in an e-mailed statement.
Jim Borghesani, the spokesman for the 2016 campaign to legalize marijuana in Massachusetts, decried the decision, saying it “gave a green light to communities to continue assessing fees beyond the scope of the law.”
But the agency’s other commissioners on Thursday said the wording of the law does not clearly ban other fees and payments, or donations to third-party charities. Those were common provisions in host community agreements recently reviewed by the Globe, including among those connected to the 19 provisional licenses it had issued before Thursday’s meeting.
The commissioners also argued it would be difficult to draw a clear line, given the variation in local circumstances and contracts, and that reviewing the deals threatened to further slow down the rollout of recreational sales. They said that the commission should instead collect examples of host community agreements and consider asking the Legislature to clarify the agency’s authority to review them.
“We can’t force a municipality to renegotiate a contract with an applicant,” Commissioner Britte McBride said at the meeting. “If we decide to go down this path, I have concerns that we are going to be making a choice, with eyes wide open, to delay the process for everybody.”
Commissioner Jen Flanagan, a former state senator, asserted that it was a lack of funding, not local contracts, holding back smaller companies and disadvantaged groups.
“The reality is, you need money to be part of this industry,” Flanagan said at the meeting. “And while not everyone is going to own the businesses that we’re going to license in Massachusetts, people have an opportunity to work in the businesses that we’re going to license. And while that doesn’t make everyone happy . . . we cannot be everything to everyone all the time.”
So far, just three of the 120-plus participants in the commission’s economic empowerment program, which grants faster review of applications to people affected by the so-called “War on Drugs,” have submitted license applications to the agency. Existing medical dispensaries, most of which are also eligible for expedited processing, have submitted 69.
Shanel Lindsay, a marijuana advocate and businesswoman who sits on the state’s Cannabis Advisory Board, said Thursday’s vote was a “crushing disappointment” for those entrepreneurs.
“Fair dealing at the local level is now a lost cause,” Lindsay said. “There is no way that small businesses can compete with big money and unlawful host agreements.”
Two key state lawmakers who oversaw revisions to the state’s marijuana laws last summer — state Senator Patricia Jehlen and state Representative Mark Cusack — had also urged the commission to review the contracts and reject those calling for payments beyond the limit.
The two legislators also noted that the law says any fees charged to marijuana companies must be reasonably related to the actual costs they impose on a city or town.
But the Massachusetts Municipal Association cheered Thursday’s vote as a “wise step forward.”
“Cities and towns will continue to responsibly negotiate host community agreements that are in the public interest, using the authority they have under existing state law,” said Geoff Beckwith, the group’s executive director, in a statement. “We are pleased that the commission’s position will allow the local negotiation process to move forward without unnecessary delays.”
Meanwhile, the commission on Thursday unanimously approved provisional licenses for two marijuana testing labs, MCR Labs in Framingham and CDX Analytics in Salem.
Labs are a key link in the pot supply chain, as, under state law, no cannabis products can be sold unless they have been tested by an independent laboratory for potency and contaminants.