First retail pot shops in Massachusetts approved by commission

Steven Senne/Associated Press

Two years after Massachusetts voters approved legalizing marijuana, the wait for retail pot stores to open is almost over.

In a historic vote on Thursday, the Cannabis Control Commission issued four final recreational marijuana licenses to two companies.

Recreational sales should begin in a matter of weeks, officials said, a major step forward in the state’s ponderous rollout of the pot market endorsed by 1.8 million voters in 2016. The two retail stores in the package of licenses approved Thursday are in Northampton and Leicester, far outside the population center of Eastern Massachusetts.

Although companies must still clear a number of hurdles before opening, Thursday’s vote was called a milestone, coming 107 years after Massachusetts first banned marijuana sales and inching the state closer to becoming the first on the East Coast to offer regulated marijuana sales.

The commission granted a final retail marijuana license to a medical dispensary in Northampton owned by New England Treatment Access, or NETA.

The other three licenses approved by the commission Thursday went to Cultivate Holdings, one for each division of the medical cannabis cultivation, processing, and retail facility it currently operates in Leicester.

“We’re excited to get started,” Amanda Rositano, NETA’s director of operational compliance, said after the meeting. “We’re really pleased to see we got the vote today. . . . We’re doing everything that we can to prepare and meet demand.”

But customers will still have to wait to buy their marijuana. Despite the votes on Thursday, NETA and Cultivate cannot open their doors to the public and start retail sales without several more steps.

In addition to a final inspection, the companies also need permission from the Department of Public Health, which regulates medical marijuana, to admit adults who aren’t registered patients into their stores and to transfer inventory from the medical system to the commission’s “seed to sale” tracking system that will keep tabs on recreational pot products.

The shops must have their products tested for purity and potency in a laboratory licensed by the commission. The agency has not issued a final license to a lab, and is unlikely to do so for at least another two weeks.

Other steps remaining for the stores to open include securing commission approval of their child-resistant packaging and label designs, which under the law cannot be too colorful or appeal to youths.

“I think we’re weeks away,” commission chairman Steve Hoffman said after the meeting. “I think it’s a big milestone, but it’s going to be a bigger one when the stores actually open.”

Earlier this week, the proponents of the 2016 marijuana legalization initiative criticized the commission for moving too slowly to issue final licenses, costing the state millions in potential tax revenue from pot sales. Hoffman defended the agency, saying he was proud of its work and insisting it would not rush through applications and risk missing a violation.

“We’re being careful, we’re being thorough,” he said. “In the long term, this is going to be in the best interest, I believe, of the citizens of the state of Massachusetts.”

Jim Borghesani, one of the leaders of the 2016 legalization campaign, applauded the commission for issuing the licenses. But he called it a “tardy milestone” and noted that sales have already started in Nevada and California, where voters also approved regulated cannabis sales at the ballot box in 2016.

“We have to reach a medium where caution doesn’t turn into obstruction,” he told reporters after the meeting.

Thursday’s historic votes by the agency’s five commissioners were marked by controversy: Commissioner Shaleen Title abstained, protesting what she said were legally dubious payments from the two companies to their host municipalities.

“I can’t affirmatively vote ‘yes’ when I’ve seen the agreements and they’re questionable at best,” Title said during the meeting, referring to the contracts marijuana firms are required to negotiate with local officials to receive state licenses.

Title and marijuana advocates have complained for months that cannabis firms and municipalities are routinely signing “host community agreements” that violate a state law limiting their length to five years and their value to 3 percent of a company’s annual revenue. Advocates argue these municipal demands are slowing down the licensing process and making it impossible for smaller, locally owned businesses with less money to enter the legal cannabis market.

“I’ll vote ‘yes’ [on a final license] when I see a host community agreement that complies with the law,” Title said after the meeting.

A Globe review of such contracts in late August found that each one of the 19 provisional licenses issued by the commission at the time was attached to a host community agreement that exceeded the caps or violated another provision stipulating that all payments be “reasonably related” to the actual costs imposed by the facility.

Municipal attorneys have argued that nothing in state law prevents cities and towns from seeking additional fees. The commission voted 4-1 in August against a proposal by Title to review each company’s local contract before issuing it a license, with the other commissioners saying the agency lacked clear legal authority to do so.

In addition to a fee equal to 3 percent of its annual revenue — ostensibly the maximum allowed under state law — NETA has agreed to pay Northampton an additional $10,000 each of the next five years for “marijuana education and prevention programs.”

Amanda Rositano, NETA’s director of operational compliance, said after the meeting that the company was “comfortable with the agreement.”

David J. Narkewicz, Northampton’s mayor, was not immediately available to comment. In August, however, he told the Globe the $10,000 payments are voluntary donations to local addiction and substance abuse prevention groups. Smaller operators aren’t being asked to contribute as much, he added

“If I was saying, ‘Pay us $10,000 towards a new school bus,’ I’d agree that’s not within the spirit of the law, but that’s not what we’re asking,” Narkewicz said in August. “None of the additional funds come to the city.”

Narkewicz blamed the cannabis commission for not offering a clearer template for host community agreements earlier this year, when Northampton was writing its contracts.

Cultivate’s host community agreement with Leicester mandates payments of at least $75,000 annually, regardless of the actual costs its facility imposes on the town. The contract also renews automatically after five years, with the payments continuing indefinitely until the two parties negotiate a new deal. Company officials did not immediately respond to requests for comment.

David A. Genereux, Leicester’s town manager, said it was highly unlikely that 3 percent of Cultivate’s annual revenue would amount to less than $75,000.

“We see the ceiling of $250,000 as a benefit to Cultivate,” Genereux said, adding that Leicester would back off the renewal provision if it is found to be unlawful. “It’s a fair deal — we just wanted to have a minimum to cover a few town programs in case.”

Genereux said his town was “thrilled” to host one of the state’ first recreational pot shops.