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A commissioner on the Cannabis Control Commission is welcoming reports that the U.S. attorney for Massachusetts is looking into the host community agreements required by the CCC and state law to grant licenses to a cannabis business.
At least six communities have been contacted about the federal grand jury investigation prompted by Massachusetts U.S. Attorney Andrew Lelling, which was first reported by The Boston Globe. According to the Globe, those communities are Great Barrington, Eastham, Leicester, Newton, Northampton and Uxbridge.
Commissioner Shaleen Title said in a statement that any indication that laws governing the agreements are being enforced would be a welcome relief.
"I receive complaints almost every day that the process is out of control," Title said. "Just yesterday, I received a complaint from a business that a town told the company representatives that only businesses who offered a 'donation' of $15,000 would be considered. When they suggested they would rather not voluntarily donate, they say they were told 'perhaps this isn’t the right town for you.' "
Title emphasized she was speaking as an individual and not about any specific investigation.
A spokeswoman from the U.S. attorney's office said she "could not confirm or deny" any investigation.
Many cannabis business owners have privately grumbled about additional demands placed on them by communities in the agreements. Some entrepreneurs say big businesses and medical marijuana dispensaries are monopolizing the process, garnering more favor from municipalities and hindering equity in the cannabis industry.
"The host community agreement is probably one of the top, biggest barriers to entry into the cannabis industry in Massachusetts," said Kamani Jefferson, political strategist for the Massachusetts Recreational Consumer Council, a marijuana consumer advocacy group.
Commission members have expressed frustration that the cannabis law is vague when it comes to regulating host community agreements. The law states the agreements can last no longer than five years, and that fees paid to the municipality cannot exceed 3% of a cannabis company's gross sales.
Dozens of agreements reviewed by WBUR last year appear to go beyond the law. Some had minimum community impact fees of $150,000 or $250,000 instead of a percentage of sales. In one agreement, the city of Fitchburg wanted to charge a company seeking a retail license $50,000 as soon as it broke ground, and $75,000 a year or 3% of its gross sales (whichever was higher). The company would also have had to create a community board that would donate $75,000 to the city each year.
In September, Fall River Mayor Jasiel Correia was arrested for allegedly conspiring to extort more than $600,000 in bribes from four marijuana vendors. Federal prosecutors argue Correia extorted companies by offering to sign "non-opposition letters" in exchange for payouts in conjunction with the host agreements. Correia has pleaded not guilty to all the charges.
Some marijuana businesses said they'd welcome an investigation into host community agreements.
"The vast majority of us companies do everything by the book and do it correctly. And it's the people who act inappropriately that kind of give a black eye to the controversial industry. So, I think it's always good to shine a light on the bad actors," said Joseph Lekach, the CEO of Apothca, which has stores in Lynn and Arlington.
Lekach said he would have given "a hard no" to any cities or towns that asked for more money than the law requires. Some businesses may feel compelled to agree to pay communities more money because they feel pressure from investors, or are desperate to finally get through the arduous licensing process, according to LeKach.
Taba Moses, the CEO of Green Soul Organics, said he's not surprised that host community agreements are being investigated.
"I think it goes to show that a lot of people in the industry feel as though they can pay to play," Moses said. "There's a lot of politics involved and there's a lot of people that have known each other for a long time, and then I think money and entitlement ends up coming into play."
Moses, who has a community host agreement with Fitchburg, said he wasn't asked to pay the city more than the law requires.
Earlier this year, the commission voted to request the Legislature give it "statutory authority to review and regulate" the agreements, but two bills (S1126 & H3536) that further clarify enforcement procedures remain in the Legislature's Joint Committee on Cannabis Policy.
Jefferson said legislative action is needed, along with education, so cities and towns understand the appropriate scope of host agreements.
"Hopefully a new bill goes into effect or something happens at the state level that reinforces that the towns and cities need to do the right thing," Jefferson said.
This article was originally published on November 05, 2019.
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