Yesterday, the Massachusetts House of Representatives passed a bill impacting Host Community Agreements. These State-required contracts are the lynchpin of the license application process in Massachusetts because marijuana businesses must enter into such agreements with the city or town where they operate as a precursor to getting a license from the State. In particular, the bill would provide the Massachusetts’s Cannabis Control Commission with the explicit power to regulate and enforce Host Community Agreements and would prohibit Host Community Agreements from including any financial obligations for the company other than a “community impact fee” of up to 3% of gross sales. The bill also authorizes cities and towns to waive the State’s Host Community Agreement requirement. However, it is unclear if any cities or towns would actually exercise that right.
The Host Community Agreement process has been the subject of recent controversy in Massachusetts. In January of 2019 the Cannabis Control Commission formally requested that the legislature clarify its authority to review and regulate Host Community Agreements. As noted on the blog, in November 2019 the US Attorney’s Office launched an inquiry related to Host Community Agreements in Massachusetts. In part, the DOJ’s inquiry reportedly arises out of concern that many Host Community Agreements violate State law by requiring annual “donations” in addition to the community impact fee. The House’s bill appears to address both of these issues.
The bill will now be referred to the Massachusetts Senate, which would need to pass it before it could go to the Governor to be signed into law. It is not clear at this stage when (or if) the State Senate intends to bring the bill up for a vote.
We will continue to monitor and provide updates on any developments.