- Miyares and Harrington, LLP
Highlights of the Significant Changes to Regulation of Marijuana Businesses
The end of the legislative session saw the passage of, S.3096, An Act relative to equity in the cannabis industry, enacted with vocal support from members of the Cannabis Control Commission. The new law, Chapter 180 of the Acts of 2022, brings sweeping changes to the cannabis industry. Here are the highlights that affect municipalities.
Host Community Agreements
The most significant provisions of interest to municipalities are changes to the community impact fee imposed by Host Community Agreements (HCAs). Now, all community impact fees must:
be reasonably related to costs imposed upon the municipality by the operation of the marijuana establishment or medical marijuana treatment center and those costs must be documented and transmitted to the licensee;
amount to not more than 3% of gross sales;
expire after the establishment or treatment center’s eighth year of operation;
not commence until a final license is granted by the Commission; and
not be based on a certain percentage of total or gross sales.
No other payments may be exacted by the host community. HCAs must be approved by the Commission.
As an incentive for municipalities to license “social equity” businesses (those with not less than 51% ownership by individuals who are “from communities that have been disproportionately harmed by marijuana prohibition and enforcement” or who qualify as “economic empowerment priority applicants”), the Act requires that an amount equal to 1% of the total sales price of marijuana or marijuana products from such businesses, received by the state as tax, be distributed to municipalities in proportion to the amount of such sums received from such businesses in the municipality.
The new law requires the Commission to “promulgate regulations to establish minimum acceptable standards for host communities to promote and encourage full participation in the regulated marijuana industry by people from communities that have previously been disproportionately harmed by marijuana prohibition and enforcement and to positively impact those communities.” A municipality may establish procedures and policies that go beyond the minimum regulations, but must, at least, satisfy the minimums established by the Commission. A host community that wants to add regulation beyond those imposed by the Commission must establish such procedures and policies not later than July 1, 2023. The failure of a host community to establish or adhere to the Commission’s policies and procedures will result in a monetary penalty to the host community equal to the annual total of community impact fees received from all establishments or treatment centers operating within the host community.
The law establishes the process required to authorize on-premises or “social consumption” of cannabis. A question may be placed on the ballot by a local voter initiative petition process, requiring the signatures of not less than 10% of the number of voters in a city or town that voted at the preceding biennial state election. As an alternative to the initiative petition process, a City or Town may simply authorize on-premises consumption by ordinance or by-law.