Marijuana industry ‘fixes’ moving in the Legislature
Bills would limit host community fees, create $10m social equity fund
A COMPREHENSIVE BILL that would address several major problems that marijuana regulators and industry experts have pinpointed in the legal cannabis industry is starting to move in the Legislature.
The Joint Committee on Cannabis Policy is polling out two bills – one related to criminal record expungements and another related to host community agreements and funding for social equity entrepreneurs – with committee members required to vote by Friday. The legislation could also pave the way for regulators to start licensing marijuana cafes.
House Speaker Ron Mariano has said addressing problems in the industry are among his priorities this session, a measure of support indicating that the full House is likely to vote on the bills this year.
“I’m cautiously optimistic that something will get across the finish line,” said Rep. David Rogers, a Cambridge Democrat and former cannabis policy committee chair, who sponsored an initial version of the marijuana bill.
For years, marijuana companies have complained that cities and towns are taking advantage of host community agreements to demand exorbitant fees, beyond the 3 percent community impact fee authorized under state law. But members of the Cannabis Control Commission have said they do not have authority to regulate these agreements, which are required as a condition of licensure for any marijuana business. Some businesses have filed lawsuits challenging community impact fees.
The bill being released by the committee would clarify that the 3 percent community impact fee must be reasonably related to actual costs imposed on the community, and the fee can be challenged in court if it is not. It also makes clear that businesses cannot be required to pay any money above that fee, such as charitable contributions or in-kind contributions to the municipality, which today are staples of many agreements.
“It’s just an effort to make clear what the rules of the road are with regard to small businesses that want to locate in any particular city or town,” Rogers said. “When we originally passed the law, we thought it was pretty clear; however, since that time, there have been instances where it appears municipalities have gone beyond the scope of the original legislative intent.”
The bill would give the Cannabis Control Commission authority to review the agreements and make sure they comply with the law, which is a role that commissioners have asked for.
The bill also allocates 1 percent of the marijuana excise tax paid by each store to the municipality that hosts its. Rogers said this was envisioned as an incentive to make sure communities do not become resistant to hosting marijuana businesses once they are more limited in how much they can get from host community agreements.
Jim Borghesani, a cannabis industry consultant who helped spearhead the marijuana legalization campaign, said given the lack of impact that marijuana businesses have had on communities, it “will bring fairness to the industry” to make sure the agreements are reasonable and can be regulated.
Another one of the biggest problems in the industry has been that the marijuana legalization law requires the industry to encourage entry by individuals – often Black and Latino individuals – and communities who were disproportionately affected by prior enforcement of drug laws. So far, however, the industry has been dominated by wealthy corporations, with limited opportunities for smaller entrepreneurs and entrepreneurs of color.
Cannabis Control Commission Chairman Steven Hoffman has long been encouraging the state to set up a public lender or bank that can provide financing for smaller entrepreneurs.
This bill aims to address both barriers. It would require municipalities to set up their own social equity procedures by July 1, 2023 or face the loss of community impact fees. The bill says these policies must “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.”
The bill would also create a Social Equity Trust Fund capitalized with $10 million of state money, plus, going forward, 20 percent of the marijuana regulation fund, the fund that collects taxes from the marijuana industry. The fund would make grants and loans, including low-interest and forgivable loans, to entrepreneurs from communities disproportionately harmed by marijuana enforcement. Currently, marijuana businesses must present plans for how they will positively impact communities harmed by the War on Drugs, and the bill would let businesses fulfill that obligation by donating to the fund.
Sen. Sonia Chang-Diaz, Senate chair of the Cannabis Policy Committee, said she is thrilled lawmakers are finally addressing equity issues. “The gap between the law’s stated commitment to equity and the on-the-ground reality of the industry shows just how much work we have left to do,” Chang-Diaz said in an email. “There’s universal agreement about the problems: high costs of entry and lack of access to capital create a near-impossible barrier for many talented entrepreneurs. This bill addresses both sides of that coin.”
The bill would also provide a mechanism by which cities and towns can vote to allow a “social consumption” facility – or marijuana café — in their community. The cafes would provide a place where someone can smoke or eat edibles with friends. Social consumption is allowed under the legalization law, but the mechanism by which communities could vote to host a facility is unclear. The Cannabis Control Commission has asked the Legislature to fix the law by outlining exactly how municipalities can hold a vote.A second bill, worked on by both the cannabis and judiciary committees, would change the law that now allows someone to petition to seal a record of a pre-legalization criminal conviction for marijuana possession. Under the bill, a person could petition to have that record expunged. A sealed record is one that can be discovered in limited circumstances; an expunged record no longer exists.
Some criminal justice advocates want convictions for marijuana possession that occurred prior to legalization to be automatically expunged. They say many people do not know they can get their record expunged, and the process takes legal know-how. But the bill does not go that far.