Too many municipal marijuana bottlenecks

APPLICATIONS FOR ADULT-USE MARIJUANA licenses have begun to pour into the state’s newly created Cannabis Control Commission with likely several hundred applications expected in 2018 alone. The commission has quickly assembled regulations and an application process that should be commended. And as a primary adult-use supporter during my days serving in the Massachusetts House of Representatives, this is a big step for the Commonwealth’s long overdue legalization. But fair warning: Don’t expect a retail store to open near you anytime soon.

That’s because the state has ceded significant approval authorities firmly into the hands of local municipalities, creating a new and significant obstacle course for license seekers. Many cities and towns have put the brakes on legalization, with more than half instituting either moratoria or outright bans. And even in the communities that have not prohibited retail sales, the going will be slow. From lengthy municipal planning processes, zoning, siting, special permitting, and mandatory host community agreements, municipalities hold all of the meaningful cards, in spite of the voters’ best efforts.

As such, Massachusetts’s new era of legalization is proving to be more of a Civics 101 course in local control rather than the flourishing new industry many had anticipated.  With a Wild West of town-by-town regulatory action threatening existing medical dispensaries and new entrepreneurs’ ability to enact their statutory rights to engage in this new legal industry, July 1, 2018 — commonly cited as the grand opening for the industry — will arrive with a whimper and not a bang with perhaps a small handful (my over-under: 3.5) open for business. Expect long-lines, limitations on purchases, and sold-out stores by mid-day.

In short, legalization is only as real as Massachusetts’ cities and towns are willing to make it.

The reason: The complicated negotiating process a would-be operator needs to go through to gain local permission. Before the Cannabis Control Commission will even consider issuing a license, and in addition to zoning, siting, and the likely locally-imposed special permitting requirement, a business must obtain a signed “host community agreement” – an agreement establishing the terms and conditions to be imposed on the prospective business’s operation, including a “community impact fee” of up to 3 percent of the business’s gross revenues. Per state statute, this fee must be tied to the costs cited by the municipality for hosting the business.

But there is a catch.

While state statute makes clear that if a municipality voted “yes” on Question 4 and wishes to restrict or otherwise ban adult-use establishments, the city must go back to the voters, the Cannabis Control Commission’s regulations provide carte blanche authority to the municipalities in terms of the host community agreements. With no oversight to ensure they are tied to actual costs, no statewide standardization or review of such agreements, and no requirement that a “yes” community ever even sign such an agreement, cities and towns may choose – in effect – to ignore the statute and the will of the voters. This includes the more than 85 existing medical operators who have a statutory right to begin adult-use operations – arguably in July.

As someone who has spent many hours over the past five years working with local and state officials in this new field, I believe we need to find a middle ground between municipalities’ right to regulate and the new industry’s rights to operate. No other advanced manufacturing, job-creating, revenue-generating, legal industry has been met with such trepidation or confusion.

More positively, while the vast majority of municipalities have taken a cautious, if not prohibitionist approach, municipalities including Holyoke, Easthampton, Worcester, Newton, Boston, Salem, and even “no” community Brewster have elected and appointed leaders who are taking proactive stances to responsibly regulate the industry, recognizing that it’s here to stay.

According to the federal Substance Abuse and Mental Health Services Administration, in 2015 more than 1 million Massachusetts residents aged 18 or older self-attested to consuming illegal marijuana products — products that were not tested, taxed, or regulated. Simply put, municipalities should not start from a place of fear, but rather start from a place of realization that marijuana is already deeply entrenched within their communities and that they have an opportunity to regulate this industry in a sensible and proactive way. And to be clear, industry has a role too, taking this opportunity to work with municipalities to craft thoughtful policy solutions.

As Massachusetts emerges as the first state east of the Mississippi to legalize adult-use consumption, there will be an onslaught of demand well beyond our own borders – and beyond the capacity of the state’s nascent market. Despite the best of intentions and diligent work by the Cannabis Control Commission, Massachusetts has a self-created regulatory bottleneck at the local level. But in time, communities will see the upside of legalization with significant local revenues, limited actual public safety concerns, and the advanced manufacturing jobs that many of these communities desire. Bans will be dropped, moratoriums will be lifted, and even competition among public officials to bring this new industry to their towns will occur.

It will just be slow. Too slow.

Jim Smith is a partner at Smith, Costello & Crawford Public Policy Law Group.