2021-05-11 00:00:00 - Joint Committee on Cannabis Policy

2021-05-11 00:00:00 - Joint Committee on Cannabis Policy (Part 1 of 2)

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SHALEEN TITLE - CRCC - SB 72 - Good morning Chairwoman Chang-Diaz Chairman Donahue thank you so much for the opportunity to share my input today. My name is Shaleen Title. I am a distinguished cannabis policy practitioner and resident at the Ohio State University College of Law Drug Enforcement and Policy Center and vice chair of the Cannabis Regulators of Color Coalition And a former commissioner in 2017 to 2020 of the Massachusetts Cannabis Control Commission. I'm here to share my input about host community agreements and my strong support for S 72. I also want to thank this committee, which thus far in my opinion, has truly represented the people of Massachusetts with respect to cannabis.

So every cannabis businesses required to have a host community agreement to operate. As of today, there are no practical limits whatsoever on what a host community may demand from a business in order319 to grant a host community agreement. So with rare exceptions, host communities are using these agreements not as a fair negotiating tool, but as a tool to hold hostage in exchange for significant financial benefits that go beyond the law. This system unfairly benefits those companies that can afford it. And it is one of the top reasons why only eight out of 223 cannabis businesses operating currently in the state are economic empowerment and social equity businesses. I believe that S 72 is the one comprehensive bill that addresses all of the different systemic aspects causing this problem, and I would specifically like to call your attention to one provision of that bill. Section 1 Subsection 7 of S 72.

So currently, the cannabis Control Commission is charged with creating policies that take into account the needs of impacted communities, but host communities are not. Subsection 7 fixes this existing consistency in a completely unspecified, non personal descriptive way, simply by allowing every municipality to decide for itself how it would like to contribute to the state's established goal of including impacted communities in this industry. The current chairman and executive director of the commission have asked for such a change. I'm submitting written testimony with a copy of that letter from last year addressed to this committee. But I will say myself having lived it I know that just having a simple stated principle of equity will remove some of the barriers that people who attempt to develop solutions on racial justice issues within government often face.

You may know this too from your own work, but when people are working on true solutions to racial justice issues, they tend to be dismissed, condescended to, alienated, retaliated against and most of all ignored. But438 I can tell you from experience that being able to point to a principle of equity in the law can make445 the impossible seem more possible. So I close by asking you to please consider making this small change and while you're considering it, please remember all of the people who marched in the streets last year and why. I will remain available of course for any input or feedback. Thank you very much for the opportunity to share this input.
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REP SOTER - Thank you, Madam Chair and Mr. Chair.495 Um I guess my question is I, you know, these bills come forth and as many small towns like my small towns, um I have from retail to grow and we have many host agreements. And can you give me some assurances if this bill is to move forward, what your opinion is, um that it won't affect the current situation. Um These small towns have all budgeted for the agreements that are already here. The biggest fear right now with all these bills before us, especially for my town administrators and my select board members is that this538 is going to it is going to dramatically change uh what they're currently doing.

And I think what we're, you know, they sold the residents on the part of the law that we now want to change or tweak. Um So could you just kind of clarify for us because I know a lot561 of them are watching today because they're very concerned. They're watching these hearings.564 Um Could you give your opinion uh to me that this particular piece of legislation and why you think this is the one that uh seems to fix and correct the problems that you want and it's not going to affect what we currently have going on.

TITLE - Thank you for that good question. Um I of course, can't speak on behalf of the commission since I'm not on it anymore. But what I would suggest might be a good compromise to that question is, uh the commission reviews documents every year with as part of renewal. And so the commission could be directed um as it enforces host community agreements to check every year and make sure that the agreement is compliant with the law. Um Currently, there is a limit of five years for how long a community, the agreement can last. So one way you could perhaps address that problem is to allow agreements to go for the full five years that they're in effect currently, um and then make sure that they're compliant from that point forward.
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REP ROGERS - HB 174 - Well, greetings, Madam, Chair and and Mr. Chair. Uh it's great to be with you today669 on the committee that I was lucky enough to chair last session with you and I want to congratulate Representative Donahue on this new chairmanship and I also want to give a shout out to the staff, Michael and Catherine, the fantastic staff you have, who I had the pleasure of working with last session. And Uh, it's a great committee in an important area of policy and I'm really glad to be with you. I'm here to talk about H 174 which is an act relative to host community agreements. As many of, you know, the House passed this uh host community agreement legislation last session. We passed it overwhelmingly and um, you know, I'll be relatively brief.

Um unlike some of the more complex matters that will come before the committee, I really do think this particular concept, whether it's the728 bill I filed or some others on this topic pretty straightforward. Uh, the law that we passed, uh, obviously the voters through the referendum, we modified it somewhat, Made it clear many, almost everyone who looks at the law that municipalities may745 only charge 3% of gross sales. Um however, to make it abundantly clear, uh, this750 bill um sort of tightens the language and makes it abundantly clear and also gives the Cannabis Control Commission759 the authority that it has asked the committee to give it. And as Chair Chang-Diaz knows, they came to us last session and768 we met with members of the commission who said, look, we really want this authority to be clear.

There's been some litigation on it in Salem. Um I think the commission arguably has the authority, but there are those scholars and lawyers and members of the commission who think it's a little murky. So I think it's a matter of tightening the law and making it clear the commission can regulate these. And uh and and to the point made by796 former Commissioner Title, you know, I think it will help smaller entrepreneurs entrepreneurs from disadvantaged communities. You know, the big players can come in and if a community asks for more than 3% or asks, hey, can you fix up the ball field, can you you make814 other contributions to our town? A big well capitalized person could do that, but, you know, small entrepreneurs cannot.

And to the point that was asked earlier about upsetting current agreements, no community should be charging more than 3% anyway. So if there's any host community agreement on the books now, when it comes up for renewal, if the CCC has the authority, um they can just modify the agreement. So, um look, we know a lot of small entrepreneurs put their life savings. This is a challenging business to get into its really hard business to get into. Um it's expensive to get into. The cost of capital to get in this business are really steep, they're high hurdles. So I think we need to do this. I would respectfully ask you try to get it out early in the mix of other business you're working on so we can really try to move it this session. And again, thank you so much for taking the time to listen to me. And it's great to be back among you and I hope you have a great hearing.
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BRITTE MCBRIDE - CONCERNED CITIZEN - SB 67 - SB 68 - SB 72 - HB 174 - HB 181 - Good morning. Good morning. Chair Chang-Diaz Chair Donahue and members of the committee and thank you for the opportunity to testify today. So my name is Britte McBride and I'm here testifying as an attorney and member of the public not affiliated with any organization or entity but from September 2017 to December 2020, I served as commissioner in the Cannabis Control Commission. In that capacity, among other matters I was engaged in, I was the primary drafter of the commission's 2018 guidance on host community agreements and I was a significant contributor to the report on host community agreements and marijuana establishments drafted by my brilliant colleague, Kay Doyle in March and published in March 2019. So I'm intimately familiar with the intricacies of the issue before the committee today.

It is with that background that I wish to state my support for the concepts of reform1001 of the HCA process reflected in Senate bills 67 68 and 72 House bills 174 and 181 but to also respectfully offer the following suggestion. As it is now an executed HCA should be required for licensure unless otherwise waved by both parties as contemplated in some bills before you. However, I suggest that the HCA and optional community impact fees should be bifurcated. The HCA setting forth stipulations and responsibilities in binding the parties should be required at the outset. But the determination of costs reasonably related to the operation of the marijuana establishment comprising any cap community impact fee1043 should be developed and agreed upon over the first year of operations. And accounting would be required upon annual license renewal and payments to the municipality would occur upon renewal.

It is my hope that this simple shift in timing would more completely balance the competing interests inherent in the discussions around HCAs and what are1063 those competing interests? I'm sure that you are very familiar with them. In a nutshell for applicants obtaining an HCA is a difficult process because of the community impact fee. Stories have been documented of municipalities1075 trying to maximize a real or perceived advantage in the best of circumstances and going well beyond trying to maximize their advantage in the worst cases. This poses a significant barrier to entry for those operators with resources never mind those applicants with limited access to resources. Municipalities meanwhile, were extended local control under1092 the statute and host communities in particular were extended1095 certain permissions, including collecting an optional community impact fee.

This was intentional, and I have to believe that some version of that intent remains because we are not here talking about abolishing HCAs rather we're talking about reforming them. And what's at the heart of the question of reform well it's money and how to figure out what the costs are that are reasonably related to the operation of a marijuana establishment. Several of the bills before you seek to increase transparency in the process, but its effect would be after the fact. At1128 the time the parties to the contract are engaging in negotiations on the community impact be as part of the statutory requirement required HCA document they are guessing. It may be an educated guess based on other municipalities and other marijuana establishments, but it's still largely a guess.

And how could it not be? How can we know what the specific impact of a particular establishment located in a particular1152 location is going to be. Moreover, if the municipality and operator are guessing when they enter the contract, how can it be expected that the Cannabis Control Commission licensing team who is not a party privy to the specifics of the determination will know with such certainty that they can be expected to act to sever that contract in whole or in part and additionally do so in a timely manner that does1174 not create a bottleneck at the point of licensing. I don't think they can but that is what is suggested in most of the bills before you.

Bifurcating the HCA community impact fee processed as I've suggested smooths the path to agreement and takes any attempts of pay to1188 play out of the equation. It creates a more accurate process1194 for determining the community impact fee. It dramatically increases transparency for all involved and it right sizes and times appropriately any potential role that the CCC may have in reviewing HCAs. So I hope that the committee will seriously consider it. And I thank you for the opportunity to testify today and I'm happy to take any questions.1214
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SEN DIZOGLIO - SB 68 - Yes. And Good morning uh Chair Chang-Diaz and Chair Donahue and fellow members of the Joint Committee on Cannabis Policy. I am honored to join you today to request your consideration of my sponsored legislation senate Bill 68 which is an act encouraging transparency in host community agreements. As I know you all agree transparency in our government is absolutely essential and that's really at the heart of why I filed this legislation. This legislation would require that cities and towns show how the cannabis impact fees they are collecting are being used to mitigate the impacts in the community of cannabis shops.

And I've heard from local cannabis businesses who are not opposed to paying these fees particularly at a time when our municipality sorely need every possible source of revenue. These shops are however greatly concerned by what they see as a lack of transparency and accountability in the HCA process, including municipalities often not producing documentation of the impact of these shops. Today, you'll be hearing from a constituent of mine and Caroline Pineau who is a cannabis entrepreneur from Haverhill. She will be attesting to the challenges around the current state law as it pertains to transparency and accountability surrounding Host community agreements. And I know you agree, uh, you know, this is an issue that needs to be addressed and I'm hopeful that we can get this legislation across the finish line as soon as possible and look forward to working with all of you as a member of this committee to do so. I again ask for a favorable report for Senate Bill 68. Thank you so much.
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CAROLINE PINEAU - STEM HAVERHILL - HB 181 - SB 68 - Yes, thank you. Thank you madam. Chairwoman and Mr. Chairman, Thank you. Senator DiZoglio. My name is Caroline Pineau and I live in Haverhill. I'm testifying today in support of Senate Bill 68 and House Bill 181. These bills would bring much needed reform and transparency to the municipal fee structures currently opposed upon cannabis facilities. I'm the owner of Stem, a1431 woman owned and independently operated cannabis retail shop in Haverhill. Like every other licensed cannabis facility in Massachusetts, I signed a host community agreement in order to move forward with the state and local license approval processes. And like nearly every other facility, the HCA that I signed included a provision allowing the municipality to collect a non negotiable impact fee with specific conditions.

The conditions under which the impact fee can be opposed are explicitly stated in the1461 statute, Chapter 94G of the Massachusetts. General laws states that any impact fees charged by communities must be reasonably related to costs imposed by cannabis facilities upon those communities. The law also states explicitly that those costs must be documented and made public. I can tell you today that after 12 months in operation, I have yet to see any evidence of negative impacts upon Haverhill. I also have yet to receive any documentation whatsoever of any impacts upon Haverhill. However, this has not stopped the city from demanding the full 3% impact fee. The1501 situation has resulted in Stem an economic empowerment licensee taking the scary and uncertain step of filing litigation that is currently pending.

But suffice it to say my situation is perfectly representative of the existing flaws in the HCA System and the continued flouting of the law by municipalities. It is important to note that Cannabis stores like mine already are paying a tax directly to municipalities of a full 3% based on gross sales. It is also important to note that very few other businesses pay anything to municipalities based on sales. Quite simply, municipalities are1542 not seeking additional money from cannabis businesses through alleged impact costs that they cannot or will not authenticate.1550 Senate 68 and House 181 would bolster the municipalities' obligation to document impact costs, if any, ensure the fees are reasonably related to the costs and provide the cannabis facilities with specific statutory relief if municipalities fail to follow the law. I urge you to report favorably on these bills. Thank you very much.
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DAVID TORRISI - CDA - HB 151 - Thank you. Good morning, and thanks for the opportunity to testify regarding the subject of host community agreements. My name is David Torrisi, and I'm the president of the Commonwealth Dispensary Association, a cannabis trade group performed in 2015 with the purpose of advocating for the interest of marijuana retailers, cultivators, manufacturers, as well as other license holders. We represent large and small operators from every part of the state and are proud of our advocacy for this emerging industry. Our members are excited about the bills before your committee as we strongly believe that reforms are necessary to HCAs. We are generally supportive of the bill's on today's agenda as they all attempt to make municipalities more accountable and clarify parts of Chapter 94G. We are particularly supportive of House Bill 151, sponsored by Representative Gregoire.

This is the language passed by the House last February and we hope your committee uses it as a starting point for your discussions. We know that many worthwhile pieces of legislation, including this one were put on hold last year due to the pandemic. But it is our hope that you quickly move this bill out of committee. The main points I would like to make today are that HCA negotiations are inherently one sided annual impact fees are being abused and the cost of hosting a marijuana establishment is negligible. HCA negotiation between municipality and a marijuana operator is not a negotiation. It is a take it or leave it proposition with the municipality holding all the cards. One prominent law firm which represents more than1671 125 communities has template HCA Language that clearly violates state law, but applicants have no option but to sign it because they know the next applicant will.

These HCAs have evergreen language that state that at the conclusion of the five year agreement, a new impact fee will be negotiated. But if the parties are unable to reach an agreement on a successor fee,1692 the existing impact fee will remain in effect. House 151 clarifies that there will only be one 5 year HCA as was the intent of the law. These HCAs have other clauses that1702 mandate travel spending payment for the town's legal and consultant fees and reopener clause all provisions that1707 other types of businesses rarely if ever encounter. Current law allows municipality to annually charge of 3% of1713 gross sales but quote, it should be reasonably related to the costs imposed upon the municipality by the operation of the marijuana establishment. End quote.

Cities and towns have raked in millions of dollars but have1724 failed repeatedly to document what costs are associated with hosting of marijuana establishment. When economists operators inquire with their host communities as it is required for CCC License renewal, they are met with indifference. Many businesses will not testify today because they don't want to jeopardize their local relationships. Furthermore, when there are reasonably related costs, such as a police detail or traffic signage, the municipalities demand that the marijuana operator ay for those out of their own pocket. It does not come out of the HCA impact fee as was supposed to be the case. By and large, that money is going straight into the town's General Fund, which is fine when it comes to their cut of the cannabis sales tax, which today is close to $48 million.

In fact, one municipality that hosts several cannabis retailers mandates an extra 1% on top of the 3% impact fee. A clear violation of 94G. Lastly, I want to state what is clear to anyone who's been paying attention the impact that these establishes have on a city or town are de minimis. If I had more time, I could easily make the argument that a Dunkin Donut shop has more detrimental impacts than a marijuana store does. They cause more traffic, Cause more trash and more of a concern for police, for drug trafficking and public nuisance. The bottom line is that our operators have been good neighbors and have developed fantastic relations with their locals. They are active in business associations and are always looking to help their communities in any way they can. They should stop being penalized running good clean businesses just because of some outdated preconceived notion of cannabis use. You can help take this major step forward bypassing cost renewal reform and in particular House 151. I thank you for your time and I'm happy to answer any questions you may have.
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REP GARRY - Sorry about that. I wanted to address um Mr.1856 Torrisi, a good old friend. Um I know that in my communities of Dracut and Tyngsborough right on the New Hampshire border because of the differences of law in New Hampshire versus Massachusetts um We're seeing a lot of businesses coming into these two towns. Um One of my concerns and maybe he could answer it is um How how can we, I don't want to put too much pressure on the community to prove the extra traffic, the extra roadway work that needs to be done because of the numbers of people coming in from New Hampshire to use those facilities um and hamstring our local communities if we have to do um traffic studies and so forth to uh certify what the extra traffic1904 and roadway usage is um to to verify why we need these host agreements and the costs evaluating that. Um I hope I said that succinctly enough, but I I don't want to I don't want to turn around and have, you know, the local communities who are seeing this increased traffic from New Hampshire to get to our local facilities um not be able to or cost them more money to prove that it's costing them money.
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TORRISI - So thank you for the question Colleen it's nice to hear from you again. Um So obviously every situation is unique. Every, business has1950 a unique setting, I would say obviously when the first doors opened back in November 2018, you had a lot of traffic and a lot of impacts, especially in Northampton and Leicester back in November of 2018. And so a lot of those costs um I mean there were legitimate1964 impact, especially on the traffic side of things. My one of the points I made today was, you know, the impact fee is supposed to pay for those impacts, but right now almost all municipalities are charging the operator pay for that the out of pocket and the municipality is basically pocketing the 3% fee.

In the case that you mentioned in your district, I'm somewhat familiar with that area. It's right on the national New Hampshire Tyngsborough line. I mean, obviously that's a high traffic road to start with that. You know, obviously it has a lot of stores there already that aren't Paying anything as far as impacts. Again, I think we have now 2.5 years of experience under our belt. Um, I think there's close to 125 stores that are2008 open across the state. The impacts are getting less and less. They're not like the long lines that we saw back in again, November 2018. So I guess my feeling is that these five year HCAs have been signed. These communities are going to benefit greatly from the, that that 3% over five years and they will continue to benefit from the 3% sales tax that can, would still be in effect.
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SOTER - I'm sorry, I didn't have a question until I started thinking about so Mr. Torrisi let me ask you a question. You know I have the same situation as my, my colleague Representative Garry being on the border. And one thing I will say as a selectman coming from uh from that angle, um we get I would say probably five or 6 a month coming in and and meeting with us at that time when this all started. So I think it's a little a little bit off base saying that, you know, these agreements are set forth and they're there um there are impacts. And I think Representative Garry is definitely right in the sense that you're going to be asking us to spend more money, the municipality spending more money, you're going to get to a point where they're not going to want these in their communities.

Um, The other thing I would address that you, I would2093 ask you is, what do we do about, uh, you know, I'll give you an example I think was about two years ago, Snoop Dogg decided to come down to Oxbridge in a cannabis site, which is great for marketing for them and, and business. I mean, how do you anticipate that in an impact study, you're not much traffic that brought and extra strain it brought to the police officers of a small town had to call in relief for that. It's not anticipated. Um, It's something that when these are negotiated, it's not brought up during these impact studies.

So, you know, I get what you're saying. Um, but, and you know, I guess you could say a lot of the industry people don't want to come and testify. But I guess my thing is how do we plan for that? How do my communities plan for that? I mean, they're very small communities. I mean, these things affect, they have to call in reinforcements if there is a marketing, um, or or visit by a star or somebody that's supportive of that, I guess.2152 And then the other question I have is when the federal government decides to make this totally legal, then what it's going to benefit the entire industry. Right?

So these impact studies, this is really, I think at some point a moot point of what we're all talking about here because I think eventually that's going to happen, it's going to have to happen. So at some point, because we have so many states getting into this. So I guess I have a two part question there is how do we anticipate the marketing aspects of the impact and handling that And then what are we going to do in the federal government? We're going to be back here talking again because now we've opened up competition across the country. I guess those are the concerns that I have.
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TORRISI - So thanks for the questions. As a former rep myself, as a former selectman myself I can relate to what you're talking about. Um the uncertainty that any business when a special promotional event happens. Um I think, you know, the the example of Snoop Dogg is a very um rare circumstance and I think that's a situation where any business, any anyone that could be kind of that kind of promotional, uh,2221 you know, event would have to pay some stuff out of their pocket no question about it. The points that I'm making simply are that I believe that the HCA Fees were used as a carrot to entice you know, some municipalities to obviously there were some that voted overwhelmingly question four back in 2016 that were ready to embrace the cannabis industry right away mostly in Western Mass and in Central Mass.

Uh with that being said, I think also the Legislature didn't know what kind of impact that they could anticipate. So I think having a five year agreement in place would give a community a good benchmark to see what kind impact these establishments are having. They would also have five years of revenue that they could plan that if they were an impact that they could wean themselves off. Because I know like you know once once uh you know municipality has money in their pocket, they want they want to keep it there. But the reality is that these establishments have not had the detrimental impacts that some people foresaw. And I think we need to recognize that, I think we need to understand that laws are meant to be changed and be adapted.

Um as far as the federal regulation point goes, I do believe at some point you may see it, but how the landscape is going to look at that point is, you know, I don't think anyone has a crystal ball to tell you how it's going to look. There's going to be a lot of changes that are going to have to happen. And obviously the supply chain would be completely different the taxation would be completely different. So I would hate to speculate on that part. But2319 you know, legislatures change laws all the time and having the ability to adapt and recognize that um circumstances change I think is a critical function of any any governing2330 body.

SOTER - So Madam Chair, if I may say so, Mr. Torrisi so let me ask you so wouldn't a better way or approach. And I believe me, I'm I've come full circle on this from when it2342 first started coming out to where we are today. Um and I testified in front of this committee also last year on bills and legislation. And and I have uh come like I said full circle on cannabis. I guess my my from a business man's perspective, I encourage small business owners and want to encouraged. So wouldn't it be a better way to approach this to if we really want to encourage smaller promotion and smaller establishers2368 or retailers to get involved in this, wouldn't be, wouldn't a better way to approach this is kind of leave our our system the way it is for those that can afford it and opening up bigger systems, but then create or carve out um an area for establishments of a certain size so that they can actually come in and have family ownership2389 and and be part of the community and open that up more.

Wouldn't that be a better way to approach the law than than trying to uh kind of take away something that a lot of towns now are focused in on and what they believe the impacts are and budgeting for those impacts and how they move forward. So I guess my question would be, shouldn't we encourage in a law to entice small retailers to get involved and do it with a way of a certain size, a certain retail space and um less cost to them to help them get into the business and and kind of even out the competition playing field.
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TORRISI - But I would just say that, you know, trying to determine the impacts of uh an establishment by the size of the company or the size of the store. I mean you just heard some very compelling testimony from Caroline Pineau um and she is a very small operator, but she does a fantastic amount of business out of that little store. She was also the first one to open up in Haverhill, I live pretty near there, so I'm very familiar with her operation. Um but the impact of that store, in my opinion have have been been negligible. And you know, I think that she has been a fabulous contributor to that, the fabric of that downtown business area. I think, uh, you know, Senators DiZoglio knows very2485 well it's the heart of her district.

Um, with that being said, there are some larger operators that, you know, don't do the kind of traffic2493 that, you know, Stem does. So I guess it's really, you know, it really depends. I would2497 say, and I don't want to take too much time. But you know, at some point you're going to, you're going be uh hearing testimony on House Bill 178 which I think is a great way to skin this cat. And that, you know, combines HCA reform with the creation of social equity trust fund and having. That HCA money that we're paying to the cities and towns instead of funnel that to a a real social equity trust fund, because that has been the biggest barrier to entry for small businesses and businesses run by people of color.

I know the Legislature has different proposals on it, I know the CCC has tried to do it, but having a dedicated revenue stream that could fund social equity businesses and economic empowerment businesses I think would go a long way. And I think if we tied to HCA reform retailers would be happy to two contribute to that fund. They2551 would be mandated by the law. So happy to talk to you offline. And again, I've taken up too much of time. So I thank you Senator and chairman Donahue thank you.
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REP VEGA - SB 72 - Um Good morning everybody. It's like a little bit of homecoming to hear and see everybody. So uh great, I2574 would just take a moment to say, I agree with with a lot with what Mr. Torrisi said I'd love to connect with you2581 more offline. I'd love to have a host community agreement in the city of Holyoke at McDonalds for the exact reasons that you mentioned its impact on the community. Um so just take my comments as being in favor generally of S 72 and the other bills regarding HCAs And CCC's Oversight. And I'll just give a few comments from my perspective now as the director of Planning, Economic Development in the City of Holyoke. As many of you know, Holyoke is one of the western2606 mass communities that has embraced the cannabis industry.

We currently have two large, very nationally well known grown facilities, both GTI And Trulieve with three small dispensaries opened, one of them being a social equity candidate license holder. Um So just a couple of comments and again generally in favor of these bills and doing something that creates more connection and partnership with the CCC and municipalities. Uh I don't see the HCA as a negotiating tool or bribery tool. It's a really agreement between businesses and municipality. Um If we look at in a positive way, there's a real opportunity for municipalities to support this new industry, especially in a place like Holyoke. But I do see that the CCC needs oversight uh over these HCAs but also again I'm going to use those word partnership with cities.

One of the impacts that we've had here in Holyoke, as you can imagine as has other communities. The amount of time that went into the planning and site plan or special permit reviews of these of these businesses in these industries um has been enormous. Um and also started with very little guidance from the state for us. So we were sort of figuring this out on our own. Again, small staffs, um trying to figure out brand new law and ushering in a brand new industry. Um so the regulatory guidance will be great and if those were done by a principles of equity I think that would be fantastic.

We're trying to level the playing field here in Holyoke. Our host committee agreement is very boilerplate. It's very open. Um, it's the same for everybody. I am looking at making some changes specifically on the impact fee regarding social equity or, candidates. Um but again, we need to lay out and the qualifying of2716 what the impacts are to2718 determine the impact. Because what is impact, um, you know, you heard about traffic parking Absolutely. We want to utilize some of the fees that we're getting uh to do traffic studies to do parking studies to help this industry. I think there's a way that we need to look at this fund in order to help the industry, especially in places like Holyoke. Where the industry is being located in the city of Holyoke is a place where there's been lack of investment for decades, both in the infrastructure uh in quality of life.

So we have an ability now to make some of those infrastructural improvements to where we're bringing people into places that weren't coming to uh for tourism or for business for decades. That could be handicap accessibility, street repairs, traffic improvements. Um And you talk about social equity. I could not agree more. I know that when I was there on this committee for uh the entire last four years of my time as the state rep um that we continually talked about that and worked with the CCC on the need for social Equity. We would love to be able to use some of these funds from the impact fee to partner with our Holyoke Community College that has the cannabis education center to allow residents from Holyoke or the greater Holyoke area to get access to those classes to get jobs in the industry. Bless you, madam chair.

So our hope is that. But can we do that? That is my question. And I think that the guidelines and what is allowed and what impact is both in supporting the business and of2801 course the impact on the municipality. Last two comments. Um I think that there is a2807 time of reform on this regulation. Um we are in the middle of it. I think that there's a difference between reform and regulation. Pointed out today in his comments was that this host committee agreements were supposed to be one time for five years. That's a regulatory effect. If municipalities garnished a better deal for themselves, it should be very clear that it was only for five years. We need the CCC much like the ABCC which in the original intent of the bill voted on by the people was to regulate cannabis like alcohol, not like plutonium.

Uh We should allow the CCC to have some of the same oversight that the ABCC does in how they work with municipalities. And lastly, I would say when2844 it comes to impact fee setting this up has not been easy. DLS only recently put out guidelines that the fund should be a stabilization fund and not a revolving fund. So, again, many of the things around creating this impact fee and some of the guidelines of the CCC, has put out only in the last year or 16 months, were not there three years ago. So again, we're already a year or two into the host community agreements, some of them with businesses that aren't even open yet. So there's a question of when does that agreement start to start, the day we signed it or the day they opened the business. Um so those guidelines are coming to us now and we're trying to play catch up.

And lastly, I would just say from my perspective, um as a municipality, we don't want to hold on to2887 these funds. I want to get them directly back into the community, back into supporting infrastructure, back into support education back into supporting the community that so has been under supported for so long. There's been a recent support that the CCC did where Holyoke is the number one impacted community in Massachusetts on the war on drugs. There's lots of fixes that need to be done and this is just one way of addressing those changes and those fixes through the impact fee. But again, I don't want to hold onto those funds. I want to get them right back onto the community and support this industry and let it thrive here in Holyoke and in Western Mass. So again, I think creating more oversight from the CCC2925 on this host community agreements will level the playing field and make this a much more thriving and welcoming place for this business. So thank you for your time.
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DICK EVANS - CONCERNED CITIZEN - SB 67 - SB 68 - HB 169 - Thank you so much for the opportunity to be here. I'm Dick Evans. I'm semi retired lawyer in Northampton. I was chair of the 2016 Initiative Campaign Committee for Questions 4 a long term advocate for marijuana reform in Massachusetts. And uh, and a member of the drafting committee for Question 4. Uh, let me turn the clock back just a minute to 2015 where we were writing uh this this this new law when medical marijuana was in3016 its infancy. Our drafting committee heard reports of applicants being shaken down basically by some cities and towns if they wanted to do business. And so we thought it would be a good idea as a matter of policy to put some protections in the law. Hence what is now Section 3D, requiring the host community agreements reasonably related with the impact fees reasonably related to costs and expenses.

When the Legislature performed its major surgery, as uh Senator Lewis called it in 2017. Uh the Legislature made the impact or the host agreement mandatory and not discretionary that as previously said if a community wanted to demand these funds, it had to be so limited, but but now it's mandatory for all communities. Unfortunately, the host community agreement provision has been construed as a as an invitation uh by too many municipalities to put the squeeze on marijuana companies. And sometimes with just remarkable disingenuity of my favorite example being when I was meeting with the mayor and a client and the host agreement said that my client shall voluntarily contribute sum of money to the to the city.

And I asked the mayor I said this is this mandatory or is this discretionary. And he just just waved off my objections as3100 a semantic games like lawyers tend to play and uh made it very clear that it was a pay to play situation. Um Now as for the bills that are before you today uh Madam Chairman let me say I really I really share the dismay of so many of you over the CCC's reluctance to enforce the law as written. And I applaud the the authors of the various bills that are offered thoughtful remedies to the problem. If the solution is to remove any doubt about the responsibility of the CCC to monitor and supervise host community agreements, then certainly the bill filed by Senator Cyr Senate 67 accomplishes this with remarkable brevity uh making it very clear that the3144 supervision of agreements is within the wheelhouse of the CCC.

Um of the other statues uh I think uh Senate 68 and House 169 Senator DiZoglio's and Representative Vargas's bill. They go right to the heart of3163 the problem. And that problem is the belief by municipalities that they can get away with near extortion. And what this bill does is disabusing municipalities of that idea. And by requiring an audit to be paid for by the marijuana company. It's an exquisitely simple remedy.3185 It removes the incentive for abuses. It's self enforcing. It imposes no new responsibilities on the CCC and requires no new regulations. So I urge serious consideration of Senate 68 and the House 169. If I may madam Chair at the time that's remaining, I'd like to mention a few things.

When we talk about impact, we seem always3210 to be talking about negative impact, but we never talk about positive impact. And and as a former Representative Vega pointed out and Holyoke is now the ground zero of this industry on the east coast. And I welcome you all to come out to Western Mass and see the what it's3230 done to Holyoke. There's new tax revenue, there's new jobs, there's the revitalization of of old buildings. There's been spectacular success so far. And I just urge the committee not just think about negative impact but consider positive impact as well. And if I may mention two facts that we didn't know.
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MIKE CUTLER - CONCERNED CITIZEN - Yes. I'm Dick's former law partner. I'm a constituent of Representative Sabadosa's. And I also am living in3282 the town where our mayor spoke the truth that no other municipality has spoken, which is to say that there are no discernible impacts from the operation of cannabis marijuana establishments and such that he has waived the impact fee. I submitted extensive written testimony yesterday and I simply want to address one point here which is whether amendments to Chapter 94G including the current HCA Law which is Section 3D Of Chapter 94G can be lawfully applied to existing host agreements that compel unprovable and therefore excessive impact fees.

3316 I3316 just want to address a couple of points that the representative raised before. In terms of the cost of proving impact fees, there's a return on investment for that cost. And if you can't prove it or if it's too much you don't think you're going to get enough impact being returned, then maybe there's not an impact. Secondly, I think former Commissioner McBride uh talked about3345 collecting these fees behind there being encouraged so that you can actually prove them. I think that was an excellent suggestion. And in terms of carving out impact different impact fees for different size retailers I think that's something that the CCC can do by regulation. Let me just make a couple of points again about the existing HCAs.

First of all, no contract is enforceable that violates state statute or public policy. So the fact that these contracts exist doesn't mean that they, that the municipalities have in violent rights under them. Secondly, as many lawyers, I see Blake3379 Mensing is is in the queue as well here, Dick and I our experience with cities and towns, was that these impact fees were take it or leave it non negotiable contracts.3391 And as such, they are what the law calls contracts of adhesion between parties with unequal bargaining power, which cannot be enforced in the face of a contrary public policy. I've got citations for all of these principles in my written testimony. Further, uh even if these changes to the law and the bills that are contemplated are3411 seen as as new as opposed to reinforcing pre existing law, contracts, can be retroactively interpreted lawfully by laws enacted after the contract's execution.

That's based on a number of cases. Most recently, an Appeals Court case from 2014. And these amendments achieve vitally important public interests uh including the protection of economic empowerment applicants from predatory competition with higher capitalized people. Municipalities have had a clear warning that these uh this cap was meant to limit the municipal rake and not that this is not a new law. And lastly empowering the CCC to have oversight of these agreements to force uh compliance with this cap, as well as avoiding constitutional challenges.

What no one's raised here the constitutional limits on these impact fees apart from the statute Section3465 3D. Uh you know, these approval impacts uh and and requiring proof of these impacts is a way of simply fulfilling the vital public principles that the 3D was required to uh sought to impose on the relationship between cities and licenses. So adopting any of these pending bills will not illegally impair municipalities rights under existing host agreements that include illegally excessive impact fees. And if you have any questions, I'm glad to answer them.
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JEFFREY MOYER - UMASS BOSTON - So my name is um Dr. Jeffrey Moyer. I am recent graduate from UMass Boston's3523 Public Policy School and I am here to share some results from a report that um David O'Brien of the Massachusetts Cannabis Business Association hired UMass Boston's graduate um or McCormick Graduate School to write a report on the local um looking at all the post community agreements across the state. And so as part of the analysis, I collected all the agreements that I possibly could. Um So I'm we've submitted a report to UMass3562 Um Boston and it's basically in the process of being put on their website, but David should share a link directly to the draft of that report. And so um as part of my testimony today, I'm just going to refer to the executive summary and a few of the key figures on 19 pages 19 and 20.

Um I encourage the committee to fully consider the entire report. We pulled some from some specifics throughout the um specifics from host community agreements on different facets. And I think it's a really good um supplement to the commission's report on that Commissioner Kay Doyle um Commissioner, former Commissioner McBride mentioned that Commissioner Doyle wrote. So just from the executive summary, we had actually reviewed um I systematically reviewed over 460 community agreements covering 85% of issued license um obtained by public records requests. And um these um host community agreements covered nearly $12 million um in potential revenue for municipalities. So this is a very sizable portion.

And obviously this also includes um potential donations, um so of, you know, we can3631 call them maybe course donations or whatever however you want to whatever phasing you want to use. And so um again I mentioned, I'm going to refer to this is from the executive summary but um specifically on pages 19 and 20 that the whether the community is interested in. Um we found that 3/4 of the contracts that we examine specify and impact percentage and of those that specify a percentage, 406 our 9/10 that had Some amount had that 3% that's specified in state law. Um you know, the finding that I took from this, the finding that um informs the recommendation made in the report is that the commission just um that municipalities are essentially asking for this 3% as a reflex because that's what's allowed in state law. And there isn't really a lot of investigation going on into the actual impacts.

And we also looked at the provisions within these HCAs that specified what the potential impacts were. Um It's important to note that these these parts of these3706 agreements do not allow the licenses to uh you know, contest in any way what the impacts are. They usually waive the right to change or challenge um what the impacts are. So usually the, you know, the net effect3720 is that the licensees are essentially handed a bill of goods and they have no chance to really um dispute that. So we find and we recommend overall this report recommends and David can certainly expand on this more when he speaks that the commission just over overall be given the authority to really regulate these um agreements that the impact fee payments be tied to specific um specific impacts.3747

Um You know, I won't I won't specifically recommend any of the bills under consideration other than that, the commission should be given the clear authority to regulate these. And that impact fees should be tied to something more specific than um just what the the towns ask for. Because we also find that towns in addition to asking for that 3% are often asking for these mandatory donations. Um You3776 know um just as an example, we pull out the town of Salem which asks for the full 3% and um then also asked for3784 a donation. Um We also have the town of Marshfield asked for um the high the greater of either $250,000 or 3%. And then also asks for a supplementary $125,000 donation.3795 So these sort of of agreements are in clear violation of of the3799 statute. And um as a result I recommend that the that the committee really um give the commission the clear authority to set3809 standards and regulate these host community agreements.
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DAVID OBRIEN - MASSCBA - Thank you. Chairwoman Chang-Diaz, Chairman Donahue and members of the committee. I am David O'Brien. I'm the president and CEO of the Massachusetts Cannabis Business Association. MassCBA brings together entrepreneurs related professionals and allied organizations to support the responsible and equitable growth of the cannabis industry here in Massachusetts. Our focus is on smaller operators, aspiring companies, particularly those that are just getting started, including social equity and economic empowerment applicants. We commissioned the analysis with Dr. Moyer to get a sense of what was happening with the HCAs across the state. The analysis that Doctor Moyer just spoke of has been posted in the chat and you can also find it at our website at masscba.com.

The commonwealth's failure to clearly enforce the law around host community agreements has resulted in a regulatory state where legalized extortion is the norm. Cannabis businesses are happy to pay their fair share of reasonably related costs to municipalities for3926 their operation, but municipalities can't just ask for a blank check with no accountability. A recent Superior Court decision declared that the CCC has no role under state statute to review these host community agreements. I ask you today to give the Cannabis Control Commission full authority to review, enforce and monitor host community agreements between licensed cannabis operators and cities and towns across the commonwealth.

I'd like to touch on a tale of three cities today. Fall River, Haverhill and Northampton. Yesterday, the closing arguments were made in the public corruption case against the former mayor of Fall River, alleging 24 counts of corruption and misuse of power. The jury is now deliberating on whether he overstepped his authority. You've already heard MassCBA's member Stem Haverhill Caroline Pineau had to sue the city of Haverhill to request receipts of the additional expenses that the city incurred as a result of her3979 business choosing to locate her new cannabis retail shop in downtown Haverhill.

And in Northampton where one of the first adult use retail cannabis dispensaries opened in November of 2018 the mayor there recently said our experience has been that cannabis retailers have not caused any of the major impacts that were predicted before legalization. And waiving unnecessary community impact fees is a way we can reduce barriers to the industry,4003 especially for small entrepreneurs and equity applicants. Close quote. The number of cannabis licenses impacted by existing HCAs numbers in the hundreds. I ask you to deliberate now on the overwhelming evidence that it is high time to enable the CCC the agency that you, the legislature set up to do their job fully and let them enforce by making municipalities4022 obey the law. Thank you for the opportunity today. And I'm happy to take any4028 questions now or after the hearing.
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BLAKE MENSING - THE MENSING GROUP - SB 72 - Thank you very much, Madam. Chair Mr. Chair, honorable members of the committee. My name is attorney Blake Mensing. I'm a cannabis attorney, former municipal attorney. I have secured for my clients just about 50 licenses statewide, which of course means I've negotiated at least 50 host committee agreements in the state from Provincetown to Pittsfield and all points in between. Um so I'm here to support strongly S 72 because it solves the problem that I believe the commission has caused in its dereliction of its statutory duty to regulate this industry. Um there are two mechanisms by which an administrative agency gets authority in a statute explicit and implicit.

I think it's strange credulity to say that the Cannabis Control Commission wouldn't have the power to review these contracts as the law is currently drafted. But we're solving the problem hopefully with the passage of one of these bills, because the commission has asked for authority that I believe it already has. The reason I support S 72 so strongly is that currently towns aren't obligated to care about the state statutory mandate for restorative social justice. Without that town obligation to support the people most harmed by by the failed drug war that's why we have the bad numbers we do. Objectively bad numbers in terms of getting people into this industry who are owed entry into this industry in my opinion.

Um, so what it clears up is what I would call manufactured ambiguity and a really clearly written statute. I believe the Massachusetts Municipal Association, The Cannabis Control Commission and the state's largest municipal law firm have read words into that statute that don't exist and have tried to say that it's really hard to read. I think that's nonsensical. If you read it like a human being, the language is really clear. Most towns4260 ignore the words up to 3% and say 3%. That's the cost of doing business, take it or leave it. That has absolutely been my experience.4267 I've had that phrase cross my ears at least 50 times in the last three years. Um, so I would make a couple points based on some comments from some, from some of the questioners. Um, if you are budgeting in a community impact fee due to municipal budget, you're doing it wrong.

The community impact fee is supposed to be net zero. Costs incurred from a reasonable related impact from a cannabis facilities operation can be reimbursed by the operator. You can't make a dollar off a community impact fee. That's not how you read the statute, it's just wrong. Um, Also I would say that the cost to actually calculate the line item costs what the impacts are that in and of itself is a reasonably related costs. So that would be compensable. So the operator would pay for the town to do the math to figure out what was actually the cost of doing business. Um, So yeah, I have host community agreements myself uh in the city of Holyoke and the town of Oxbridge. It is not an accident why I went to those towns because they have a set of rules and they follow them. I didn't want to make more work for myself that I have to deal with for all my clients.

Um, So there's also an issue with the CCC's Guidance. The guidance says, you can, as a municipality charged for anticipated costs. No, you can't. It's for costs that are incurred. How do you have a receipt that then becomes a public record for something you fear might happen. Also, towns are fearful of things that won't happen. That fear is fueled by fact free propaganda. And I'm just tired of hearing town say, well, what about all the deaths from cannabis and what about the children and all these, you know, tales of doom4359 that haven't materialized. It's here, it was here before. Let's tax and regulate it. And I think the only clear path to make this statutory goal of equity is to make towns care about equity by having S 72 passed. And with that, I know I get worked up. But if you have any questions happy to answer them.
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SHANEL LINDSAY - EON - SB 72 - HB 151 - Good afternoon, everyone. Thank you very much. Committee Chairs Chang-Diaz and Donahue for allowing me to testify today. My name is Shanel Lindsay. I'm an attorney. I was one of the authors of Question 4 and a spokesperson for the campaign and after we passed legalization, I4413 was co founder of Equitable Opportunities NOW. We're a nonprofit that has been fighting for equity, working along with the community and you all as legislators to protect equity as this new industry unfolds. I was also appointed to4428 the advisory board four years ago by Treasurer Goldberg and I've been working4433 in that capacity and I'm here in each of those roles to ask for and support broad reform for host community agreements and specifically S 72 and H 151.

As you all know, HCAs have been the largest hurdle and you're going to hear additional testimony today very compelling about the transparency issues um, around community host agreements. But a large part of the challenge here is really this ambiguity that has snuck into the law around equity and host community agreements. It was always from the beginning and within the compromised law the intent that the mandate that this industry positively impact communities harmed by prohibition would extend throughout the commonwealth. Somewhere along the way the cities and towns were made to believe that this did not apply to them.

And it's only common sense to understand and know without equity at the city and town level, there can be no equity at the state level. It will be non existent. So I really am here today just to plead, um, with you all not to leave equity behind while HCAs are being reformed. And S 72 really clarifies this issue that equity is not simply optional, but at the same time allows municipalities broad leeway and authority to meet this equity standard. And if we want to see some semblance of equity here in the state, this is absolutely essential. Thank you very much.
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PETER BERNARD - CONCERNED CITIZEN - HB 181 - SB 72 - HB 151 - HB 174 - SB 67 - SB 68 - HB 150 - HB 169 - SB 77 - Good morning. Thanks for this opportunity this morning. It's glad to see the HCA language finally come up. I've been beating this drum for a few years. 94G does afford4594 A 3% community impact fee already with the reasonably related costs that they're supposed to be accountable for. If an extra meter maid is needed because parking enforcement needs to go up that's a reasonable impact on the community. A snowplow because it's4615 snowing not so much. You've got to plow that road4619 anyways. Uh, but ultimately all these bills are supposed to rectify flaws in 94G where the Cannabis Control Commission says it lacks the authority to do anything about enforcing them. I know about this because I had the law firm of Gerson and Altman dig out a few years ago, every HCA that had been written to date.

We found that four out of five of them were not in compliance with the spirit of the law. For example, Amherst executed an HCA with Happy Valley Ventures that requires a company to pay $75,000 in addition to a flat 3% of its gross sales revenue for the first year of its operation. And requires an annual $15,000 donation to4663 charities operating within the town. Charity part of kind of get, because that's Part of the licensing anyways, you're supposed to do good things for the town. But what's that extra 15,00 for what's that extra 75,000 for? Where is the accountability? There's supposed to be accountability. Brewster executed an HCA with Nature's Alternative Inc that requires the company to pay $25,000 in addition to 3% flat gross of sales revenue and also to reimburse the town's for various other costs it might incur.

Gee that's a little ambiguous hearing this, isn't it? So when the municipality says, well we budgeted based on this, I say shame on you. Greed is its own reward. You went above and beyond and I think you should lose the privilege. So when I look at these bills, I like H 181, S 72 H 151, especially H 174, S 67 S 68 And H 150. All of these bills have a common theme of a 3% accountable cap on the municipalities and regulated enforcement of the HCAs4738 and says to the Cannabis Control Commission, you will enforce this to make regulations around it. They each have their own special caveats though that you might want to think about incorporating.

Uh for instance, some of the language allows for an establishment to call for an audit on the way their HCA money is being spent and assigns nice4761 little penalties to noncompliant municipalities like having4763 to give the money back. H 150 for another4766 example, calls for a uniform municipal approval process. All of these municipalities have vastly different ways of vetting a business. I look at three other bills are really kind of no good in my opinion. You got H169 and that's relative to cannabis host agreements. While it addresses the 3% cap, it doesn't leave any room for accountability and what the money is spent on.

They could throw it in the general fund for all anybody knows. In the current law, they're not enforced. We already know that the municipalities are only supposed to ask for cost reasonably related and that really kind of it isn't. And uh that one should get filed in the circular file. S 77 an act to support partnerships between cannabis industry and municipalities, doesn't that sound warm and cozy partnership. But this is4821 a huge step backwards because it has, you know, for one thing, it starts with a minimum of five years or host community agreements. That's a nonstarter right there because that means it could go on in perpetuity. That needs to join 169 of the circuit of the file,

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