Ruling underscores power of host community agreements over pot retailers.

Byline: Pat Murphy

Attorneys representing cannabis retailers complain that the state's current statutory framework effectively gives cities and towns veto power over the issuance of operating licenses, authority that municipalities have been eager to exploit in the form of demands for payment of excessive "impact fees."

A recent decision from Essex Superior Court, Mederi, Inc. v. City of Salem, et al., appears to recognize the virtual unassailability of a municipality's refusal to enter into "host community agreements." Such agreements are a prerequisite for marijuana retailers to even apply for licenses to operate from the Cannabis Control Commission.

"Right now, these host community agreements are for sale, and that was never the intent," said Peabody's William H. Sheehan III, counsel for the plaintiff cannabis license applicant in Mederi.

Boston attorney James E. Smith represents businesses and municipal clients in regulatory matters involving both the medical and adult-use cannabis industries. Smith said the first step for any client intent on obtaining a retail marijuana license is to get a location if they don't already have one.

But Smith said his best piece of advice is often more direct: "I tell clients, 'If you don't have sufficient capital, please don't do this.'"

The 29-page ruling in Mederi, Lawyers Weekly No. 12-042-19, can be found here.

Authority for 'shakedowns'?

Massachusetts voters approved the legalization of marijuana in November 2016. Under the Marijuana Act, G.L.c. 94G, the Cannabis Control Commission is authorized to issue licenses for retail marijuana establishments.

Per G.L.c. 94G, 3(d), marijuana establishments seeking to operate in a municipality must "execute an agreement with the host community setting forth the conditions" for having the business located within the town or city.

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"Chapter 94G was designed for the state to be the entity to determine who would get the licenses. The host community agreements were never designed to be a vehicle by which the locals would decide who would get the licenses."

William H. Sheehan III, plaintiff's counsel in Mederi

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Northampton attorney Richard M. Evans said obtaining a host community agreement was not a prerequisite for obtaining a marijuana license when voters first legalized marijuana. Host agreements became mandatory when the Legislature later conducted what Evans characterized as ill-advised "major surgery" amending the Marijuana Act.

"As a consequence, the cities and towns obtained a lot more power to make demands upon establishments," Evans said, adding that the change in the law has brought about a "widespread" abuse of power.

"I see 'shakedowns' by the municipalities themselves," Evans said.

But...