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Cannabis Control Commission
(via Commission@CCCMass.com)
Union Station, Worcester
Delivered electronically
Dear Members of the Cannabis Control Commission:
The Massachusetts Municipal Association (“MMA”) joins with the Massachusetts Municipal Lawyers Association (“MMLA”) in providing the following comments to the Cannabis Control Commission’s (“CCC”) “Model Municipal Equity By-law or Ordinance” (“Model Bylaw”), released on April 11, 2024.
While our organizations support the goal of the Commonwealth, in the adoption of Chapter 180 of the Acts of 2022 (“Chapter 180”), to promote equity in the cannabis industry and create guidelines around licensing, we have significant concerns with the CCC’s Model Bylaw and its underlying draft “Guidance on Municipal Equity and Industry Participation” (“Equity Guidance”). We believe that the Equity Guidance and Model Bylaw have the capacity to provide much needed clarification and guidance on issues of consequence to both municipalities and the marijuana establishments with respect to HCAs, community impact fees and the promotion of social equity in the industry. However, in our opinion, the documents issued by the CCC appear to merely be a verbatim resuscitation of the regulations, providing little (if any) guidance, and continuing to raise questions about whether an adopted Model Bylaw and the underpinning regulations could survive a legal challenge if applied and enforced.
The MMA and MMLA respectfully submit the following comments on the proposed draft Model Bylaw.
A. Timeline
As an initial matter, the “Equity Guidance”, released by the CCC on April 11, 2024, requires municipalities to “submit an attestation to the Commission affirming it has adopted [municipal equity] local laws to effectuate compliance and identify the specific local laws passed” by May 1, 2024. Given the logistical process of adopting or amending such an ordinance or bylaw, including an initial submission, review, hearing and notice, the May 1st deadline appears to be impracticable, given that the CCC’s Equity Guidance was only made available 19 days earlier and that the Model Bylaw has not yet even been adopted by the Commission. This timeline does not take into account the intricacies and notice requirements of municipalities with representative town meeting or open town meeting forms of government, nor the political nature of garnering votes.
Given the importance of equity bylaws, we would suggest allowing a one year timeline for municipalities to craft and adopt substantial and consequential equity bylaws that conform with the CCC’s Equity Guidance and comply with all relevant state and local laws.
B. Conflicting Governance
Next, we note the Model Bylaw starts with an “Introduction & Purpose” section which states, in relevant part, that “… Host Communities are presumed to have met the Commission’s minimum acceptable equity standards for promoting and encouraging full participation in the regulated marijuana industry by taking one of the following actions: 1. Adopting an ordinance or bylaw to exclusively permit Social Equity Businesses for three years or until the goals of the exclusivity period have been met; 2. Adopting the Model By-Law or Ordinance created by the Commission to permit Social Equity Businesses; or 3. Creating a Local Approval Process for equity applicants that is administered on a 1:1 basis, where a General Applicant may be approved only after a Social Equity Business has commenced operations. Host Communities may choose to administer a 1:1 Local Approval Process until such time as 50% of the Licensees operating in the Host Community are Social Equity Businesses.”
The Equity Guidance, however, does not discuss or otherwise provide any relevant guidance on the “actions” that host communities can take to be presumed to be in compliance aside from citing to the Model Bylaw. Without clear and appropriate guidance, it is unclear how municipalities can satisfy the CCC, given the concerns addressed herein.
Given the importance of the intent of the Model Bylaw and Equity Guidance, we offer the following comments on actions 1 and 3 in the Model Bylaw’s Introduction & Purpose section.
Exclusivity Permits and 1:1 Approval
The first “action” a municipality can take to be presumed compliant reads “[a]dopting an ordinance or bylaw to exclusively permit Social Equity Businesses for three years or until the goals of the exclusivity period have been met”. In the context of local land use bylaws and ordinances, a requirement for permitting based on ownership or the class of particular applicant is particularly problematic. A prohibition on permitting non-Social Equity Businesses for a number of years could amount, at least arguable, to an unlawful exercise of municipal zoning power because it is based on ownership and not use. CHR Gen., Inc. v. City of Newton, 387 Mass. 351, 356-57, (1982) (ordinance regulating conversion of residential units to condominiums was invalid regulation based on ownership because “a building composed [of] condominium units does not ‘use’ the land it sits upon any differently than an identical building containing rental units”).
Indeed, the exclusivity requirement would operate to require a municipality to approve one applicant, and deny another, based solely on the identity of the applicant and not on compliance with the underlying regulatory requirements. However, a “fundamental principle of zoning [is that] it deals basically with the use, without regard to the ownership, of the property involved or who may be the operator of the use.” CHR Gen., 387 Mass. at 356 (internal quotations and citations omitted). G.L. c. 40A §4 (“Any zoning ordinance or by-law which divides cities and towns into districts shall be uniform within the district for each class or kind of structures or uses permitted”).
Further, special permits and variances ordinarily “run with the land” rather than the applicant and this could result in additional challenges if for example, a Social Equity Business permitted to operate then seeks a change of ownership (or otherwise attempts to transfer its business) to a non-Social Equity Business. An exclusivity bylaw or ordinance would operate to prevent such a change or transfer and could, in effect, be harmful to Social Equity Businesses.
Additionally, application of such a bylaw, on a practical level, could potentially freeze any cannabis businesses from entering a municipality for three years if a Social Equity Business applicant can not be found in that area. This, of course, cannot be the CCC’s intended effect but very may well be the actual consequence.
Accordingly, a requirement for permitting and licensure based on ownership, non-specific and vague factors presents significant concerns and could open municipalities to a potential host of legal challenges (not to mention, conflicting general and zoning bylaws).
Similarly, the third “action” presents a wide range of additional challenges for municipalities, especially given the lack of guidance provided by the CCC. In particular, the third action reads, “[c]reating a Local Approval Process for equity applicants that is administered on a 1:1 basis, where a General Applicant may be approved only after a Social Equity Business has commenced operations. Host Communities may choose to administer a 1:1 Local Approval Process until such time as 50% of the Licensees operating in the Host Community are Social Equity Businesses”. (emphasis added). Municipalities cannot simply adopt a bylaw or ordinance to override, limit, or otherwise control the authority of the municipal boards, commissions, and departments to carry out their respective powers and duties to decide upon and to issue, or deny, applicable permits and other approvals under the statutes and regulations of the Commonwealth, other municipal bylaws or ordinances, or applicable regulations of those boards, commissions, and departments. “This is because a municipality has no power to adopt a by-law that is “inconsistent with the constitution or laws enacted by the [Legislature].” Home Rule Amendment, Mass. Const. amend. art. 2, § 6.
Absent any guidance, the “1:1 Local Approval Process” seems to possibly reflect the 40B approval process which, pursuant to state statute, enables local zoning boards of appeals to approve affordable housing developments under flexible rules if at least 20-25% of the units have long-term affordability restrictions. General Laws chapter 40B, §§ 20-23 – known as Chapter 40B or the Comprehensive Permit Law – empowers the zoning board of appeals in each city and town to hold hearings and make binding decisions that encompass all local ordinances or bylaws and regulations. See also, 760 CMR 56.00 et seq. There is not a similar statute that grants municipalities such extraordinary powers as applied to marijuana businesses and accordingly, special legislation would likely be needed to accomplish such a herculean feat. Further, unlike the Comprehensive Permit Law, the “1:1 Local Approval Process” provides that the municipality would only be able to regulate the business after it has commenced operations. Requiring businesses to make changes after commencing operations would not only be extremely costly, but also nonsensical. If, for instance, a business proposed – and did – construct a facility in wetlands, there would be a host of changes and likely reconstruction needed including rehabilitation costs for any damage to the protected area. This is just one example of why permits and approvals are needed before commencement of operations. And, more to the point, if the CCC wasn’t envisioning a process similar to a comprehensive permit – municipalities should be provided guidance as the proposed process.
These are not new issues raised on behalf of municipalities. In fact, the MMA and the MMLA, as well as others, raised significant concerns about these “actions” when the CCC’s draft regulations were made available for public comment and these concerns have not been resolved or otherwise addressed.
C. Model Template
The following comments are focused on the Model Bylaw beginning on its page 2.
Section 5: Transparency of Applications and Applicants
While transparency is of particular importance in local government, the requirements in Section 5 are lengthy and dynamic, making it difficult, costly and time consuming to update regularly in order to ensure accuracy. For example, the requirements in items 1-3 to list meeting schedules for local bodies, key individuals, and all documentation involved in the approval process may be ever changing depending on whether variances, special permits or approvals are needed based on a particular proposal and various sites. Such approval bodies may include not only planning and zoning boards, and select boards, but also conservation commissions, historical commissions and others. Just as approvals for a single family home may vary based on the location, scope, size and scale of the project, so too may they be for marijuana businesses. Likewise, section 4 requires “identification of application criteria for local approval to operate …and scoring methodologies relied on”, but it is unclear which application criteria or methodologies this is referring to. Is this in reference to special permit criteria in a zoning bylaw or ordinance? Variance criteria in a zoning bylaw or wetland bylaw? Is simply providing a copy of the local bylaw or ordinance sufficient? Section 5 is equally perplexing. What are the “general and individual scoring information” that municipalities are meant to publish – the special permit decision, the variance decision? Again, without any guidance, municipalities are left struggling with how to interpret and apply the Model Bylaw.
Additionally, what “other information [is] required by the Commission” that item number 7 is meant to refer to? This section is extremely vague, making it unclear how or if a municipality can comply.
Section 6: Procedures and Policies for Host Community Agreement Negotiations
The section asks municipalities to determine whether an applicant meets a number of equity factors, but creates no standard basis for an applicant to make such a claim. It is difficult to see how a municipality could make such a determination on a number of these required factors, including previous marijuana offenses or convictions, member of an area of disproportionate impact, or member of a minority race or descent. While we appreciate the pre-verification and equity work the Commission is engaged in, it is unclear how municipalities might engage in such work themselves without doing extensive background checks into each applicant – something they have neither the time nor money to do. Moreover, this section suggests that a municipality can adopt the standard evaluation form developed by the CCC but, to the best of our knowledge, no such form has been created or published.
We also echo our prior comments raised concerning the reservation of “licenses” based on ownership to Social Equity Business; we note, it is not clear if the CCC is suggesting a local licensing scheme or simply meant to refer to the permitted use.
Section 7: Municipal Equity Plan
As we have stated in the past, while municipalities applaud the intent of such work, they are not the experts in this field and cannot be expected to do the work regulators failed to do at the onset. The language is vague, as it is unclear what the bar for “encouragement” would be or how compliance with it would be determined. It’s also unclear what “goals, programs, and measurements” would be or how municipalities would be expected to make and meet them.
Section 8: Equity Standards for Host Community Agreements
As stated above, how a municipality might “prioritize” an equity applicant within the confines of the law is unclear. What this “prioritization” might mean is also vague. Most problematic in this section are the number of things a municipality is expected to do “at minimum” to meet these standards. These standards are higher than any other a municipality might make to encourage any other business within its borders, and as written in the Model Bylaw, are unclear in practice. For example, requiring a municipality to provide an interpreter or translator – or designate counsel and/or a municipal planner, or other designees, as municipal contacts to work closely with social equity businesses – goes far beyond any other allowances a municipality might make for a business within its area, would be extremely costly and could be challenged as unlaw under the Anti-Aid Amendment. Home Rule Amendment, Mass. Const. amend. art. 46, § 2. The recoupment of these costs are not contemplated in this Model Bylaw or the Equity Guidance, and it is unclear if they would be an allowable Impact Fee if the applicant actually became an operating business. While the Model Bylaw is one of several possible actions a municipality can take to be in compliance with equity regulations, any requirement for compliance that a municipality hire such a translator or interpreter would likely trigger the unfunded mandate law under Proposition 2½.
Additionally, the flexibilities required in the negotiation and contract process create additional confusion in terms of timeline and contract enforcement. Requiring a municipality to grant an amendment or cancellation of a contract within 30 days from a host community agreement’s execution would likely hinder good faith efforts and create unpredictability in these agreements.
Lastly, while we appreciate that the CCC is tasked with balancing competing interests in implementing Chapter 180, there seems to be some distance between the Model Bylaw and the fact that as a matter of law, municipalities and their employees are entitled to a presumption that they act in good faith. See LaPointe v. Licensing Bd. of Worcester, 389 Mass. 454, 459 (1983) (“There is every presumption in favor of the honesty and sufficiency of the motives actuating public officers in actions ostensibly taken for the general welfare.”) (citation omitted). Item 5 seems to suggest quite the opposite and, in our opinion, should be stricken from the Model Bylaw as we are aware of no other State entity in the Commonwealth that has seemingly taken such a harsh position towards municipalities.
D. Conclusion
Municipalities are eager to be good faith partners with cannabis licensees and support equity across their borders, but they can not bear the onus of creating equity within the industry, a responsibility that is better served by regulators and those within the industry.
We hope you find these comments helpful and in the spirit of cooperation with which they are intended. We are eager to create more clarity around the law for all stakeholders and to help successfully implement the law. If you have questions or desire additional comment, please contact MMA Legislative Analyst Ali DiMatteo at adimatteo@mma.org and Jillian N. Jagling, Esq., Chair of the MMLA Legislative Committee, at jjagling@westgrouplaw.com.
Thank you for your time and consideration of the above comments and recommendations.
Sincerely,
Adam Chapdelaine
Executive Director & CEO
Massachusetts Municipal Association
Karis L. North, Esq.
President
Massachusetts Municipal Lawyers Association