Marijuana committee wraps up hearings, turns to policy

After completing five public hearings on the state’s new recreational marijuana law, the special Joint Committee on Marijuana Policy now turns its attention to crafting legislation to make adjustments to the law.
 
The committee, chaired by Sen. Patricia Jehlen of Somerville and Rep. Mark Cusack of Braintree, began its first hearing, on March 20, with testimony from several state officials. Treasurer Deborah Goldberg gave assurances that her office was on track to handle regulation of the new industry, though she requested that the Legislature appropriate an additional $10 million for fiscal 2018 to assist with start-up costs (which were not provided for in the ballot question).
 
A major area of discussion during the five-hour hearing was the tax rate on marijuana products. The law sets a 3.75 percent tax on retail sales, plus a local-option tax of up to 2 percent, on top of the state’s 6.25 percent sales tax. So a $100 purchase could carry a total state and local tax of $12.
 
The Department of Revenue presented its first estimates of revenue that could be generated from retail sales of marijuana products, set to begin in July 2018. Revenue Commissioner Michael Heffernan offered estimates of $64 million for fiscal 2019, rising to $132 million in the second full year of regulated commercial sales. The optional municipal tax was not included in these estimates.
 
In Colorado, Gov. John Hickenlooper’s most recent budget requested $45 million for the regulation of the marijuana industry. Based on Colorado’s experience, the Senate Special Committee on Marijuana (since disbanded) estimated the cost of regulation in Massachusetts to be between $55 million and $60 million. (Massachusetts’s population of 6.7 million is considerably higher than Colorado’s 5.3 million, suggesting a higher cost of regulation.)
 
Based on the Special Senate Committee numbers, the anticipated first-year revenues would barely cover the cost of regulation.
 
Margaret Hurley, director of the Municipal Law Unit in the Attorney General’s Office, called for clarification of the local process to limit or ban marijuana businesses, citing the volume of requests for guidance she has received from local officials.
 
Stephen Crosby, chair of the five-member Massachusetts Gaming Commission, offered testimony based on his experience on a commission charged with regulating a new industry.
 
Asked about proposals to expand the Cannabis Control Commission, Crosby said, “As to five versus three, five is a lot of money and firepower, even for the Gaming Commission. It does give us an incredible depth of expertise.”
 
Many legislators have since suggested that the Cannabis Control Commission be changed to emulate the Gaming Commission, with five independent commissioners appointed by the treasurer, governor and attorney general.
 
The MMA submitted written comments to the 17-member committee calling for changes to the tax rates and regulatory structure. The MMA is also calling for clear language allowing municipalities to opt-out of recreational marijuana operations by a vote of the local legislative body.
 
The committee’s second hearing was held in West Springfield on March 27, where legislators heard from concerned citizens.
 
The third hearing, on April 4, was focused on local control issues and the regulatory structure of the new law. The MMA and the Massachusetts Municipal Lawyers Association collaborated on a panel of local officials and municipal counsel to offer testimony.
 
The panel – Melrose Mayor Rob Dolan, Auburn Town Manager Julie Jacobson, MMA Executive Director Geoff Beckwith and attorney John Goldrosen of the MMLA – focused on the need for a municipal representative on the Cannabis Control Commission and allowing municipalities to opt-out of provisions of the law by a vote of their legislative body.
 
Beckwith clarified misconceptions about the MMA position on opting out, noting that the MMA simply wants to see this decision placed before the voters of the town as part of their legislative process, as any other zoning decision is, rather than a special process only for marijuana.
 
Goldrosen reiterated the MMA’s and MMLA’s call for clearer language around the opt-out process, noting that municipal counsel across the state have heard from hundreds of local officials unsure of what they need to do to remain compliant with the law.
 
Goldrosen’s testimony reiterated that the opt-out process being sought by municipal officials would put the question before existing democratic bodies in cities and towns, contrary to claims made by others at the hearing.
 
House and Senate leadership have recently indicated support for the idea of expanding the CCC, with additional commissioners appointed by the attorney general and the governor, in a structure similar to that of the Gaming Commission. There are two different visions of what the expanded commission would look like. A Senate bill would require that one of the additional commissioners be a social justice advocate, while a House bill would require adding a municipal representative.
 
The special legislative committee held what was originally scheduled to be its last hearing in Shrewsbury on April 10, which again featured general testimony from the public.
 
Jim Wallace, executive director of the Gun Owners’ Action League of Massachusetts, explained recent changes to federal paperwork required to legally purchase a firearm from a licensed retailer, which added warnings that any firearm owner found to be lying about marijuana use, including in states where it is legal (contrary to federal law), would be subject to loss of their license and up to five years in prison. This is likely one of the first examples of the “law and order” approach to drug policy being promoted by U.S. Attorney General Jeff Sessions, who has promised to withhold federal resources from states and municipalities not in compliance with federal laws.
 
The fifth and final committee hearing, on April 24, was a general hearing with testimony from a number of concerned citizens as well as legislators with specific bills.
 
Westborough Town Manager James Malloy offered comments on his town’s experience in trying to ban recreational marijuana. Westborough pursued the so-called “belt and suspenders” approach, by putting a ban on the ballot while also passing general and zoning bylaws to accomplish the same thing. In Malloy’s view, Westborough was forced to do this because of the ambiguity in the law regarding the opt-out process.
 
Malloy strongly urged the Legislature to add a municipal representative to the Cannabis Control Commission. Citing the confusing local control language and misconceptions about the local decision-making process in the ballot question, he said a municipal voice should be involved in the crafting of regulations.
 
The governor has encouraged the Legislature to act by May or June on an omnibus clarification bill, but Senate and House leadership have suggested that the Legislature is not likely to have a bill done until July.
 
Under the law in its current form, personal use of marijuana and home growth became legal last Dec. 15. On Dec. 30, 2016, the Legislature enacted a six-month delay for the other deadlines in Question 4, which means the governor is now required to appoint a new Cannabis Advisory Board by Aug. 1, and the treasurer is required to appoint the CCC by Sept. 1.
 
The CCC’s deadline for promulgating regulations is March 15, 2018, and the commission is due to begin accepting applications by April 1 of 2018 (before most towns will hold their spring town meetings, so communities wishing to take action on recreational marijuana are advised to act this year).
 
If the CCC has not promulgated regulations by June 1, 2018, then existing medical marijuana dispensaries will be authorized to sell recreational marijuana without a regulatory structure in place. It is unclear whether the law preempts any community host agreement that prohibits a registered marijuana dispensary from selling recreational marijuana.