Report: Grand Jury Exploring Municipal Pot Agreements

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A federal grand jury is looking into the mandatory agreements and payments between host communities and marijuana businesses, according to a report in the Boston Globe, delving into an issue that state regulators and legislators have also been wrestling with.

The Boston Globe reported Monday night that at least six communities—Great Barrington, Eastham, Leicester, Newton, Northampton and Uxbridge—have received subpoenas from U.S. Attorney Andrew Lelling’s office seeking details on the communities’ host community agreements with marijuana businesses.

State law requires applicants for marijuana business licenses to enter into a host community agreement before the Cannabis Control Commission will consider an application. The law stipulates that those agreements cannot run for more than five years and that the community impact fee paid to the municipality by the licensee cannot exceed three percent of the establishment’s gross sales.

But the CCC has wrestled with the policy for more than a year now as entrepreneurs, lawyers and lobbyists have shared stories about cities or towns demanding a greater percentage of gross sales or other asks that would not appear to comply with the language of the law. Lawmakers have faced pressure all year to pass news laws addressing problems with host community agreements but so far no proposal has gathered steam on Beacon Hill.

“Your statute is very specific...it says that the community impact fee shall be reasonably related to the cost imposed upon a municipality. That is not happening,” Jim Smith, an attorney at Smith, Costello and Crawford who represents dozens of marijuana businesses including Haverhill’s Mellow Fellows, told lawmakers in July. “It also says that it should be no more than three percent of gross sales. That is not happening. In fact, nothing in this section of the law is being respected.”

Grand jury deliberations are typically secret unless indictments are ultimately issued. Haverhill officials would not comment on whether the city has received any grand jury notices. “We are aware of media reports concerning these matters,” said City Solicitor William D. Cox Jr. “Unfortunately, we are not in a position to either confirm or deny receipt of a subpoena. Such information may be available from the U.S. Attorney’s office.”

A spokesperson for the CCC said Tuesday that the agency “would not comment on a pending federal investigation.”

Lelling has already filed charges against a public official in connection with a host community agreement. Federal prosecutors allege that Fall River Mayor Jasiel Correia solicited bribes from at least four marijuana companies that applied to open in Fall River by telling them he would only issue local approvals needed—a responsibility that only rests with the city’s mayor—if he personally collected hundreds of thousands of dollars.

The CCC has determined that it does not have the authority to regulate HCAs or to deny a business license because of an agreement that both the business and municipality entered into. The CCC voted in January to formally request that the Legislature grant it “statutory authority to review and regulate” host community agreements.

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