Cannabis Business Host Community Payments Stir Controversy In MA

Contending that some local governments create obstacles in a system that requires mandated contracts between municipalities and cannabis businesses, proponents, past regulators and legislators are calling for a legislative committee to offer additional supervision over these required agreements, the Worcester Business Journal (WBJ) in Massachusetts reported Tuesday (May 11).

Much controversy has surrounded so-called “host community agreements,” with industry members claiming for a long time that talks between municipalities and cannabis businesses are many times single-sided as local governments have all the negotiating might.

This situation leads to deals that often contravene the caps on the amount that municipalities can charge cannabis companies for public safety and traffic, among other effects on a municipality, according to testimony to Joint Committee on Cannabis Policy, as reported by the WBJ.

One former Cannabis Control Commission member said per the report that the framework as it stands lets host municipalities “hold hostage” applicants and mandate payments over the 3 percent impact fee that the law permits. But one legislator expressed concern about how a modification in regulation would affect municipalities that have made host community agreements and already made financial plans for the money they anticipate receiving.

As it stands, state law mandates that fees need to be “reasonably related to the costs imposed upon the municipality by the operation of the marijuana establishment,” as reported by the WBJ.

However, a recently published study that was reported by the outlet, suggests that cannabis firms paid a minimum of $2.46 million more than they had to under the law while municipalities often didn’t have a framework as to how the funds they receive would be spent.

As previously reported, legal cannabis companies continue to struggle to locate financial service providers to fill their needs as regulation changes, which makes companies drown in physical cash in many instances. But, as legalization spreads, new ways surface to link these companies to banking services and providers open to taking on the risk of cash-intensive markets such as legal cannabis.