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City Working on Agreements with Cannabis Companies

September 2, 2018

FITCHBURG -- There was an unsuccessful proposal last week to have the Cannabis Control Commission review host community agreements to make sure cities and towns aren’t extracting illegally high payments from marijuana-related businesses.

But in Fitchburg, the host-community agreements the city has entered into with cannabis companies require the payments be lowered if they violate state law, said Assistant City Solicitor Christine Tree.

“It is important to note that since the recreational statute passed, Fitchburg’s host agreements state that the annual payments which exceed the state limitation will be reduced,” Tree said in an email.

Despite this, Tree said in a subsequent telephone interview that her office contacted cannabis companies this week to make sure they remain comfortable with the terms of the host-community agreements they signed.

The renewed correspondences comes after the Cannabis Control Commission voted not to review the agreements as part of its licensing process. Host-community agreements are prerequisite to being licensed by the CCC.

“This is a new industry, so we’re going to make sure we’re in compliance with the law,” said Tree.

She said the city writes the agreements with input and after negotiating with representatives of the cannabis companies.

The city considers them “continuing agreements” that are not precluded from adjustment, she said.

“Just because we’ve signed an agreement doesn’t mean we end our concern to make sure they’re operating well,” she said.

Tree said the city “wants to comply with whatever the law is” surrounding the host-community agreements.

The terms of host-community agreements spell out the requirements a company must meet in order to business in Fitchburg. They include payments to the municipality in the form of “community impact fees” that cannot exceed 3 percent of gross sales.

Mayor Stephen DiNatale has signed seven such agreements with companies pursuing recreational, or “adult-use”, cannabis outfits in the city.

Last week, the Cannabis Control Commission rejected a proposal to review the agreements as one step in the licensing process, according to the State House News Service.

According to the news service, the decision left businesses and marijuana advocates concerned that municipalities would try to charge payments from companies that exceed state law.

The commission is now mulling whether to ask the legislature to clarify a portion of state law that relates to host-community agreements, the news service reported.

At a recent meeting Cannabis Control Commission Chairman Steven Hoffman said commission’s general council concluded that the regulatory body cannot reject a license application based on the terms of its host-community agreement, according to the news service.

Hoffman said it is ambiguous whether or not the CCC has the authority to review the agreements, and attributed that ambiguity to “an issue of clarity in the legislation” that governs marijuana.

But one of the authors of the legislation, Rep. Mark Cusack, asserted the intent of the law was to have the CCC ensure the host-community agreements don’t require payments over the 3 percent limit.

“I think this has less to do with the ambiguity than it does with reading comprehension,” said Cusack.

Fitchburg’s Tree said city officials welcome clarification surrounding the terms of host-community agreements. Under state law, communities can charge cannabis-related companies “impact fees” that are “reasonably related to the costs imposed upon the municipality” by the cannabis company locating there.

Tree noted that the city began negotiating these agreements before even the Cannabis Control Commission was assembled.

She said the city was grateful for the a draft guidance document the commission released in early August.

One company, NS AJO Holdings Llc, agreed to pay the city an “impact fee” that includes $50,000 upon breaking ground on their proposed retail facility at 20 Authority Drive.

That fee also includes an annual payment of at least three percent of gross sales $75,000, whichever is greater.

NS AJO also agreed to donate an additional $75,000 each year to a “community relations board” that will disburse the funds to local charities.

One thing that remains unclear, said Tree, is whether such donations to a “community relations board” are included in the “impact fee.”

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