Massachusetts regulators of cannabis are tightening up the rules on host community agreement (HCAs), with the goal to improve transparency and equity in the process. Since years, local governments have been able to impose excessive charges and restrictions on cannabis businesses through these agreements, resulting in what is often described as “Wild West-style” regulations. State officials have now stepped in to bring order into the chaotic situation.
HCAs and the Problem
Massachusetts law mandates that cannabis businesses obtain an host community agreement from the town or city they intend to operate before applying for a state licence. These agreements, in theory at least, ensure local governments are compensated for costs associated with cannabis business. However, in practice some municipalities exploit the system and impose steep fees, demanding additional benefits beyond what is allowed by state law.
There are new regulations on the Horizon
Massachusetts Cannabis Control Commission is now working on reforms to curb abuse. New rules:
• The Fee Cap: The amount that municipalities can charge marijuana businesses in excess of the 3% legal community impact fee will be limited.
• Increase oversight: Data proving the impacts of cannabis businesses will be required by local governments to support their charges.
• Increase Transparency HCAs are reviewed to verify compliance, and municipalities will not be able to take advantage of business.
The industry’s response
HCAs are a significant barrier for cannabis entrepreneurs to enter the market. This is especially true of smaller companies and those applying under social equity. The changes are welcomed by many, who argue that they will even the playing field. They also say the towns won’t be able to auction off cannabis permits. Some municipal leaders disagree, saying that they deserve compensation as towns host cannabis operations.
What’s Next?
CCC anticipates more equitable agreements with the implementation of new regulations. Some industry participants believe that additional legislation may be needed to resolve this issue. Businesses and local government will continue to monitor closely as Massachusetts refines its cannabis policy.