MA cannabis businesses forced to pay $2.5M in unlawful fees, study shows

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Cannabis companies in Massachusetts have paid at least $2.46 million in fees more than lawfully allowed under “host community agreements” (HCAs), according to a new study that reiterates the need for reform.

The study, paid for by the Massachusetts Cannabis Business Association and conducted by the University of Massachusetts in Boston, was released Tuesday during a legislative committee hearing on the issue, according to the Worcester Business Journal.

Lawmakers are considering measures to bolster oversight and enforcement of the agreements.

Marijuana businesses and other advocates have long argued that municipalities have demanded the maximum 3% of gross sales as a community impact fee without evidence of actual costs – plus tens of thousands of dollars of “donations” and other payments.

“The Commonwealth’s failure to clearly enforce the law around host community agreements has resulted in a regulatory state where legalized extortion is the norm,” Massachusetts Cannabis Business Association President and CEO David O’Brien said in a news release.

“Cannabis businesses are happy to pay their fair share of reasonable municipal costs related to their operation, but municipalities can’t just ask for a blank check with no accountability.”

At one point, federal prosecutors were said to be probing the agreements.

A study by a Boston law firm in January 2019 concluded that almost four out of five “host community agreements” were technically illegal.

The fees especially are hard on small and minority-owned businesses that typically don’t have as much money to start and operate a marijuana operation.

The Massachusetts House passed a measure in February 2020 that would have given the state’s Cannabis Control Commission oversight and enforcement authority over the contracts.

But the COVID-19 pandemic derailed further legislative action, so lawmakers are back at it again with nine bills under consideration, the Worcester Business Journal reported.