AG Maura Healey’s Ruling Could Slow Massachusetts Marijuana Industry

Photo Credit: Keith Bedford

Attorney General Maura Healey is giving cities and towns more power to slow down the recreational marijuana industry, ruling that local officials can unilaterally prohibit cannabis companies for another year without polling residents.

The decision, approving an extension of Mansfield’s temporary moratorium on pot shops and other marijuana businesses through June 2019, was released Friday after questions from the Globe. It represents a reversal by Healey, as her office had previously said local freezes extending beyond Dec. 31 of this year were “longer than is reasonably necessary” and “could be viewed as unconstitutional.”

Now Healey believes municipalities deserve additional time to set up marijuana zoning rules.

“Certain communities have expressed a need for some additional time to address implementation of recreational marijuana licensing, sales, and facilities,” Healey spokeswoman Margaret Quackenbush wrote in a statement. “Given ongoing regulatory activity by the Cannabis Control Commission, such temporary local moratoriums are consistent with state law.”

Quackenbush did not respond to questions about which commission activities necessitated the longer freezes; the agency issued its final regulations on March 15.

Marijuana advocates and businesses denounced the move.

“This ruling has the potential to severely threaten Massachusetts’s job-creating, $2 billion cannabis industry, subverting state law and the will of the people who voted for legalization over 20 months ago,” the Massachusetts Cannabis Business Association said in a statement. “Should it stand, municipalities will be given three times longer than [the seven months] the state’s cannabis commission . . . had to develop its regulations.”

Jim Borghesani, a spokesman for the 2016 legalization campaign, called the ruling “appalling” and said Healey was “flip-flopping on her own prior decision.”

Under state law, communities that haven’t formally banned marijuana establishments altogether cannot impose other “unreasonably impracticable” restrictions — rules that would effectively discourage a prudent marijuana businessperson from setting up shop there. Healey’s office reviews local temporary moratoriums passed by towns and decides whether they’re genuine planning periods or unreasonably long delays that amount to de facto bans.

State law lays out a specific procedure cities and towns can use to ban marijuana companies indefinitely. In municipalities where residents voted “yes” on Question 4, the 2016 ballot referendum legalizing marijuana, bans must be approved in a communitywide vote. In municipalities where most voters said “no” to legalization, legislative bodies such as boards of selectmen may implement bans without a referendum. More than 200 of the state’s 351 municipalities currently have bans or temporary moratoriums in place.

The Massachusetts Municipal Association defended Healey’s decision as “entirely reasonable and necessary,” saying that many communities don’t have town meetings scheduled for another year and that holding special town meetings to set marijuana zoning would be too expensive.

But lawyers from several firms representing cannabis operators insisted that extended moratoriums like the one in Mansfield are illegal and expose municipalities to potential litigation. Not only would yearlong delays cause prudent cannabis operators to look elsewhere, they argued, but they take away the right of residents in “Yes-on-4” municipalities to vote on prohibiting marijuana businesses. (Mansfield residents voted in favor of marijuana legalization in 2016.)

“The notion that the attorney general can suspend or delay state law like this is unprecedented,” said Jim Smith, an attorney representing marijuana clients. “It gives local officials who don’t like marijuana a free pass to simply not do [zoning].”

Cities and towns already enjoy extensive powers over marijuana companies. In addition to enacting zoning rules and buffer zones that together sharply limit the areas where marijuana businesses can locate, municipalities can impose a 3 percent local tax on retail pot sales.

Officials can further take up to 3 percent of a company’s revenue under the so-called host community agreement each operator must sign before getting a state license. By law, those payments must be “reasonably related” to the actual costs imposed by a marijuana operation, though operators say municipalities frequently ask for larger amounts than costs would suggest.

Some attorneys criticized Healey’s office for not providing a legal analysis to back the new decision. Referring to her office’s statement citing “ongoing regulatory activity” at the cannabis commission, they noted that most state agencies are continually adjusting their regulations.

“Under that rationale, towns could have moratoriums in perpetuity,” said Adam Fine, an attorney for marijuana law firm Vicente Sederberg. “It doesn’t even pass the laugh test. The notion that cities and towns need almost three years [after the November 2016 vote] to either put in zoning or a ban is beyond absurd.”

Healey, who spoke out against the marijuana legalization movement in 2016, has previously drawn grumbling from marijuana proponents over her decision to let communities draw buffer zones not just around public schools, as explicitly allowed under state law, but also around day-care centers, parks, and other facilities.

Top officials at the cannabis commission itself questioned Healey’s decision.

“Nothing in the commission’s regulations or our ongoing work requires municipalities to wait to make any decisions,” said Shaleen Title, one of the agency’s five commissioners. “We’ve taken great pains not to hold up their process in any way.”

Asked in March about the possibility of moratoriums extending into 2019, commission chairman Steve Hoffman stressed the decision was Healey’s to make but said he doubted municipalities really needed so long to prepare for the arrival of recreational marijuana.

“Moratoriums are to make sure you have enough time in terms of planning,” Hoffman said in March. “You don’t need two years to do that. You might need six months or a year to make sure it fits into your meeting schedule, but beyond that, I’m not sure I see the logic.”