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Updates on Public Law in Massachusetts from Anderson & Kreiger LLP

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What the passage of Question 4 legalizing recreational sale and use of marijuana means to municipalities

Coming to your town soon - unless you opt out. Note the police car!

Coming to your town soon – unless you opt out. Note the police car!

Given the stunning and widely unexpected results of the presidential election, the seismic change in the state’s marijuana policy effected by the passage of Question 4 has received less attention in the election aftermath than it might have in a different year.

Many of the initiative’s opponents pointed out that the proposed law would be excessively friendly to the “budding” marijuana industry, and contained provisions that would cause implementation problems for state and local governments. But the voters approved it anyway, by a comfortable seven-point margin, largely out of the belief that prohibition has failed, not as an endorsement of the specific regulations proposed in the law.

But cities and towns now have to deal with those provisions, flawed as they are. Here’s a quick guide to the new law as it affects municipalities.

Law Overview

Question 4 makes three sets of changes to the General Laws:

  • It adds two new sections to Chapter 10 to establish a “Cannabis Control Commission” (CCC) and a “Cannabis Advisory Board” (CAB);
  • It enacts a new Chapter 64N, establishing excise taxes on the sale of marijuana and marijuana products (including a local option surtax); and
  • It enacts a new Chapter 94G (“Regulation of the Use and Distribution of Marijuana Not Medically Prescribed”). This Chapter contains the provisions concerning the regulation and licensing of “marijuana establishments” by the CCC, defines the scope of local control of such establishments, and creates new rules concerning the “personal use” of marijuana (including possession, transportation, cultivation and consumption).

By design, these new provisions superficially mimic the statutory controls on the sales of alcohol (G.L. c. 138). It creates a new regulatory agency, the CCC, having licensing and regulatory powers roughly analogous to the ABCC. The differences, however, are much more significant, particularly with regard to the role of municipalities in the regulatory process.

Local Control of Marijuana Establishments

Unlike Chapter 138, there is no local licensing authority. Instead, the new CCC will license all marijuana establishments in the first instance. If a town does not regulate these establishments, they will be allowed without local regulatory oversight, subject to zoning (which cannot prohibit recreational sales in any area where a registered marijuana dispensary is allowed).

While the new Chapter 94G allows municipalities the option to prohibit marijuana establishments within their borders, they must opt out if they wish remain the marijuana-equivalent of a “dry town” (a “non-high town?”). This is the opposite of Chapter 138, which required towns to opt in. A municipality can opt out by adopting an ordinance or bylaw that either:

  • prohibits the operation of 1 or more types of marijuana establishments within the city or town,
  • limits the number of marijuana retailers to fewer than 20% of the number of licenses issued within the city or town for the retail sale of alcoholic beverages not to be drunk on the premises where sold under chapter 138, or
  • limits the number of any type of marijuana establishment to fewer than the number of medical marijuana treatment centers registered to engage in the same type of activity in the city or town.

[See G.L. c. 94G, § 3(a)(2)]. Note that “types” of marijuana establishments include marijuana cultivators, marijuana testing facilities, marijuana product manufacturers, and marijuana retailers; a local bylaw could prohibit any or all of these by type.  Note also that this is a limited menu that appears to restrict towns to one of these three approaches. Given that this section makes no mention of zoning, municipalities should probably frame their regulations as general ordinances or bylaws, and only use zoning in a complementary fashion to regulate siting.

A key, unresolved question is HOW a city or town may enact such an ordinance or bylaw. G.L. c. 94G, § 3(a)(2) indicates that it can only be adopted “by a vote of the voters of that city or town.”  Some Question 4 proponents have indicated that this requires a ballot vote. But, given that there is no statutory mechanism for submitting local ordinances or bylaws to the voters, it is debatable whether this clause creates one. The Legislature needs to resolve this issue, if possible, before towns start setting their warrants for their annual town meetings in the spring.

Many town officials are already asking whether cities and towns may adopt zoning moratoria to delay the siting of marijuana establishments. The Attorney General’s office is currently considering this question and expects to get some guidance out in the near future.

However, as noted above, the new statute prohibits towns from enacting zoning to restrict the sale of marijuana for non-medical purposes anywhere where medical marijuana facilities are permitted. This may be read as prohibiting even temporary moratoria in those areas. To the extent that it is possible to adopt an ordinance or bylaw under § 3(a)(2) (discussed above), it may be safer to use that mechanism to prohibit such facilities entirely; if a city or town wants that ban to be temporary, it could include a “sunset” provision in the ordinance or bylaw (stating that the bylaw will be of no further force and effect after a specified date).

G.L. c. 94G, § 3(b) allows for local initiative petitions to allow “the sale of marijuana and marijuana products for consumption on the premises where sold.” Such a petition would have to be signed by 10% of the voters of the municipality who voted in the last state election, and approved at the next biennial state election.

The law also clearly privileges existing medical marijuana dispensaries, giving them an inside track to sell marijuana for recreational use. The law explicitly provides that, “until January 1, 2018, the [CCC] shall issue licenses first to applicants with the most experience operating medical marijuana treatment centers and then by lottery among qualified applicants.” If you already have a medical marijuana treatment facility within your borders, the only way to prevent it from getting into the business of marijuana sales for other purposes is to prohibit such facilities entirely.

It will be interesting to see to what degree the legislature may entertain special exceptions, as it does now with regard to alcohol licenses. Would towns maximize their control by prohibiting such facilities entirely, and then making better deals through home rule legislation? If the public sentiment in a town is to prohibit marijuana establishments and see how it plays out in other communities, that may be a wise thing to do.

Taxes

If a city or town does allow marijuana sales, it may also opt to impose an excise surtax of up to 2%, on top of the 3.75% excise tax due to the state.  Note that Chapter 94G, § 3(d) contains an extraordinary prohibition against agreements requiring payments to the municipality that are not “directly proportional and reasonably related to the costs imposed upon the city or town by the operation of a marijuana establishment,” creating strong pressure to look to the surtax – and only to the surtax – for revenue that a town cannot document as necessary to offset the cost of hosting the facility.

Personal Use

Under G.L. c. 94G, § 13 (“Penalties”) decriminalizes the possession, use, purchase, processing or manufacture of 1 ounce or less of marijuana, and, within a person’s primary residence, possession of up to 10 ounces of marijuana or 6 marijuana plants per person (up to 12 on one premises). Consumption of marijuana remains unlawful in a public place (subject to a penalty of not more than $100), and smoking of marijuana is unlawful wherever smoking of tobacco is prohibited. Possession and consumption of marijuana on school grounds remains prohibited. Towns may prohibit or regulate the possession or consumption of marijuana or marijuana accessories within any building that the Town owns, leases or occupies. The law includes prohibitions on “open containers” of marijuana in motor vehicles similar to the prohibition against open containers of alcohol.

The law states that nothing within it “requires any accommodation of any on-site medical use of marijuana in any place of employment, school bus or on school grounds, in any youth center, in any correctional facility, or of smoking medical marijuana in any public place.” It also does not “require an employer to permit or accommodate conduct otherwise allowed by this chapter in the workplace and shall not affect the authority of employers to enact and enforce workplace policies restricting the consumption of marijuana by employees.”

However, the law also states that “a person shall not be arrested, prosecuted, penalized, sanctioned or otherwise denied any benefit” for engaging in any activity made lawful by the statute. The apparent tension between these provisions is certain to raise some disputes, particularly for public employers, with very little time to plan for them. It is going to be an interesting first few months.

Photo creditWally Gobetz

About the Author

George A. Hall, Jr. – Partner

George represents clients on local government issues, particularly zoning and other land use matters.


Posted In: Municipal Law

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