Bill S.2801

FILED ON: 3/31/2022

SENATE . . . . . . . . . . . . . . No. 2801

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Second General Court
(2021-2022)

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An Act relative to equity in the cannabis industry.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 2 of chapter 64N of the General Laws, as appearing in the 2020 Official Edition, is hereby amended by amended by adding the following paragraph:-

A sum equal to 1 per cent of the total sales price received under this section, from a marijuana retailer that is a social equity business, as defined in section 1 of chapter 94G, shall, not less than quarterly, be distributed, credited and paid by the state treasurer upon certification of the commissioner, to each city or town that has at least 1 marijuana retailer that is a social equity business, in proportion to the amount of the sums received from the sale of marijuana or marijuana products by any such marijuana retailer in the city or town. Any city or town seeking to dispute the commissioner's calculation of its distribution under this paragraph shall notify the commissioner, in writing, not later than 1 year from the date the money was distributed by the commissioner to the city or town.

SECTION 2. Section 1 of chapter 94G of the General Laws, as so appearing, is hereby amended by inserting after the definition of “Host community” the following definition:-

“Host community agreement”, the agreement between a marijuana establishment or a medical marijuana treatment center and a municipality pursuant to subsection (d) of section 3.

SECTION 3. Said section 1 of said chapter 94G, as so appearing, is hereby further amended by inserting after the definition of “Residual solvent” the following definition:-

“Social equity business”, a marijuana establishment with not less than 51 per cent majority ownership of individuals who are eligible for the social equity program under section 22 or whose ownership qualifies it as an economic empowerment priority applicant as defined by the commission’s regulations promulgated pursuant to section 4.

SECTION 4. Section 3 of said chapter 94G, as so appearing, is hereby amended by striking out subsection (b) and inserting in place thereof the following subsection:-

(b)(1) The city council of a city and the board of selectmen or town council of a town shall, upon the filing with the city or town clerk of a petition meeting the requirements of this subsection, request that the question of whether to allow, in the city or town, the sale of marijuana and marijuana products for consumption on the premises where sold, be submitted to the voters of the city or town.

The petition shall be on a form prepared by the state secretary, signed by not less than 10 per cent of the number of voters of the city or town who voted at the preceding biennial state election and submitted in a timely manner, after filing the petition with the city or town clerk, to the board of registrars or election commissioners. The board of registrars or election commissioners shall certify the signature of registered voters not more than 7 days after receipt of the petition. Upon certification of the signatures, the following question, and a fair and concise summary of the question to be prepared by the city solicitor or town counsel, shall be placed on the ballot for the next regularly occurring municipal or state election in the city or town:

“Shall [city or town] allow the sale of marijuana and marijuana products, as those terms are defined in section 1 of chapter 94G of the General Laws, for consumption on the premises where sold, a summary of which appears below?”

Notwithstanding the foregoing, the question shall appear on the ballot for the next regularly occurring municipal election if the election is to be held not less than 35 days after certification. To appear on the ballot for the next regularly occurring biennial state election, the city or town clerk shall provide notice, including the ballot question and summary, to the state secretary not later than the first Wednesday in August before the election.

If a majority of the votes cast in the city or town are in favor of allowing the consumption of marijuana or marijuana products on the premises where sold, such city or town shall have authorized the consumption of marijuana and marijuana products on the premises where sold.

(2) As an alternative to a local voter initiative petition process under paragraph (1), a city or town may, by ordinance or by-law, allow the consumption of marijuana or marijuana products on the premises where sold. No local voter initiative shall be required if the sale of marijuana and marijuana products for consumption on the premises is authorized by local law.

SECTION 5. Said section 3 of said chapter 94G, as so appearing, is hereby further amended by striking out subsection (d) and inserting in place thereof the following subsection:-

(d)(1) A marijuana establishment or a medical marijuana treatment center seeking a new license or renewal of a license to operate or continue to operate in a municipality that permits such operation shall negotiate and execute an agreement with that host community setting forth the conditions to have a marijuana establishment or medical marijuana treatment center located within the host community, which shall include, but not be limited to, all stipulations of responsibilities between the host community and the marijuana establishment or medical marijuana treatment center.

(2)(i) Notwithstanding any general or special law to the contrary, a host community agreement may include a community impact fee for the host community. The community impact fee shall: (A) be reasonably related to the costs imposed upon the municipality in the preceding year by the operation of the marijuana establishment or medical marijuana treatment center, exceeding costs that would be created by a non-cannabis business entity, as documented pursuant to subparagraph (iii); (B) amount to not more than 3 per cent of the gross sales of the marijuana establishment or medical marijuana treatment center; (C) be effective for not longer than a single 5-year term, subject to renewal; (D) commence on the date the marijuana establishment or medical marijuana treatment center is authorized to commence operations by the commission; and (E) not mandate a certain percentage of total sales as the community impact fee. A host community agreement may be renewed following the expiration of the agreed upon term.

(ii) Notwithstanding any general or special law to the contrary, the community impact fee shall encompass all payments and obligations between the host community and the marijuana establishment or a medical marijuana treatment center. Host community agreements shall not include any additional payments or obligations, including, but not limited to, monetary payments, in kind contributions and charitable contributions by the marijuana establishment or medical marijuana treatment center to the host community or any other organization. Payment of the community impact fee shall be due annually to the host community, with the first payment occurring not sooner than upon the first renewal by the commission of a final license to operate the marijuana establishment or medical marijuana treatment center. Any other contractual financial obligation that is explicitly or implicitly a factor considered in, or is a condition of a host community agreement, shall not be enforceable. Nothing in this section shall preclude a marijuana establishment or a medical marijuana treatment center from voluntarily providing organizations with in-kind contributions and charitable contributions after the execution of the host agreement.

(iii) Any cost imposed upon a host community by the operation of a marijuana establishment or medical marijuana treatment center shall be documented by the host community and transmitted to the licensee not later than 1 month after the date of the annual renewal of a final license to operate the marijuana establishment or medical marijuana treatment center and shall be a public record as defined by clause Twenty-sixth of section 7 of chapter 4 and chapter 66. If a licensee believes the information documented and transmitted by a host community is not reasonably related to the actual costs imposed upon the host community in the preceding year by the operation of the marijuana establishment or medical marijuana treatment center, the licensee may bring a breach of contract action against the host community and recover damages, attorneys’ fees and other costs encompassed in the community impact fee that are not reasonably related to the actual costs imposed upon the town. Costs documented under this subparagraph shall not include any costs that would be created by a non-cannabis business entity.

(3) The commission shall review and approve each agreement required by this subsection prior to the submission of a complete marijuana establishment or medical marijuana treatment center license application and at each renewal. The commission shall not approve a provisional license application unless the commission approves the agreement and certifies that the agreement complies with this section.

(4) A host community may waive the host community agreement requirement under this subsection; provided, however, that the host community shall submit to the commission a written waiver executed by the host community and the marijuana establishment or medical marijuana treatment center.

(5) Notwithstanding any general or special law to the contrary, the commission shall establish rules and promulgate regulations for host communities to promote and encourage full participation in the regulated marijuana industry by individuals from communities that have previously been disproportionately harmed by marijuana prohibition and enforcement and to positively impact those communities.

(6) The commission shall issue rules and promulgate regulations necessary to implement this subsection.

SECTION 6. Said section 3 of said chapter 94G, as so appearing, is hereby further amended by adding the following subsection:-

(f) A city or town shall adhere to cannabis control commission regulations promulgated pursuant to section 4 regarding procedures and policies for host communities to promote and encourage full participation in the regulated marijuana industry by people from communities that have been disproportionately harmed by marijuana prohibition and enforcement and may establish additional procedures and policies to further this goal.

SECTION 7. Subsection (a) of section 4 of said chapter 94G, as so appearing, is hereby amended by striking out clauses (xxvii) and (xxviii) and inserting in place thereof the following 6 clauses:-

(xxvii) monitor any federal activity regarding marijuana;

(xxviii) adopt, amend or repeal regulations for the implementation, administration and enforcement of this chapter;

(xxix) review and approve host community agreements pursuant to paragraph (3) of subsection (d) of section 3;

(xxx) regulate and enforce all host community agreements;

(xxxi) establish procedures and policies for municipalities to promote and encourage full participation in the regulated marijuana industry during negotiations of host community agreements with social equity program businesses and economic empowerment priority applicants;

(xxxii) prioritize social equity program businesses and economic empowerment priority applicants and any other class of applicants the commission deems eligible for expedited review during an evaluation of applications and inspections.

SECTION 8. Subsection (a½) of said section 4 of said chapter 94G, as so appearing, is hereby amended by striking out clauses (xxxiii) and (xxxiv) and inserting in place thereof the following 6 clauses:-

(xxxiii) requirements that prohibit marijuana product manufacturers from altering or utilizing commercially-manufactured food products when manufacturing marijuana products unless the food product was commercially manufactured specifically for use by the marijuana product manufacturer to infuse with marijuana; provided, however, that a commercially-manufactured food product may be used as an ingredient in a marijuana product if: (A) it is used in a way that renders it unrecognizable as the commercial food product in the marijuana product; and (B) there is no statement or advertisement indicating that the marijuana product contains the commercially-manufactured food product;

(xxxiv) energy and environmental standards for licensure and licensure renewal of marijuana establishments licensed as a marijuana cultivator or marijuana product manufacturer;

(xxxv) criteria for allowing marijuana establishments and medical marijuana treatment centers to satisfy their diversity plan or positive impact plan requirement for licensure in part by donating a percentage of their revenue to the Cannabis Social Equity Trust Fund established in subsection (c) of section 14;

(xxxvi) requirements and procedures for host community agreements, including, but not limited to, criteria for calculating community impact fees, consistent with subsection (d) of section 3;

(xxxvii) criteria for reviewing, certifying and approving host community agreements and community impact fees; and

(xxxviii) requirements for procedures and policies for host communities to promote and encourage full participation in the regulated marijuana industry during negotiations of host community agreements of social equity program businesses and economic empowerment priority applicants, including, but not limited to, advisory guidelines, best practices and minimum acceptable policy standards.

SECTION 9 Section 14 of said chapter 94G, as so appearing, is hereby amended by inserting, after the word “132B”, in line 15, the following words:- ; provided, however, that, annually, 10 per cent of the fund shall be transferred to the Cannabis Social Equity Trust Fund established in subsection (c).

SECTION 10. Said section 14 of said chapter 94G, as so appearing, is hereby further amended by adding the following subsection:-

(c)(1) There shall be a Cannabis Social Equity Trust Fund to encourage the full participation in the regulated marijuana industry in the commonwealth, of entrepreneurs from communities that have been disproportionately harmed by marijuana prohibition and enforcement. The fund shall consist of: (i) funds transferred pursuant to subsection (b); and (ii) any funds from private sources, including, but not limited to, gifts, grants and donations. Money in the fund shall be used to make grants and loans, including no-interest loans and forgivable loans, to social equity program participants and economic empowerment priority applicants. The fund shall be administered by the executive office of housing and economic development, in consultation with the Cannabis Social Equity Trust Fund board established in this subsection. Money remaining in this fund at the end of the fiscal year shall not revert to the General Fund.

(2) There shall be a Cannabis Social Equity Trust Fund board consisting of individuals from, and with experience advocating on behalf of, communities that have been disproportionately harmed by marijuana prohibition and enforcement. The board shall consist of: 1 person appointed by the governor with a background in the cannabis industry, who shall serve as chair; 1 person appointed by the treasurer with a background in finance or commercial lending; 1 person appointed by the attorney general with a background in business development or entrepreneurship; 1 person appointed by the state auditor with experience in business development, preferably in the cannabis industry; and 1 person appointed by the secretary of the commonwealth with experience in business development, preferably in the cannabis industry. When making appointments, an appointing authority shall select individuals who are from communities that have been disproportionately harmed by marijuana prohibition and enforcement. Members shall serve for 2-year terms and may be reappointed not more than once by their appointing authority. Any vacancy in a seat on the board shall be filled by the appropriate appointing authority within 60 days of the vacancy. The appointing authority may remove a board member who was appointed by that appointing authority for cause. Before removal, the board member shall be provided with a written statement of the reason for removal and an opportunity to be heard. Board members may be employed by another business that does not pose a conflict of interest with the duties of serving on the board.

(3) The board shall regulations governing the structure and administration of the fund, to be approved by the executive office of housing and economic development, including, but not limited to: (i) requirements for social equity businesses and municipalities who host such businesses to apply to receive a grant or loan from the fund; (ii) conditions of such grants and loans; (iii) procedures pertaining to marijuana establishments or medical marijuana treatment centers that default on a loan from the fund; and (iv) a process by which a license is sold as a result of a licensee’s default on a loan from the fund. The secretary of housing and economic development, subject to the approval of the board, shall be responsible for the selection of recipients, grant or loan values and conditions for such grants or loans.

SECTION 11. Said chapter 94G is hereby amended by adding the following section:-

Section 22. The commission shall administer a social equity program to encourage and enable full participation in the marijuana industry of people from communities that have been disproportionately harmed by marijuana prohibition and enforcement and to positively impact those communities. The program shall offer technical assistance and training to individuals certified by the commission as economic empowerment priority applicants and that meet other criteria determined by the commission.

SECTION 12. Section 22 of chapter 270 of the General Laws, as appearing in the 2020 Official Edition, is hereby amended by inserting after the definition of “Lodging home” the following definition:-

“Licensed marijuana social consumption establishment”, an establishment that is, at a minimum: (i) licensed by the Massachusetts cannabis control commission established under section 76 of chapter 10 for sale of marijuana and marijuana products for consumption on the premises pursuant to regulations promulgated pursuant to section 4 of chapter 94G; and (ii) authorized to allow social consumption on premises, where required, by the appropriate authority in the city or town in which the establishment is located.

SECTION 13. Subsection (c) of said section 22 of said chapter 270, as so appearing, is hereby amended by inserting, after paragraph (5), the following paragraph:-

(5½) A licensed marijuana social consumption establishment in designated consumption areas and as permitted by cannabis control commission regulations promulgated pursuant to section 4 of chapter 94G.

SECTION 14. Initial appointments to the Cannabis Social Equity Trust Fund board established in section 14 of chapter 94G of the General Laws shall be made not more than 60 days after the effective date of this act.

SECTION 15. The Massachusetts cannabis control commission shall amend its regulations to be consistent with this act not more than 1 year from the effective date of this act.