Equitable Municipal Cannabis Licensing

Social justice was a core component of Question 4 and subsequent legislative updates. To achieve the restorative justice goals of legalization, we need procedures and policies to encourage justice-involved individuals and Black and Brown business owners and workers to participate in this industry at the state and local level.

Thankfully, the Legislature took bold steps in advancing equitable opportunity in municipal licensing with Chapter 180 of the Acts of 2022, which reformed host community agreements (HCAs) and set standards for how municipalities should promote equitable participation through licensing.

The following is a compilation of resources to help Massachusetts cities and towns comply with the new law and support a vibrant, diverse industry in their community. For questions, please email kevin@masseon.com.

Important Deadlines

July 1, 2022:
Statutory deadline for initial municipal equity policies & procedures

“(a)Notwithstanding any general or special law to the contrary, a host community shall establish initial procedures or policies required by paragraph (5) of subsection (d) of section 3 of chapter 94G of the General Laws not later than July 1, 2023.

“(b) The failure of a host community to establish procedures or policies pursuant to subsection (a) shall result in a monetary penalty to the host community equal to the annual total of community impact fees received from all marijuana establishments or medical marijuana treatment centers operating within the host community, to be deposited into the Cannabis Social Equity Trust Fund established in section 14A of said chapter 94G.”

(2022 Mass. Acts Ch. 180, Section 25)

March 1, 2024:
CCC begins reviewing HCAs for compliance

“All applications for initial licensure submitted on or after March 1, 2024, must include an HCA that complies with 935 CMR 500.000 or a compliant HCA Waiver.”

(935 CMR 500.180(3)(b)(1))

“All renewal applications submitted on or after March 1, 2024, must include an HCA that complies with 935 CMR 500.000 or a compliant HCA Waiver.”

(935 CMR 500.180(3)(c)(1))

May 1, 2024:
Regulatory deadline for Host Communities to establish & report municipal equity rules or bylaws

“Host Communities must adopt local rules or bylaws to comply with 935 CMR 500.181(3) on or before May 1, 2024. A Host Community shall submit an attestation in a form and manner determined by the Commission affirming that it has adopted local laws to effectuate compliance with 935 CMR 500.181(3) and identifying the specific laws passed. In addition, a Host Community shall submit its equity plan and any other documentation of its compliance with 935 CMR 500.181(3).”

(935 CMR 500.181(3)(d))

Reporting Non-Compliance with Municipal Equity Regulations

“Any interested person may file a complaint with the Commission alleging noncompliance with an equity requirement under 935 CMR 500.181. If the Commission substantiates an allegation of noncompliance with 935 CMR 500.181, a Host Community shall be fined after first receiving notice and opportunity for corrective action pursuant to 935 CMR 500.310 and 935 CMR 500.320. A Host Community shall be fined in an amount equal to the annual total of CIFs received from all Marijuana Establishments and MTCs operating in the Host Community during the prior calendar year.”

(935 CMR 500.181(3)(e))

If you are concerned that your city or town has not taken steps to establish procedures and policies to encourage equitable participation in the cannabis industry, please consider any of the following steps:

  • Talk to your local city or town officials to find out where things stand, including:
    • Executive officers like mayor or city/town manager
    • Legislative officials like city/town councilors, selectmen, aldermen, Town Meeting Members
    • Economic Development; Diversity, Equity, & Inclusion, Licensing; and Zoning departments
  • Share this resource with your local elected and appointed officials and encourage them to take action
  • Talk to cannabis businesses, racial and economic justice organizations, and other community leaders about what programs would work best in your community
  • Contact the CCC to report complaints of noncompliance with municipal equity regulations.

Key Pillars of Robust Equity Programs

Prioritization in licensing

The CCC’s prioritization of Social Equity Program participants and cannabis equity businesses in licensing and exclusivity periods for delivery and the social consumption pilot have already been models for other cities and towns that have implemented their own exclusivity periods, licensing ratios, and other efforts to prioritize equity applicants.

Capitalization

Municipalities like Boston, Brookline, and others have already led in creating loan and grant funds, and with the Commonwealth starting its one statewide Cannabis Social Equity Fund, encouraging municipal reinvestment of cannabis and other revenues into capitalizing equity business should be a key pillar of any local equity effort.

Technical assistance

Providing assistance and training, similar to the efforts of the CCC’s Social Equity Program, is another key component of a comprehensive set of procedures and policies to encourage equitable participation.

Positive Impact Plans & Diverse Hiring Plans

The CCC has supported community reinvestment and fostering a more diverse cannabis industry through the Social Equity Plans that it requires of all applicants. Any municipal procedures and policies to encourage full participation should meet or exceed this minimum requirement established by the CCC.

Research & evaluation

The CCC has shown a demonstrated commitment to studying and evaluating the impacts of legalization, as well as specific regulatory efforts to advance equity such as the delivery exclusivity period. To ensure their efforts are making an impact, any municipal equity procedures and policies should include measurement and evaluation of impact and full, transparent disclosure of their results.

Public education & outreach

Through staffing, its website, printed material, social media, listening sessions, trainings, and other paid and earned efforts, the CCC has strived to be accessible and responsive to the applicants and licensees most impacted by their policies and any host community should ensure they have procedures and policies to educate the community about their resources and opportunities for equity businesses.

Suggested Programs, Policies, & Procedures to Encourage Equitable Participation

  • Create cannabis social equity grant and loan funds
    • Dedicate cannabis tax revenue and make a significant early investment before cannabis revenue comes in to support equity businesses
  • Fund technical assistance
  • Waive community impact fees
  • Waive licensing, inspection, and other municipal fees
  • Property tax exemptions/credits for cannabis and other disadvantaged businesses
  • Set equitable licensing ratios to ensure parity
  • Create exclusivity periods for licensing to equity businesses
  • Prioritize social equity businesses in the application review process
  • More flexibility with buffer zones and variances for social equity businesses
  • Invest in staff to help businesses navigate licensing (and support other agencies working with these businesses)
  • Negotiate HCAs in public meetings
  • Connect applicants to other resources
    • Cannabis Social Equity Fund
    • CCC Economic Empowerment Program
    • CCC Social Equity Program
    • Directory of pro bono or discounted service providers
    • Other municipal, state, and private resources
  • Invest in recruiting and retaining diverse staff
  • Invest in diverse media, trade groups, professional associations, and nonprofits when advertising jobs, public notices, and other municipal marketing efforts
  • Allow virtual community meetings, and provide virtual options for public hearings and meetings whenever possible
  • Offer live translators, interpreters, and other accommodations
    • Offer childcare and meals at public meetings and hearings and in government buildings
    • Translate websites and printed materials
    • Offer scheduling flexibility and variety for public meetings to try to accommodate working parents

Compliant Municipal Equity Standards

Municipalities are presumed to have met the Commission’s minimum acceptable equity standards for promoting and encouraging full participation in the regulated Marijuana industry by taking one of the following actions:

  1. Adopting an ordinance or bylaw to exclusively permit Social Equity Businesses for three years or until the goals of the exclusivity period have been met;
  2. Adopting the Model Ordinance or Bylaw created by the Commission to permit Social Equity Businesses; or
  3. Creating a Local Approval Process for equity applicants that is administered on a 1:1 basis, where a General Applicant may be approved only after a Social Equity Business has commenced operations. Host Communities may choose to administer a 1:1 Local Approval Process until such time as 50% of the Licensees operating in the Host Community are Social Equity Businesses
(935 CMR 500.181(3)(a))

Additional Required Municipal Transparent Practices

A Host Community shall publicize certain information in a conspicuous location at its offices and on its website which shall, at minimum, include:

  • a) All required steps of a Host Community’s Local Approval Process including, but not limited to, all associated fees, deadlines, and meeting schedules for local bodies involved in the Local Approval Process;
  • b) Identification of key individuals involved in a Host Community’s Local Approval Process, including, but not limited to, their name, title, business address, and business contact information such as email address or phone number;
  • c) A list of all documentation required by a Host Community’s Local Approval Process, in downloadable form and paper form;
  • d) Identification of application criteria for local approval to operate a Marijuana Establishment and scoring methodologies relied on by a Host Community;
  • e) General scoring information for all applicants and a Host Community’s scoring of each individual applicant;
  • f) A Host Community’s explanation, in narrative form, of its reasoning for the approval or denial of an application; and
  • g) Any other information required by the Commission.
(935 CMR 500.181(3)(b)(1))

Host Community Equity Plans

A Host Community shall develop an equity plan to promote and encourage full participation in the regulated cannabis industry by individuals from communities disproportionately harmed by cannabis prohibition and enforcement and shall publicize its equity plan in a conspicuous location at its offices and on its website. A Host Community’s equity plan shall:

  1. Encourage applications from business and individuals that would meet the definition of Social Equity Businesses, Social Equity Program Participants, and Economic Empowerment Priority Applicants as determined by the Commission; and
  2. Include goals, programs, and measurements a Host Community will utilize to promote and encourage equity participation.
  3. A Host Community shall publish data regarding its total applicant pool, which shall identify each Social Equity Business and License Applicant that has been designated as a Social Equity Program Participant or Economic Empowerment Priority Applicant, or who have been pre-verified pursuant to 935 CMR 500.101(7).
  4. The Commission may require the Host Community to report data to the Commission.
(935 CMR 500.181(3)(b)(2))

Best Practices for HCA Negotiations

  1. A Host Community shall develop a standard evaluation form, or use a form developed by the Commission, that scores components of an application. The evaluation form shall include consideration of equity in the overall evaluation score, which must comprise not less than 25% of the total evaluation score. This equity component shall include:
    • a. whether an individual, entity, or License Applicant is pre-verified or verifiedpursuant to 935 CMR 500.101(7);
    • b. whether the License Applicant is a Social Equity Program Participant;
    • c. whether the License Applicant is an Economic Empowerment Priority Applicant;
    • d. whether a License Applicant or pre-verified individual or entity has a prior Marijuana-related criminal offense or conviction;
    • e. whether a License Applicant or pre-verified individual or entity is part of an Area of Disproportionate Impact, as identified by the Commission; or
    • f. whether a pre-verified individual is of Black, African American, Hispanic, Latino, Native American or indigenous descent, or a majority of a pre-verified entity or License Applicant entity is comprised of individuals that are of Black, African American, Hispanic, Latino, Native American or indigenous descent.
  1. In circumstances where a Host Community imposes a cap on the number of Marijuana Establishments or MTCs that may obtain local approval to operate, if a Host Community later decides to allow additional Marijuana Establishments or MTCs, at least 50% of those licenses, but no less than one license, above the previously-established cap shall be reserved for: License Applicants that are Social Equity Businesses; License Applicants that have been designated as Social Equity Program Participants, Economic Empowerment Priority Applicants, or both; or individuals or entities verified or pre-verified pursuant to 935 CMR 500.101(7), including pre-verified individuals or entities that have already been designated as Social Equity Businesses, Economic Empowerment Applicants, or both. A Host Community seeking exemption from this regulatory requirement may submit a waiver request pursuant to 935 CMR 500.850. Such request must include identification of proposed compensating features, as provided under 935 CMR 500.850(2)(b).
(935 CMR 500.181(3)(c))

Equity Standards for Host Communities in HCA Negotiations

(a) A Host Community shall prioritize negotiations of HCAs with equity parties. The equity party to negotiations of an HCA for an application for licensure is: a License Applicant that is a Social Equity Business; a License Applicant that has been designated as Social Equity Program Participants, Economic Empowerment Priority Applicants or both; or an individual or entity verified or pre-verified pursuant to 935 CMR 500.101(7), including pre-verified individuals or entities that are not yet a License Applicant but have already been designated as Social Equity Businesses, Economic Empowerment Applicants, or both.

(b) A Host Community may waive or reduce fees for an equity party to an HCA negotiation, including, but not limited to CIFs, zoning and occupancy fees.

(c) Required Practices. At minimum, a municipality or Host Community shall take the following actions during HCA negotiations with an equity party to promote and encourage their full participation:

  1. Engage in an ongoing dialogue by providing multiple opportunities for discussion and negotiation of HCA terms including, at minimum, two conferences with an equity party;
  2. Include any attorney, authorized representative, or other advocate, if elected by an equity party, in all negotiation discussions and conferences;
  3. Promote language access by providing a certified interpreter or translator to assist an equity party who is a Non-English speaker during all negotiation discussions and conferences;
  4. Provide reasonable opportunities for an equity party to review a proposed HCA, HCA term or condition outside of a negotiation conference, or to seek review or input by a third party of their choice.
  5. Negotiate the terms of an HCA in good faith, including consideration of flexible terms that may mitigate particular challenges affecting an equity party, such as access to capital, with all terms and clauses conspicuously identified and openly discussed; and
  6. Allow an equity party to propose an amendment to, or seek cancellation of, an HCA within thirty days from the date of execution of the HCA.

(d) Prohibited practices.

  1. No municipality or Host Community shall negotiate an HCA with an equity party through the use of undue influence, duress, coercion, intimidation, threats, or any strong-arm tactics.
  2. No municipality or Host Community shall threaten loss of an equity party’s position in its local application queue or delay to the processing of an equity party’s application.
  3. No municipality or Host Community shall compel an equity party to sign an HCA in any manner that conflicts with the practices required in 935 CMR 500.181(4)(c).
  4. No municipality or Host Community shall negotiate or discontinue negotiations with an equity party in bad faith.
(935 CMR 500.181(4))

Equity Standards for Host Community Positive Impact Plans

(a) A Host Community must develop a plan to positively impact one or more of the following communities:

  1. Past or present residents of the geographic “areas of disproportionate impact,” which have been defined by the Commission and identified in its Guidance for Identifying Areas of Disproportionate Impact. The designation of these areas will be re-evaluated periodically.
  2. State-designated Economic Empowerment Priority Applicants.
  3. State-designated Social Equity Program participants.
  4. Massachusetts residents who have past drug convictions.
  5. Massachusetts residents with parents or spouses who have drug convictions.

(b) A Host Community shall publicize said plan in a conspicuous location at its offices and on its website. The plan shall outline the goals, programs, and measurements the Host Community will pursue.

(935 CMR 500.181(5))

EON Municipal Presentation: Successfully Implementing An Act Relative to Equity in the Cannabis Industry

Cannabis Control Commission Regulations

Adult Use

Medical Use

Check the Cannabis Control Commission’s website for updated regulations. For more information, check out the Cannabis Control Commission’s Municipal Equity resource page.

June 29, 2023 CCC Memo to Municipalities

S. 3096 An Act Relative to Equity in the Cannabis Industry (Municipal Section Highlights)

November, 2021 CCC Guidance to Municipalities

CCC Municipal Zoning Tracker

The Cannabis Control Commission’s Municipal Zoning Tracker identifies the zoning and bylaws of adult-use marijuana for all 351 cities and towns in Massachusetts.

CCC State & Local Government Resources

Find Cannabis Control Commission guidance for state and local government about licensing, responsibilities, and other marijuana topics.

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