As discussed in multiple Cannabis Control Commission
(“Commission”) meetings over the past several months,
the Commission has finally moved to intervene in a pending Superior
Court case – Theory Wellness, Inc. et al. v. Town of
Great Barrington – in which a central legal issue
is whether Chapter 180 of the Acts of 2022 and the
Commission's new regulations governing Host Community
Agreements (collectively, the “New HCA Rules”) apply
retroactively to Host Community Agreements (“HCAs”)
that were executed prior to the
effective date of New HCA Rules.
The plaintiffs in the case, three marijuana retailers located in
Great Barrington, brought suit against the town seeking a return of
millions of dollars in what are known as “Community Impact
Fees” made in pursuant to HCAs that were executed before the
New HCA Rules took effect. The claims are that HCA community impact
fees paid to the town must be returned because the town did not
incur such additional costs by virtue of the operation of the
marijuana establishments in the town. While the preexisting
regulatory framework supports the marijuana retailers in their
pursuit of refunds as the law always limited community impact fees
to those amounts reasonably related to the costs actually imposed
on the town by the operation of the marijuana establishments in the
municipality, the New HCA Rules make that mandate crystal clear and
add certain documentation and other requirements including that the
Commission must approve HCAs annually for compliance. Accordingly,
the retroactive application of the New HCA Rules would be helpful
to the plaintiff marijuana retailers in the Great Barrington
litigation.
The New HCA Rules were intended to provide clarity to marijuana
operators (including adult-use marijuana establishments and medical
marijuana treatment centers) and their host municipalities
regarding what conditions may (and, more importantly, may not) be
included within an HCA, which all marijuana operators are required
by law to obtain prior to receiving a license from the Commission.
In particular, the New HCA Rules clarified that, although
municipalities may impose Community Impact Fees annually on
marijuana operations within their borders, such fees must be
reasonably related to the actual costs imposed on the municipality
by the marijuana operation. Pursuant to the New HCA Rules,
municipalities must also keep diligent records of all such costs,
which shall be reviewed and certified by the Commission prior to
imposition of a Community Impact Fee. Since 2022, many
municipalities have voluntarily amended their existing HCAs to
comply with the New HCA Rules. However, several municipalities,
including Great Barrington, have resisted arguing that the New HCA
Rules do not expressly apply to HCAs
executed prior to the effective
dates of the New HCA Rules and, therefore, apply only prospectively
to more recently executed HCAs.
Since the New HCA Rules took effect, the Commission has applied
them to all HCAs (including
those executed prior to 2022) by, among other things, requiring all
existing licensees to submit conforming HCAs as part of license
renewal applications, which must be submitted to the Commission on
an annual basis. Despite this clear interpretation, until its
recent motion to intervene in the Great Barrington case, the
Commission has remained on the sidelines of cases examining the
applicability of the New HCA Rules to legacy HCAs. These cases
include Haverhill Stem LLC v. Fiorentini et al., in
which the Superior Court for Essex County held that the New HCA
Rules cannot be applied retroactively. Indeed, Great Barrington
cited this very case in its opposition to plaintiffs' motion
for judgment on the pleadings in the present case and also in its
opposition to the Commission's recent motion to
intervene.
Although the Commission's memorandum in support of its motion
to intervene provides little insight into the specific arguments
that the Commission may advance on the merits, the Commission will
doubtless argue that the New HCA Rules should apply retroactively
to all legacy HCAs and that recalcitrant municipalities, like Great
Barrington, should be compelled to comply with the new regime.
Critically, the Commission's memorandum underscores that the
arguments in “this case directly implicate the
Commission's authority to review and approve HCAs under G.L.
c. 94G and the Commission's implementing regulations”
and that “none of the parties currently involved in this
matter are adequately situated to fully protect [the
Commission's] authority.” Accordingly, the Commission
argues that it should be granted intervention as a plaintiff in
this case, either as a matter of right under Mass. R. Civ. P.
24(a), or via permissive intervention under Mass. R. Civ. P.
24(b).
Given the stakes and legal issues at hand, we would expect the
Superior Court to grant the Commission's motion. We will
continue to monitor the docket in this case and provide updates as
developments unfold.
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