The Marijuana Act: Overview of the Municipal Role

The Marijuana Act: Overview of the Municipal Role Presented by Brandon H. Moss, Esquire Murphy, Hesse, Toomey & Lehane, LLP March 10, 2017 979320 1 The FEDERAL Law The federal Controlled Substances Act of 1970 ( CSA ) (21 U.S.C. 801 et seq.) regulates the use, distribution, possession, manufacture and importation of certain drugs. Marijuana remains a Schedule I drug under the CSA. 979320 2 The FEDERAL Law Schedule I drugs are categorized as such because of their high potential for abuse, lack of any accepted medical use, and absence of any accepted safety for use in medical supervised treatment. Gonzales v. Raich, 545 U.S. 1, 14-15 (2005) (citing 21 U.S.C. 812(b)(1)). By classifying marijuana as a Schedule I drug, as opposed to listing it on a lesser schedule, the manufacture, distribution, or possession of marijuana became a criminal offense, with an exception not applicable here. See Raich, 545 U.S. at 14; see also 21 U.S.C. 812(c). 979320 3 1

Massachusetts is not in unchartered territory Other states legalizing recreational marijuana establishments: Colorado and Washington (2012 election); Oregon and Alaska (2014 election); and California, Maine, Massachusetts and Nevada (2016 election). District of Columbia (2014 election) voted to legalize marijuana possession/cultivation for personal recreational use (not commercial production/sale). 979320 4 Massachusetts and its Ballot Questions 2008 State Election: Question 2 ( Massachusetts Sensible Marijuana Policy Initiative ). 2012 State Election: Question 3 ( Massachusetts Medical Marijuana Initiative ). 2016 State Election: Question 4 ( An Initiative Petition for a Law Relative to the Regulation and Taxation of Marijuana ). 979320 5 Ballot Question 2 (2008 Election) Eliminated criminal penalties for possession of 1 ounce or less, instead using civil penalties. The $100 civil penalty went to the municipality where the offense occurred. No Criminal Offender Record Information reports for covered violations. The 2008 ballot question did not affect penalties for cultivating, trafficking and selling marijuana, or operating under the influence. Minors were subject to additional penalties (e.g., maximum $1,000 fine, educational program, community service, and parental notification). 979320 6 2

Ballot Question 2 (2008 Election) Local action was permitted under the 2008 ballot question in connection with the public use of marijuana. In particular, municipalities were expressly authorized to adopt bylaws and ordinances prohibiting or regulating marijuana or tetrahydrocannabinol (THC) in public places and to provide additional penalties for public use. Subsequently codified as Chapter 387 of the Acts of 2009, and resulting in M.G.L. c. 94C, Section 32L through 32N. 979320 7 Ballot Question 2 (2012 Election) The 2012 ballot question: Authorized the medical use of marijuana this included acquiring, cultivating, possessing, processing, transferring, transporting, selling, distributing, dispensing or administering marijuana to aid qualifying patients in the treatment of debilitating medical conditions, or the symptoms thereof. Established medical marijuana treatment centers (or registered marijuana dispensaries), which are not-forentity entities, registered with the Department of Public Health, and involved with the medical use of marijuana. 979320 8 Ballot Question 2 (2012 Election) The 2012 ballot question: Limited the medical use of marijuana to qualifying patients and their caregivers. Eliminated state prosecution and criminal penalties for permitted conduct. Contemplated hardship cultivation registrations. Did not require accommodation of on-site medical use in any place of employment, school bus, school grounds, youth center, or correctional facility, or the smoking of marijuana for medical purposes in any public place. Did not affect Massachusetts laws applicable to marijuana for non-medical use. 979320 9 3

Ballot Question 2 (2012 Election) The 2012 ballot question was codified as Chapter 369 of the Acts of 2012. In 2013, the Department of Public Health ( DPH ) adopted 105 CMR 725.000, Implementation of an Act for the Humanitarian Medical Use of Marijuana. 979320 10 Ballot Question 2 (2012 Election) Under the DPH regulations: Registered marijuana dispensaries ( RMDs ) must comply with local siting requirements. In the absence of local requirements, no RMD may be 500 feet from: A school; A daycare center; and Any facility in which children commonly congregate. The 500 buffer zone is measured by a straight line between the facility and the closest point of the RMD. 979320 11 Ballot Question 2 (2012 Election) Under the DPH regulations, RMDs and registered persons must comply with applicable local rules, regulations, bylaws and ordinances. The DPH regulations do not require involvement by municipalities and local boards of health in regulating RMDs, qualifying patients with hardship cultivation registrations, or other components of marijuana for medical use. Lawful local oversight and regulations, such as fee requirements, that did not conflict with or impede 105 CMR 725.000 are permitted. 979320 12 4

Ballot Question 2 (2012 Election) The result: Zoning moratoriums; Mitigation/community benefit agreements; General ordinances/bylaws; and Zoning ordinances/bylaws (such as special permit requirements, site plan requirements, and/or zoning districts where RMDs could be located). 979320 13 And FINALLY Ballot Question 4 (2016 Election) Question 4 at the 2016 state election essentially legalized marijuana for non-medical uses, with certain prohibitions and limitations. Question 4 passed by a margin of 53.66%-46.34%. Question 4 had an effective date of December 15, 2016. Question 4 is codified as Chapter 334 of the Acts of 2016. Portions of Question 4 were amended by Chapter 351 of the Acts of 2016 this created a 6 month extension to deadlines under Question 4. 979320 14 There is or rather, will be a new sheriff in town The Cannabis Control Commission ( CCC ) is charged with the supervision and regulation of marijuana establishments. 3 Members: 1 Commissioner + 2 Associate Commissioners (appointed by Massachusetts State Treasurer). A maximum of 2 Members in the same political party. The Commissioner serves the same term as the Massachusetts State Treasurer. The Associate Commissioners serve 4 year terms. 979320 15 5

There is or rather, will be a new sheriff in town The CCC must enact certain regulations to administer, clarify and enforce laws involving the regulation and licensing of marijuana establishments. There are 15 subjects that the CCC s regulations must address, including: Initial and renewal licenses for marijuana establishments; Fees for license applications, and for initial/renewal licenses for marijuana establishments (up to the maximum permitted under Chapter 94G); 979320 16 There is or rather, will be a new sheriff in town Qualifications to be licensed and minimum employment standards in connection with operating marijuana establishments; Participation in the regulated marijuana industry by individuals disproportionately harmed from marijuana prohibition and enforcement; Security requirements; Preventing sales to individuals under 21 years old; Record keeping and tracking marijuana and marijuana products; 979320 17 There is or rather, will be a new sheriff in town Health and safety standards; Packaging requirements; Labeling requirements; Requirements for testing of random samples; Safe disposal requirements; 979320 18 6

There is or rather, will be a new sheriff in town Reasonable restrictions for signs, marketing, displays and advertising; License transfers; and Enforcement; fee and penalty collection; suspending or terminating licenses; and appeals of civil penalties or licensing actions. 979320 19 There is or rather, will be a new sheriff in town Subjects that the CCC s regulations may, but are not required to, address: Additional types/classes of licenses: Limited activities cultivation, processing, manufacturing, possession, storage, or delivery; On-premises consumption; Special events consumption in limited areas; or Scientific research or education. Regulating cultivation, processing, distribution, and sale of hemp by marijuana establishments. 979320 20 There is or rather, will be a new sheriff in town The CCC, if an analysis has occurred, can restrict the amount of marijuana cultivated in order to limit illicit markets for marijuana. If the total amount of marijuana is restricted, the CCC must reconsider the decision biannually and the limit must ensure a sufficient supply of marijuana and marijuana products. The limit cannot be imposed if importing/exporting marijuana to/from Massachusetts is not prohibited by federal law. 979320 21 7

There is or rather, will be a new sheriff in town The CCC cannot adopt six types of regulations, such as : Prohibiting marijuana establishments or making the operation of a marijuana establishment unreasonably impracticable ; Preventing an RMD and an experienced marijuana establishment operator from operating an RMD and a marijuana establishment at a shared location. 979320 22 The CAB is also driving this In addition to the CCC, there is a 15 member Cannabis Advisory Board ( CAB ), to be appointed by the Governor by August 1, 2017. CAB members study and make recommendations on regulating marijuana and marijuana products. The CAB meets at the discretion of the CCC. CAB members are unpaid, but will be reimbursed for their expenses. 979320 23 The CAB is also driving this The CAB: Advises the CCC on marijuana cultivation, processing, manufacturing, transportation, distribution, testing, and sale; Reviews matters as requested by the CCC; Suggests guidelines, rules, regulations, and related changes to the CCC; and Counsels on the preparation of regulations under M.G.L. c. 64N (taxation) and 94G (regulation). 979320 24 8

The Other Type of Green Tax Revenue Massachusetts General Laws Chapter 64N deals with taxing non-medical marijuana sales. 3.75% state excise tax for the sale of marijuana and marijuana products by marijuana retailers (excluding sales to marijuana establishments). This is in addition to the Massachusetts sales tax under M.G.L. c. 64H, 2. 979320 25 The Other Type of Green Tax Revenue Local Action Required: Municipalities can adopt a local sales tax for the sale or transfer of marijuana and marijuana products by marijuana retailers (excluding to marijuana establishments). The local sales tax may be up to 2% of the total sale price. The local sales tax is collected by the Commonwealth, but distributed, credited and paid at least quarterly by the Massachusetts State Treasurer. 979320 26 The NEW Law Question 4 addresses the regulation and distribution of marijuana for non-medical use in a new Massachusetts General Laws Chapter 94G ( Chapter 94G ). Chapter 94G addresses permitted, prohibited, and limited activities, and defines the various categories of marijuana establishments that are subject to licensing by the soon-to-be-formed CCC. 979320 27 9

The Businesses Chapter 94G regulates the following marijuana establishments, all of which must have a license: Marijuana cultivators they cultivate, process and package marijuana; deliver marijuana to marijuana establishments; and transfer marijuana to other marijuana establishments, but not to consumers. Marijuana testing facilities they test marijuana and marijuana products, and certify for potency and the existing of contaminants. 979320 28 The Businesses Marijuana product manufacturer they receive, manufacture, process, and package marijuana and marijuana products; deliver marijuana and marijuana products to marijuana establishments; and transfer marijuana and marijuana products to other marijuana establishments no involvement with consumers. Marijuana retailer they buy and deliver marijuana and marijuana products from marijuana establishments; and deliver, sell or other transfer marijuana and marijuana products to consumers or marijuana establishments. 979320 29 The Businesses Other types of licensed marijuana-related businesses which may be addressed through future action or regulation by the CCC. 979320 30 10

Experience Matters An experienced marijuana establishment operator includes: an RMD that has a registration in good standing; or is a reorganized marijuana business created through a vote of at least 2/3 of the board of directors of an entity that filed a registration to operate an RMD to DPH before October 1, 2015 and which received a provisional registration to operate an RMD before December 15, 2016 (the effective date of Chapter 94G). 979320 31 Other Key Terms Marijuana accessories equipment, products, devices or materials that are intended or created for planting, propagating, cultivating, growing, harvesting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, containing, ingesting, inhaling, or otherwise introducing marijuana into a person. Marijuana products products manufactured and having marijuana or a marijuana extract, and this includes edibles, beverages, topic products, ointments, oils, and tinctures. 979320 32 The People A consumer must be at least 21 years old. Chapter 94G prohibits knowingly transferring marijuana, marijuana products, and marijuana accessors to underage persons. Chapter 94G prohibits underage persons from possessing, using, buying, receiving, cultivating, manufacturing, delivering, selling, or otherwise transferring marijuana or marijuana accessories. 979320 33 11

Permissible bylaws and ordinances governing marijuana establishments Bylaws and ordinances are generally permitted if they are: Reasonable; Not unreasonably impracticable ; This means that compliance creates unreasonable risk or require[s] such a high investment of risk, money, time or any other resource or asset that a reasonably prudent businessperson would not operate a marijuana establishment. (Chapter 94G, Section 1(p)). Not in conflict with Chapter 94G or the CCC s regulations; and Within the 5 categories of permitted regulation. 979320 34 Category No. 1 of Regulation Time, place and manner regulations of marijuana establishments and businesses dealing in marijuana accessories. (Chapter 94G, Section 3(a)(1)). However, marijuana establishments that cultivate, manufacture or sell marijuana or marijuana products must be allowed to operate in the same area where an RMD can engage in the same kind of activity. 979320 35 Category No. 2 of Regulation Restricting the total number of marijuana establishments in the municipality. (Chapter 94G, Section 3(a)(2)). Also, a municipality can adopt an ordinance or bylaw by a vote of the voters of that city or town which: Prohibits 1 or more types of marijuana establishments; Restricts the number of marijuana retailers to 20% of the number of off-premises retail liquor licenses; or Restricts the number of any type of marijuana establishment to less than the number of RMDs registered to engage in the same kind of activity. 979320 36 12

Category No. 2 of Regulation What is a vote of the voters? Certain municipalities are proposing prohibitions for adoption at a municipal election and/or through the local legislative body, whether through a general and/or zoning enactment; Other municipalities are waiting; and Remaining municipalities are contemplating action or undecided. 979320 37 Category No. 3 of Regulation Regulating cultivation, processing and manufacturing activities that constitute a public nuisance. (Chapter 94G, Section 3(a)(3)). 979320 38 Category No. 4 of Regulation Reasonable regulations of public signs for marijuana establishments. (Chapter 94G, Section 3(a)(4)). 979320 39 13

Category No. 5 of Regulation Adopting a civil penalty for violating an ordinance or bylaw under the local control provisions of Chapter 94G, similar to a penalty imposed for violating an ordinance or bylaw involving alcoholic beverages. (Chapter 94G, Section 3(a)(5)). 979320 40 Transportation Regulations Bylaws and ordinances that make transportation of marijuana or marijuana products unreasonably impracticable are prohibited. Bylaws and ordinances cannot prohibit the transportation of marijuana or marijuana products. Westborough Special Town Meeting of October 17, 2016, Attorney General s Office Case #8155: zoning bylaw prohibited delivery of non-medical marijuana to consumers except as allowed by special permit. 979320 41 Transportation Regulations Westborough Special Town Meeting of October 17, 2016, Attorney General s Office Case #8155: Zoning bylaw prohibited delivery of non-medical (retail) marijuana to consumers except as allowed by special permit. This zoning bylaw was approved, with the caveat that off-site delivery of non-medical (retail) marijuana could not be totally prohibited. Special permit conditions could not be unreasonably impracticable. 979320 42 14

Dover Amendment The growing, cultivation, distribution or dispensation of marijuana is not a protected use and therefore does not qualify for special treatment under the so-called Dover Amendment (M.G.L. c. 40A, 3). 979320 43 Examples of Prohibited Regulations Westborough Special Town Meeting of October 17, 2016, Attorney General s Office Case #8155: Proposed prohibition on growing or cultivating marijuana and marijuana-based products inside a residence or in a residential zoning district disapproved because it conflicted with Chapter 94G. Note: Language prohibiting the sale of marijuana and marijuana-based products outside a residence or in a residential zoning district was left intact. 979320 44 Examples of Prohibited Regulations Westborough Special Town Meeting of October 17, 2016, Attorney General s Office Case #8155: Proposed prohibition on cultivation by a resident, a qualifying patient, or a personal caregiver disapproved because it conflicted with Chapter 94G and Chapter 369 of the Acts of 2012 (the Medical Marijuana Act). Note: Language prohibiting cultivation by marijuana establishments, RMDs, and dispensing facilities other than where specifically authorized in the zoning bylaw was left intact. 979320 45 15

WAIT A MINUTE Moratoriums West Bridgewater Special Town Meeting of December 14, 2016, Attorney General s Office Case #8242: Temporary zoning moratorium through June 18, 2018 adopted by Town Meeting and approved by the Attorney General. Note: This moratorium was approved before Chapter 351 of the Acts of 2016, which extended dates by six months. 979320 46 WAIT A MINUTE Moratoriums Stated purposes of West Bridgewater moratorium included: studying and considering the regulation of recreational marijuana establishments and marijuana retailers and addressing the novel and complex legal, planning and public safety issues; addressing the potential impact of state regulations; and undertaking a planning process to consider zoning amendments. 979320 47 WAIT A MINUTE Moratoriums West Bridgewater s zoning moratorium was: (1) limited in time (June 30, 2018); and (2) limited in scope (use of land and structures for marijuana establishments and retailers). Questions presented from West Bridgewater approval (Footnote 2 from decision): Whether a municipality can license marijuana establishments? Whether a complete ban requires a bylaw vote or town ballot vote or both? 979320 48 16

On-Premises Consumption On-premises consumption requires a vote by the voters of the municipality at a biennial state election. To place the question on the ballot: At least 10% of the voters of the municipality voting at the last state election must sign a petition, filed with the city council or board of selectmen. The petition must comply with applicable requirements for municipal initiative petitions. 979320 49 On-Premises Consumption If a majority of voters are not in favor of allowing onpremises consumption, the municipality shall be taken to have no authorized the consumption of marijuana and marijuana products on-premises. 979320 50 It takes two to tango mitigation agreements Many municipalities have entered into mitigation/community benefits agreements with RMDs. Chapter 94G contemplates agreements between municipalities and marijuana establishments, however: Fees paid to a municipality must be: (1) directly proportional ; and (2) fees must be reasonably related to costs resulting from operation of the business. Costs to a municipality from operating the business must be documented and are a public record. 979320 51 17

Stay Away! (Buffer Requirements) A marijuana establishment cannot be located, at the time of a license application, within 500 feet of a preexisting public or private school serving kindergarten or grades 1-12. Local action: A municipality can enact an ordinance or bylaw that lessens this 500 foot buffer zone. 979320 52 Licensing The CCC must promulgate initial regulations by March 15, 2018. The CCC must issue regulations necessary to implement Chapter 94G on or before July 1, 2018, or otherwise: Each RMD can possess, cultivate, process, manufacture, package, buy, or obtain and test marijuana and marijuana products and can deliver, sell or transfer marijuana to individuals who are at least 21, until the CCC adopts necessary regulations and issues licenses. 979320 53 Licensing Licensing schedules: Marijuana testing facilities April 1, 2018; Experienced marijuana establishment operators (for 1 marijuana cultivator license, 1 marijuana product manufacturer license, and 1 marijuana retailer license) April 1, 2018; 979320 54 18

Licensing If less than 75 provisional registrations for RMDs have been issued by April 1, 2018, from all applicants for marijuana retailer, marijuana product manufacturer, and marijuana cultivator licenses on and after July 1, 2018; If this applies, the CCC is limited to licenses for 75 marijuana retailers, 75 marijuana product manufacturers, and 75 marijuana cultivators, until applications are accepted by the April 1, 2019 and April 1, 2020 deadlines below. If the CCC cannot issue licenses to all applicants, then licenses are first issued to qualified applicants that submitted RMD applications to DPH by October 1, 2015 and then by lottery among qualified applicants. 979320 55 Licensing All applicants for marijuana retailer licenses and marijuana product manufacturer licenses on and after April 1, 2019; All applicants for marijuana cultivator licenses on and after April 1, 2020. 979320 56 Licensing Once an applicant pays the application fee and completes an application, the CCC must send a copy of the application to the proposed host municipality, to determine if the applicant and the premises qualify for the license and satisfy Chapter 94G. The CCC has 90 days to issue the license or send a notice of rejection (with reasons). 979320 57 19

Licensing The CCC must issue the license if: The application is compliant with the CCC s regulations, the applicant meets the CCC s requirements, and the applicant meets Chapter 94G and the CCC s regulations, and has paid the required fee; The proposed host municipality has not notified the CCC that the marijuana establishment would violate a local control (Chapter 94G, Section 3) bylaw or ordinance in effect at the time; The proposed marijuana establishment satisfies the buffer zone requirement; and 979320 58 Licensing The controlling person of the establishment has not been convicted of a felony in Massachusetts or an offense in another state that would be a felony in Massachusetts, excluding solely a prior marijuana offense or a violation of M.G.L. c. 94C, 34, unless the offense involved distributing a controlled substance (including marijuana) to a minor. 979320 59 Licensing If the total number of marijuana establishments is properly restricted by the municipality under Chapter 94G, Section 3(a)(2) and the CCC cannot issue a license to all qualified applicants, then: Until July 1, 2018, the CCC must issue licenses first to applicants with the most experience operating RMDs and thereafter by lottery among qualified applicants; On and after July 1, 2018, the CCC must issue licenses by lottery among qualified applicants. 979320 60 20

Licensing Licenses are valid for one year, unless the CCC allows a longer renewal period. Renewal licenses are issued within 30 days of a renewal application and payment of a renewal license fee. 979320 61 Not on my property Local Action Potential: The state, municipalities, and local government agencies can prohibit or otherwise regulate possession or consumption of marijuana or marijuana products within government buildings. This can be done through regulation, bylaw or ordinance. 979320 62 Schools Chapter 94G does not allow possession or consumption: on the grounds or inside a public/private school where children attend classes in preschool programs, kindergarten programs, or grades 1-12; or on the grounds or inside a correctional facility. 979320 63 21

Private Property Chapter 94G allows a person to prohibit/regulate the consumption, display, production, processing, manufacture or sale of marijuana and marijuana accessories on property that is owned, occupied or managed. Exception: a lease cannot prevent a tenant from non-smoking consumption on or in the property unless failing to do so would result in the landlord violating a federal law or regulation. 979320 64 Employment An employer is not required to allow or accommodate conduct otherwise permitted by Chapter 94G in the workplace. Employers can adopt and enforce workplace policies limiting the consumption of marijuana by employees. Check your policies and collective bargaining agreements! 979320 65 Personal Use (Effective 12/15/16) Individuals aged 21 years and older are permitted to possess, use, purchase, process or manufacture 1 ounce or less of marijuana, with a limit of 5 grams as marijuana concentrate. Inside a primary residence, an individual may: possess up to 10 ounces of marijuana and marijuana from plants cultivated on the premises; and possess, cultivate or process up to 6 marijuana plants for personal use, with a limit of 12 marijuana plants for cultivation at any one time. 979320 66 22

Personal Use (Effective 12/15/16) An individual may give away or transfer without remuneration up to 1 ounce of marijuana, and not more than 5 grams of marijuana concentrate, to an individual who is at least 21 years old. 979320 67 Not Everything is Allowed Existing operating under the influence laws remain intact which include operating, navigating or being in control of motor vehicles, trains, aircraft, motorboats, and motorized transport or machinery Knowingly transferring marijuana, marijuana products, and marijuana accessories to underage individuals is prohibited. Cultivating or processing marijuana plants cannot be visible from a public place absent binoculars, aircraft, or optical aids, or in an area without a lock or security device. 979320 68 Not Everything is Allowed Possession of over 1 ounce of marijuana or marijuana products in a residence is prohibited unless the items are secured by a lock. No consumption in a public place; no smoking of marijuana in places where smoking tobacco is prohibited. This excludes authorized on-premises consumption and does not apply to the medical use of marijuana. 979320 69 23

What lies in the future? While the future is hazy, potential issues are: CCC regulations; Potential legislative action; Clarification on opt-out procedures/language; Clarification on pot cafes (on-site consumption); Local action zoning and general bylaws; Local taxation; and Federal involvement. 979320 70 In closing Questions? Comments? Concerns? 979320 71 24