Worcester Business Journal

8 Worcester Business Journal | November 25, 2019 | wbjournal.com Local officials are speculating about nature of U.S. attorney requests of host community agreements Marijuana subpoenas cause a stir Cultivate in Leicester was the first of two recreational marijuana stores to open in Massachusetts on Nov. 20, 2018, creating long lines of people waiting to buy legal cannabis. Since then, Mass. marijuana retailers have sold $364 million in product. People. Places. Product. Photographic images for advertising, public relations, graphic and corporate communications groups . See the difference. 165 Holly Lane • Holliston, MA 01746 Phone/Fax: 508.429.3188 • www.ronbouleyphoto.com R O N B O U L E Y P H O T O G R A P H Y BY LIVIA GERSHON Special to the Worcester Business Journal W hen they looked in their email a few weeks ago and found subpoenas from U.S. Attorney Andrew Lelling's office looking into their rela- tionships with marijuana businesses, leaders in communities across Central Massachusetts, and the rest of the state, were surprised. "Usually I don't see a lot of federal grand jury subpoenas – it might be the first in my career," said Shaun Suhoski, Athol's town manager. Even as communities like Athol, Worcester, Uxbridge, Leicester and Hudson scrambled to comply with the extensive demands for local records, it remains unclear exactly what the grand jury hopes to find. "I can only surmise, like anyone else," Suhoski said. "It's not like it came with a letter explaining why." City and town leaders, as well as peo- ple within the state's growing cannabis industry do have some guesses. "e first thing that pops up in everybody's mind is what's alleged to have gone on in Fall River," said Phillip Silverman, a Boston-based attorney with Vicente Sederberg LLC, a national firm focusing on the cannabis industry. In September, Lelling's office charged Fall River Mayor Jasiel Correia with extorting bribes from cannabis business- es. But Silverman said it's not clear how subpoenaing municipal records would turn up that kind of illegality. "It's not exactly like there's going to be a document that lays out the corrupt scheme," he said. "Maybe they're just dotting all their i's and crossing all their t's." Illegal host agreements Aside from gross corruption, Silverman said, the other common assumption in the industry is Lelling is investigating violations of host commu- nity agreements, an aspect of the state's regulation of the cannabis industry that has been highly controversial. "I find that really hard to believe," Sil- verman said, noting HCAs are a matter of state law and, if the federal govern- ment wanted to intervene in cannabis sales, it could just start enforcing federal drug laws, which it has so far declined to do in states legalizing recreational cannabis. In any case, the investigation has stirred up new discussions of the HCAs, which in some cases seem to make demands on cannabis businesses to go beyond what state law allows. e law limits impact fees charged by cities and towns to 3% of a company's gross sales and requires they only represent actual costs related to having the businesses in town. Yet a number of local agreements include additional requirements. Steven Hoffman, chairman of the industry regulator Massachusetts Can- nabis Control Commission, wouldn't comment on the federal investigation, but he said the broader issue of HCAs is important to the CCC. Hoffman said some agreements include flat fees rather than payments based on sales, donations to outside charities, or even require a company to pay for municipal expenses like a new fire truck. While the CCC believes these provisions violate the state law, the agen- cy has determined it doesn't have the authority to intervene in the contents of the local agreements. It has asked the Massachusetts legislature to grant it that authority, and a bill on the topic is now moving through the legislative process. e inclusion of expensive demands in the HCAs is particularly troubling be- cause Massachusetts has sought to make sure small businesses and entrepreneurs from disadvantaged backgrounds have access to the cannabis market, Hoffman said. "e issue absolutely is a significant barrier in the way of equity and diversi- ty," he said. "It's a very important issue to us." Matt Simon, New England political director for the Marijuana Policy Project and a member of the draing committee that wrote the state's law regulating the cannabis industry, said he had expected state regulators would review the host

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