Massachusetts House lawmakers approved a bill Wednesday that would tighten oversight of payments made by marijuana companies to the cities and towns that host them.
The bill, which passed by a 121-33 vote, would give the state’s Cannabis Control Commission the power to review, regulate and enforce host community agreements following criticism that some local officials have used the contracts to demand more money from companies than is allowed under state law.
By law, each marijuana firm is required to sign an agreement with the community it plans to operate in before applying for a state license.
The contracts normally call for substantial payments to the municipality. Massachusetts voters approved recreational marijuana use and sales in 2016.
Critics have complained that the payments create an unfair barrier to smaller cannabis businesses and end up favoring deep-pocketed marijuana entrepreneurs.
Under the existing law, the fee that communities charge a company must be related to the costs imposed on the city or town by the operation of the marijuana business and can’t amount to more than 3% of the gross sales of the business. The fee remains in effect for five years.
The communities must document the costs, which are considered a public record.
Rep. David Rogers, a Cambridge Democrat, said the goal of the bill is to make sure municipalities aren’t pressuring businesses for fees that exceed those allowed under the law — a move that could price out smaller businesses.
“It’s come to light that some of these agreements impose financial obligations that go beyond 3%,” Rogers said during Wednesday’s debate. “Smaller businesses have great difficulties paying more than the 3%.”
The bill would also give cities and towns the option of waiving a host community agreement.
The Boston Globe reported in November that a Massachusetts grand jury was investigating contracts and payments between municipalities and the marijuana companies they host.
The grand jury was convened by U.S. Attorney Andrew Lelling and is part of a larger effort by federal prosecutors to curb local corruption related to the cannabis industry.
Lelling’s office sent subpoenas to at least six communities regarding information about their host community agreements.
Last year, Lelling’s office also charged former Fall River Mayor Jasiel Correia with extorting hundreds of thousands of dollars from marijuana companies seeking to operate in his city near the Rhode Island state line.
Correia has pleaded not guilty to the charges.
In November, Boston Mayor Marty Walsh signed an new ordinance he said would serve as “a model for how to create a system that fosters racial equity and inclusion in the new marijuana industry.”
The ordinance requires the city to create a category of “municipal equity applicants,” defined as businesses where a majority of the company is owned by Boston residents, racial minorities, people who have drug records, are poor, or who live in communities with high drug arrest rates.
Under the ordinance, the state cannabis commission is required to approve at least one equity applicant for every general applicant. The ordinance also creates a new fund to help equity applicants set up their businesses.
“This ordinance ensures those who have been impacted hardest by the war on drugs will benefit most from this economic opportunity.” Walsh said.