WHATELY – Recent changes to the commonwealth’s marijuana laws did not sit well with Town Administrator Brian Domina. The new regulations are tilted so favorably toward cannabis business owners that it may not be worth the risk to allow them to open in the town, he opined.

“You want the bad news first, or the bad news?” Domina asked the Select Board. He characterized the changes as “heavily in favor of the cannabis industry and … I would almost go so far as to say they are hostile to municipalities.”

The bills recently passed on Beacon Hill focus on three areas of regulation. A social equity fund was established to assist those injured by the cannabis prohibition of the past. Changes were also made to pave the way for cannabis consumption lounges, which have yet to be licensed. Revisions to the host-community agreement process, and so-called user impact fees charged to business operators by communities, however, were the changes that troubled Domina, who twice said, “It’s disappointing for me to see this.”

In the past, municipalities negotiated an agreement with cannabis business owners that returned up to 3 percent of gross sales to the municipality, fees intended to offset any impacts to a town’s infrastructure by the operations of the business. Whately has eleven such agreements, but only one active facility. Business owners complained that towns were overcharging on impact fees and pointed to Jasiel Correia, the former mayor of Fall River, who was found guilty of extorting excessive impact fees from cannabis business owners and sentenced to six years in prison.

The new regulations, according to Domina, also leave important questions unanswered about host-community agreements. The laws originally governing the industry never specified what constitutes an acceptable agreement.

“I have expressed this to our legislators,” Domina said. “We don’t really know what is a community impact, under the statute. I had hoped that they would include some definitions as to what those impacts might be, which would give municipalities some currency as to what costs they could address with community impact fees. We just don’t know.”

Impact fees have been a chronic source of bewilderment for both municipalities and cannabis businesses. During the start-up phase the fees are used to entice municipalities to welcome cannabis shops. After the grand opening, owners see the impact fees as “blackmail” paid to open the doors. The city of Northampton, however, seems to agree the fees are excessive. The city stopped collecting them after $2 million in fees accrued in a bank account.

“What are those impacts? And can we quantify them?” Domina asked. “No question that I think we need to grapple with, over the next couple months, what we think those impacts are, and can we quantify them … It’s a big change. It makes the community impact fee not attractive at this point, because of all the paperwork.”

And the loss of control to the state. And the increased possibility of litigation.

The new regulations provide a legislative remedy for breach of contract claims by cannabis businesses. Business owners that feel a municipality charges too much in impact fees can sue for breach of contract and secure reimbursement for attorney fees. The regulatory change gives legal teeth to cannabis businesses fighting excessive fees, but tips the balance for towns to an unacceptable exposure to risk.

Select Board member Fred Baron understood the town’s increased risk would come from unanticipated outcomes. “Our attorney’s fees could be more than what we get from the [impact] fee,” Baron said.

Board Chair Joyce Palmer-Fortune grew indignant when discussion turned to the Cannabis Control Commission’s (CCC) increased oversight of host-community agreements (HCA). Under the new regulations, the CCC has greater control over what constitutes a well-written host-community agreement. The CCC also has the new authority to reject an agreement, even if an applicant and municipality both signed it. That change is intended to promote diversity in cannabis business applicants – but again, the changes highlight problems in the original laws.

“Everybody who comes through the door gets [a host-community agreement]. You get an HCA. and you get an HCA,” Palmer-Fortune said. “We are not discriminating against anybody in our host community agreements, so I don’t know what this means, ‘minimum standards for facilitating opportunity’.”

Standards for promoting diversity among applicants are among the added municipal statutes required under the new regulations. Domina showed little patience with the new demands on towns.

“With the addition of the breach of contract claims, the damages, the attorneys fees, and then this sort of threat that if we don’t adopt these policies that we’re going to forfeit a monetary amount equal to the annual total amount of community impact fees,” Domina said, “I don’t know. It just seems towns are being made the scapegoats for a lot of problems within the industry.”

Board member Julia Waggoner took Domina’s point of view. “I agree,” Waggoner said. “It’s weird to put it on local communities.”

Judy Markland, a member of the Planning Board, offered a more temperate opinion of the changes. Markland thought the CCC revisited the impact fee to reconsider whether it’s at all necessary.

“Community impact fees were supposed to be related to the expenses,” Markland said. “It was originally thought those expenses would be rather high. But it turns out they’re not.”

Markland also prodded the board to think more about consumption lounges. A local resident is waiting to apply for a license for a cannabis café, according to Palmer-Fortune. Markland sounded a warning on the many possible problems.

“We don’t know about ventilation. We don’t know about parking. We don’t know about employees, the exposure. There’s phenomenal numbers of issues involved that we have no knowledge of,” Markland said. “We tend to be ahead of the curve, in Franklin County, [and] this is gonna be the next thing on the horizon.”