Breaking Down Bill H.3818

On July 28, 2017, Governor Baker signed into law H. 3818, “An Act to Ensure Safe Access to Marijuana,” which was passed by state legislators to update state laws governing the cultivation, sale, and use of marijuana, following voter approval in 2016. The Act was characterized as an emergency law and declared “necessary for the immediate preservation of the public convenience,” and the majority of its provisions pertain to the establishment of a five-member Cannabis Control Commission, the purpose and duties of which are relative to the regulation of the recreational and medical marijuana industries in the Commonwealth. The law additionally calls for the creation of a 25-member Cannabis Advisory Board, consisting of members chosen for their expertise and knowledge relative to the Board’s mission.

In addition to the establishment of the Commission and the Board, the Act:

– Permits a municipality to establish zoning by-laws or ordinances, which allow commercial marijuana growing and cultivation on land used for commercial agriculture, aquaculture, floriculture, or horticulture;

– Permits a city or town to impose a local sales tax upon the sale or transfer of marijuana or marijuana products by a retailer operating within the city or town to anyone other than a marijuana establishment, but not a rate greater than 3% of the total sales price;

– Permits a city or town to limit the number of marijuana establishments in the case of a city or town in which the majority of voters voted affirmative for Question 4 on the 2016 ballot;

– States that no local ordinance or by-law may impose a standard for signage more restrictive than those applicable to retail establishments that sell alcoholic beverages within that city or town;

– Provides the Commission the right to: receive from state police criminal offense record information as necessary for the purpose of evaluating licensees or applicants for license; inspect and have access to all equipment and supplies in a marijuana establishment; seize and remove from a marijuana establishment and impound any marijuana, equipment, supplies, and records in violation of the law for purpose of examination and inspection; for cause, demand access to and inspect all papers, books, and records of close associates of licensees whom the Commission suspects is involved in the financing, operating, or management of the licensees; impose fees and fines as sanctions; conduct adjudicatory proceedings and promulgate regulations in accordance with Chapter 30A; and refer cases to criminal prosecution to the appropriate federal, state, or local authorities;

– Provides that the regulations to be promulgated by the Commission shall include: method and forms of application for licenses, schedule of application, license and renewal fees, qualification for licensure and minimum standards, procedures, and policies to promote and encourage full participation in the marijuana industry by people in communities that have been previously disproportionately harmed by marijuana prohibition and enforcement; standards for licensure of marijuana establishments; standards for reporting or payment of licensure fees or taxes; criteria for evaluation and information that must be furnished by a licensee relative to its employees; procedures and grounds for revocation or suspicion of a license; record-keeping requirements; training of employees; minimum security requirements and standards for liability insurance coverage; procedures to prevent the sale of marijuana to persons under 21 years of age; health and safety standards; requirements for labeling and packaging of marijuana products; requirements for potency or dosing limitations of edible products; and requirements for branding, marketing, and advertising of marijuana products;

– Directs the Commission to investigate, in conjunction with the Department of Public Health, the effect of marijuana on the human body and whether there should be restrictions on the potency of marijuana;

– Directs the Commission to annually review the established tax rate of marijuana and marijuana products, and make recommendations as appropriate;

– Directs the Commission to promulgate advisory guidelines and best practices on the cultivating of marijuana within a person’s primary residence;

– Clarifies that no licensee shall operate a marijuana establishment without an operations certificate issued by the Commission, and that each licensee must file an emergency response plan with the fire and police departments of the host community;

– Directs the Commission to promulgate regulations of the license and oversight of independent testing labors, and establish testing protocols for the sampling, testing, and analysis of marijuana;

– Requires that no licensee shall be granted more than three marijuana retailer licenses, three medical marijuana treatment licenses, three marijuana product manufacturer licenses or three marijuana cultivator licenses; provided, however, that a licensee may hold three marijuana retailer licenses, three medical marijuana treatment licenses, three marijuana product manufacturer licenses or three marijuana cultivator licenses;

– Directs the Commission to develop a research agenda in order to understand the social and economic trends of marijuana in the Commonwealth, to inform future decisions that would aid in the closure of the illicit marketplace and to inform the Commission of the public health impacts of marijuana;

– Requires that the Commission audit, as often as it determines necessary, the account programs, activities, and functions of all licensees, and have access to all required books and records, except tax returns;

– Requires the Commission to operate a medical use of marijuana program that permits a qualifying patient to obtain certification from a healthcare professional to purchase medical marijuana and maintain a confidential list of qualifying patients;

– Directs the Commission, in connection with the Department of Public Health and Office of Public Safety, to establish science-based and public awareness campaigns;

– Requires the Commission to prioritize review and licensing decisions for applicants for retail, manufacture, or cultivation licenses that are registered dispensaries with a final or provisional certificate of registration in good standing with the Department of Public Health, or that demonstrate experience in or business practices that promote empowerment in communication disproportionately impacted by high rates of arrest for offenses under Chapter 94C;

– Requires the Commission to make a recommendation to the legislature by July 1, 2018, regarding a procedure for civil citations issued for violations of the Act;

– Requires the Commission to issue a report to the Attorney General by July 1, 2020, on the advisability of establishing criminal penalties for violations of the Act;

– Directs the Commission to conduct a study of women and minority participation in the marijuana industry;

– Calls for the creation of a 13-member Special Committee on operating under the influence and impaired driving, to conduct a comprehensive study relative to the regulation and testing of operating under the influence of marijuana and other narcotic drugs. The Special Committee shall review all aspects of law enforcement to test impaired operators and prevent impaired operation of motor vehicles;

– Establishes a deadline of no later than April 1, 2018, for the Commission to begin to accepting applications for licenses pursuant to Chapter 94G;

– Permits any person holding a provisional or final certificate of registration as of July 1, 2017, to dispense medical marijuana, or any application pending before the Department of Public Health, to convert from a non‐profit corporation into a domestic business corporation or other domestic entity. The entity conversion will not result in the imposition of any tax by the Commonwealth; and

– Establishes a tax rate that attempts to balance state and local revenue needs without creating excessive market prices that may encourage black market use. The Act permits a local sales tax and requires host agreements between operators and the cities and towns in which they stipulate to all responsibilities between the host community and the marijuana establishment or treatment center. The tax rates are established as: a 10.75% state excise tax, a 6.25% state sales tax, up to a 3% option local sales tax, and a host agreement with a cap of 3% on gross revenue. Most notably, medical marijuana remains untaxed.

We will continue to provide updates relative to activities of the Commission, the Board, and the Special Committee.

The full text of H. 3818 can be accessed by clicking here.