SALEM — A Salem Superior Court judge has denied a rejected pot retailer's bid to include the Cannabis Control Commission in its lawsuit against Salem.
But an attorney for Mederi says the suit still sparked discussion over whether agreements signed between marijuana retailers and their communities lock in payments that go beyond what state law allows.
In a decision released Friday, Judge Timothy Feeley said Mederi is "trying to stop license applications pending before the CCC that involve others' rights and interests, and not its own.
"Mederi is not a party to any pending application before the CCC. The court finds that no duty is owed by the CCC to Mederi, an unsuccessful applicant for an HCA (host community agreement) that is not able to file a complete license application with the CCC," Feeley wrote. "Mederi's dispute is with the City, not with the CCC."
Mederi had argued the commission holds the legal power to review host community agreements, which are pacts between a community and marijuana retailers that are vital in the state licensing process. Mederi also sought to overturn agreements Salem had signed with other pot companies, saying the deals' financial requirements are overreaching.
The challenge, had it ended in Mederi's favor, could have set a precedent for host agreements across the state, where businesses have agreed to charitable donations and fees above the maximum 3 percent "community impact fee" outlined in state law.
Mederi was one of eight applicants for four available retail pot licenses in Salem (the fifth went to Alternative Therapies Group, which had already been operating a medical marijuana dispensary on Grove Street). Although the company received a special permit, the city chose not enter into a host agreement with Mederi.
Mederi's case is still open because of judicial review into how the city narrowed the pool of applicants, which allowed the four remaining to apply for licenses with the CCC.
In his 28-page decision, Feeley rejected Mederi's bid to bring the commission into the lawsuit. In the latest stage, he wrote, the company "has switched its attack from the city's refusal to enter into an HCA with it, to an attack on the HCAs held by the four applicants currently before the CCC."
In a statement, mayor's Chief of Staff Dominick Pangallo said the city is pleased with Feeley's decision.
"We remain steadfast in our belief that the process followed to review and approve retail cannabis Host Community Agreements in the city of Salem was transparent, fair and professional," Pangallo said. "The city of Salem has worked earnestly over the last several months to objectively implement both the law and the will of the voters who approved of this new industry."
Questioning host agreements
Despite Feeley's ruling, Mederi attorney Michael Tucker considered the motion successful because it spotlighted the broader context of oversized host agreements.
"The judge declined to invite the Cannabis Control Commission into our case, and he explained in his decision that the reason for that was because we weren't in front of the CCC. Of course, that's the problem," Tucker said. "Nothing the judge said was factually incorrect, but the question remains — what does the CCC believe it's doing when it is certifying these as lawful? That's a question that's playing out across the state."
From that perspective, Tucker said, "the motion created the conversation we were hoping to have."
"It's going to need to be resolved, because there are too many people investing too much of their livelihoods (launching businesses)," he said. The state's recreational pot law "is a brand-new statute. The ink is still wet, and people are still trying to understand what that means."
Mederi isn't alone. Since host agreements in other communities started going public in mid-2018, several groups around the state have highlighted the size of the agreements and challenged the legality of any financial obligations in them beyond a 3 percent fee on all sales to rectify any so-called "community impact" from the business.
In Salem, all four deals mirror an earlier one signed to Alternative Therapies Group, which had a 3 percent community impact fee, a separate 3 percent fee on sales, an added 1 percent fee to power work on transit options, and $25,000 in donations to area charities.
Mederi has argued that the CCC has the power to review host agreements and determine their legality. That was also the view of Beacon Hill's Joint Marijuana Policy Committee, which wrote to CCC Chairman Steven Hoffman last year on the subject.
In their co-signed letter, state Sen. Patricia Jehlen, D-Somerville, and state Rep. Mark Cusack, D-Braintree, wrote that the CCC "has the authority and is required to therefore review any such community host agreements to ensure their compliance with statute." That includes ensuring any financial ties in the deals don't total more than "3 percent of gross sales."
On Jan. 30, Feeley threw out the first count of Mederi's lawsuit, which aimed to stop the city from cutting deals with other businesses. A final count, which questions the legality of the city's process of issuing host agreements, remains.
"Right now, it's in Judge Feeley's court," Tucker said, "and he's the one being asked to decide."