A communication transmitted from Louis A. DePasquale, City Manager, relative to a response to questions contained in Policy Order Number 5 of April 29, 2019 regarding the proposed Cannabis Business Permitting Ordinance

Assistant City Solicitors Nancy E. Glowa Paul S. Kawai City Solicitor Keplin K. U. Allwaters THRIS ANTIOWE Sean M. McKendry Arthur J. Goldberg Deputy City Solicitor Samuel A. Aylesworth First Assistant City Solicitor Public Records Access Officer Seah Levy CITY OF CAMBRIDGE Office of the City Solicitor 795 Massachusetts Avenue Cambridge, Massachusetts 02139 May 6, 2019 Louis A. DePasquale City Manager City Hall Cambridge, MA 02139 Re: Response to Council Order No. O-5 of 4/29/19 re: Cannabis Business Permitting Ordinance Dear Mr. DePasquale: The City Council has asked for responses to be provided as soon as possible to the late order referred to above, which was passed its last meeting of Monday April 29, 2019, relating to several additional questions about the draft Cannabis Business Permitting Ordinance. As stated in the above referenced late order, the questions are as follows: 1. "Provide a list of all 6 RMDs seeking to or operating in Cambridge, including their licensing status, and which 5 were licensed by the state prior to July 2017, and which of them are seeking to convert to adult use at this time." The following RMDs have been granted special permits by the Planning Board: • Sira Naturals (formerly Sage Naturals) - 1001 Massachusetts Avenue • Final Certificate of Registration issued 3/8/2017 • Intends to apply for a Marijuana Retailer license (meeting 4/30/2019) • Healthy Pharms - 98 Winthrop Street • Final Certificate of Registration issued 10/7/2016 • Intends to apply for a Marijuana Retailer license (meeting 8/27/2018) • Revolutionary Clinics - 110 Fawcett Street • Provisional Certificate of Registration issued 7/27/2016 • Final Certificate of Registration issued 9/4/2018 • Intends to apply for a medical and adult-use retail marijuana establishment at this location (meeting 5/13/2019) • Revolutionary Clinics - 541 Massachusetts Avenue TTY/TTD [phone removed] Facsimile [phone removed] Telephone [phone removed]

2 • Provisional Certificate of Registration issued 6/2/2017 • No Final Certificate of Registration • Intends to apply for a medical and adult-use retail marijuana establishment at this location (meeting 4/24/2019) • Commonwealth Alternative Care LLC - 1385 Cambridge Street • Provisional Certificate of Registration issued 4/21/2017 • No Final Certificate of Registration • No community meeting to date re: adult-use retail • Ascend Mass LLC - 200 Monsignor O'Brien Highway • No Provisional or Final Certificate of Registration (per information available on Mass. Medical Marijuana web site) • No community meeting to date re: adult-use retail 2. "Add provision to ordinance for shelf space as a percentage." A provision could be added to the draft Cannabis Business Permitting Ordinance at $5.50.050, where the permitting requirements are listed, that an applicant must certify that it will set aside at least 10% of its shelf space for cannabis and cannabis accessories to be provided by Economic Empowerment or Social Equity licensees approved by the Cannabis Control Commission. There are a number of difficult practical considerations with such a "shelf space" requirement however, including: how will the entity/ies who are given access to sell their products on another business's property be chosen; will the entity using the shelf space be entitled to the entire amount of revenue generated from the sales or can they be required to profit share with the host business; will the entity being provided the shelf space be required to enter into a host community agreement with the City; will the entity being provided shelf space be required to obtain a local Cannabis Business Permit in some form? In my opinion, given the multitude of practical issues needing resolution regarding a "shelf space" program prior to implementation, the City Council could stipulate a shelf space requirement in the Ordinance as something to be accomplished over time, pursuant to regulations to be promulgated by the Assistant City Manager for Community Development pursuant to §5.50.090 of the Ordinance. CDD notes that compliance with such a requirement could be difficult to confirm and enforce. 3. "What can be included in community host agreements." G.L.c.94G, §3(d) provides that there must be a host community agreement (HCA) between a municipality and a marijuana establishment: ...setting forth the conditions to have a marijuana establishment or medical marijuana treatment center located within the host community which shall include, but not be limited to, all stipulations of responsibilities between the 2

3 host community and the marijuana establishment or a medical marijuana treatment center. An agreement between a marijuana establishment or a medical marijuana treatment center and a host community may include a community impact fee for the host community; provided, however, that the community impact fee shall be reasonably related to the costs imposed upon the municipality by the operation of the marijuana establishment or medical marijuana treatment center and shall not amount to more than 3 per cent of the gross sales of the marijuana establishment or medical marijuana treatment center or be effective for longer than 5 years. It does not appear that financial contributions beyond the 3% community impact fee are permitted to be imposed by municipalities through HCAs. 4. "Can we require RMD to continue to supply medical products while converting to adult use and exactly what aspects of RMD conversion to adult use can we regulate." RMDs converting to adult use must still obtain a Planning Board special permit and enter into an HCA with the City. The proposed Cannabis Business Permitting Ordinance would also impose various conditions on converting RMDs. What the City may not do pursuant to G.L.c.94G, §3(a)(1) is "prevent the conversion of a medical marijuana treatment center licensed or registered not later than July 1, 2017 engaged in the cultivation, manufacture or sale of marijuana or marijuana products to a marijuana establishment engaged in the same type of activity...." The Cannabis Control Commission is prohibited by state law at G.L.c.94G, §4(c)(4) from prohibiting an RMD from co-locating with an adult use establishment. The Cannabis Control Commission's "Guidance for Municipalities" at p. 10 states that its interpretation of the above statutory language is that it prohibits municipalities from preventing conversion of RMS to an entirely different form of a marijuana establishment, such as one for retail use only. 5. "Provide guidance on residential component of 50% AMI versus neighborhood revitalization strategy areas; specifically, concerns about potential use of this provision by outside parties to buy their way in to cannabis retail in Cambridge and how we can best prevent that." CDD notes that Cambridge residency can be difficult to prove if a person is living unofficially, such as, for example, as a sub-tenant. CDD recommends that if income limits are considered, current income limits used by CDD and other agencies to determine eligibility for housing assistance programs be used. CDD's are set forth at: https://www.cambridgema.gov/~/media/Files/CDD/Housing/incomelimits/hud2018incom elimitsforwebwithcdbglimits_060118.ashx; and those used by the Massachusetts Cannabis Control Commission for Housing Income Limits are set forth at: https://mass- cannabis-control.com/wp-content/uploads/2018/11/Household-Income-Limits.pdf. CDD states that using Neighborhood Revitalization Areas based on census tracts are likely not as good an indicator as income limits, due to current housing affordability in Cambridge. 3

4 6. "Can exclusionary period be indefinite." In my opinion, the exclusionary period may not be indefinite because it is possible that it would result in the City allowing fewer than the minimum number of retail cannabis businesses in the City that the City must allow. One way to address this concern would be to state in the ordinance that there will be an exclusionary period for 2 or 3 years, and such period will expire at that time unless the City has the minimum number of retail cannabis businesses required by law then operating in the City. Answer #1 to the legal opinion provided by this office to the Council on April 29 also addressed this issue. 7. "Provide guidance on if and how we could design a program that would give priority to both Economic Empowerment applicants and Social Equity applicants, and that would give meaningful priority to Economic Empowerment applicants over Social Equity applicants within that priority group." One option to give Economic Empowerment applicants priority over Social Equity applicants is to make them both Priority Applicants but to provide that the Economic Empowerment applicants would have an exclusivity period for the first year after passage of the ordinance, and then Economic Empowerment and Social Equity applicants both have an exclusivity period thereafter. 8. "Provide clarity on how we would enforce the minority board membership and minority employee requirements and how we would phase them in for existing entities." The simplest way to enforce these requirements would be to require applicants to submit documentation to the City establishing their compliance with these requirements when they come to the City for their annual business permit renewal. If a one-year phase-in period for existing entities is determined to be onerous, then at the first one-year renewal point, the City could require a statement as to progress made toward the requirements, and could require that full compliance be achieved by the second annual renewal. CDD recommends that establishments be required to provide a signed affidavit confirming the number of board members if the board is in existence at the time of the application, and that establishments would then be given a one-year phase-in period from the date of the application to come into compliance. CDD also recommends requiring an annual signed affidavit from the establishment confirming the minority make-up of its staff. If all staff is in place at the time of the application, a phase-in period, which would include annual reporting as to the establishment's employee transition plan to reach the 51% level, would be required. 9. "What is the current minimum number of cannabis retail establishments that we must allow." 4

5 Eight. The License Commission advises that currently it has issued a total of 39 package store licenses, with one more expected to soon receive final approvals. G.L.c.94G, §3(a)(2)(ii) states the City may not limit the number of cannabis retailers to fewer than 20% of the number of those licenses. Twenty percent of forty is eight. Very truly yours, Nancy E, Glowa City Solicitor 5