State House Amends and Passes Bill on Host Community Agreements

On Tuesday, I blogged about H 4367, a bill that would amend the statutory language that defines permissible scope of community impact fees in Host Community Agreements (“HCAs”) and would grant to Cannabis Control Commission authority to regulate HCA.  Soon after I posted the blog, the House passed the bill with two substantive amendments.

The first amendment, offered by Representative Kane, clarifies that while the 3% community impact fee is the only fee a locality can collect in an HCA, cannabis companies are free to voluntarily make charitable contributions to organizations in the community after the HCA has been executed.  The idea here is to ensure that localities do not make charitable contributions a condition of entering an HCA – as is now a common practice – but at the same time to allow cannabis companies to support community organizations. Many already do and will continue to voluntarily.

The second amendment, offered by Representative Gregoire, ensures that the CCC cannot deny a license to a cannabis company based on a non-compliant HCA.  The amendment states that “No applicant, licensee, or holder of a provisional or final certificate of registration shall be denied a license, registration, renewal thereof by the commission on the sole basis of an agreement containing an invalid term or condition related to the community impact fee.”  Instead, the amendment makes all “terms and conditions related to the community impact fee severable,” meaning that the Commission can invalidate non-compliant terms without invalidating an entire HCA.

This provision would likely save cannabis companies from having to re-negotiate and amend their HCAs to bring them into compliance with the bill’s new restrictions on payments to localities.  It appears to give the CCC exclusive authority to reform HCAs by “severing” provisions for non-compliance, while the executed HCA remains operative.

The bill will now proceed to the Senate and then potentially to a conference committee.  If the bill is approved by both legislative chambers, it will advance to the Governor’s desk for his signature.  We will be monitoring this bill closely.

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