Mederi, INC. v. City of Salem, 121919 MASUP, 1877CV01878

Docket Nº:CIVIL ACTION 1877CV01878
Opinion Judge:Jeffrey T. Karp, Associate Justice
Party Name:MEDERI, INC. v. CITY OF SALEM & another[1]
Case Date:December 19, 2019
Court:Superior Court of Massachusetts
 
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MEDERI, INC.

v.

CITY OF SALEM & another[1]

CIVIL ACTION No. 1877CV01878

Superior Court of Massachusetts, Essex

December 19, 2019

MEMORANDUM OF DECISION AND ORDER ON CROSS-MOTIONS FOR JUDGMENT ON THE PLEADINGS (PAPER NOS. 39 AND 39.6)

Jeffrey T. Karp, Associate Justice

Plaintiff Mederi, Inc. ("Mederi"), like many entities, seeks to obtain a license to operate a retail marijuana establishment ("RME") in Salem, Massachusetts under the recently enacted "Regulation of the Use and Distribution of Marijuana Not Medically Prescribed" at G.L. c. 94G, § § 1, et seq. ("Act"). Such licenses are granted by the Cannabis Control Commission ("CCC"). See generally G.L. c. 94G, § § 3 and 5.

Mederi commenced this action on December 21, 2018, after defendants City of Salem ("City") and Salem Mayor Kimberley l. Driscoll ("Mayor") notified it that it had not been selected as one of the entities with which the City would execute a host community agreement ("HCA"). The City’s refusal to execute an HCA with Mederi effectively precludes Mederi from being able to obtain a license to operate an RME in the City because an HCA is a required part of the state-level application for the licensure of RMEs by the CCC.

On October 10 and 30, 2019, the parties were before the Court for a hearing on Plaintiff’s Motion For Judgment On The Pleadings (Paper No. 39) and Defendants City Of Salem And Mayor Kimberley L. Driscoll’s Cross Motion For Judgment On The Pleadings (Paper No. 39.6).2 The parties seek judgment on the pleadings on Count II of Mederi’s First Amended Verified Complaint (Paper No. 16), which requests relief in the nature of certiorari under G. L. c. 249, § 4.3

As is fully stated below, Mederi’s motion for judgment on the pleadings is DENIED and the defendants’ cross-motion for judgment on the pleadings is ALLOWED .

I. OVERVIEW

As stated, in Count II of the First Amended Verified Complaint Mederi seeks certiorari review of the defendants’ refusal to enter into an HCA with it. Mederi claims that the defendants acted arbitrarily or capriciously in declining to enter into an HCA with it, and that without an HCA, it cannot apply to the CCC for an RME. Mederi further argues that the defendants’ decision to execute HCAs with other applicants over it was based on impermissible grounds and not supported by substantial evidence. Also, Mederi alleges that the defendants exceeded their authority in refusing to enter into an HCA because the CCC has the sole authority under the Act to determine which applicants may be awarded RMEs.

II. REGULATORY FRAMEWORK OF THE ACT

A. Introduction

At the heart of this dispute is the division of authority over the licensing of RMEs between local municipalities and the CCC, the state agency tasked with regulating the sale of recreational marijuana in the Commonwealth. As a result, the Court will examine in detail the applicable statutory and regulatory scheme.

On December 15, 2016, the "Regulation and Taxation of Marijuana Act," St. 2016, c. 334, § § 1 - 12 ("Marijuana Act"), became effective after having been approved by voters in November 2016. Generally speaking, the Marijuana Act, codified at G.L. c. 94G, § 1 et. seq., authorized, inter alia, the sale of marijuana to adults for recreational use.4

On July 28, 2017, the Governor signed into law Chapter 55 of the Acts of 2017, "An Act to Ensure Safe Access to Marijuana," which amended the Marijuana Act, at Chapter 94G ("Act").

B. The Role of Municipalities

Section 3 of the Act, entitled "Local Control," permits a city or town to, among other things, "adopt ordinances and zoning by-laws that impose reasonable safeguards on the operation of marijuana establishments [including RMEs] provided they are not unreasonably impracticable and are not in conflict with this chapter or with regulations made pursuant to this chapter." Such ordinances and by-laws may "govern the time, place and manner of [RME] operations" and "limit the number of [RMEs] in the city or town." G.L. c. 94G, § 3(a).

Section 3 also includes the following provision regarding HCAs (in pertinent part): A marijuana establishment5 ... seeking to operate or continue to operate in a municipality which permits such operation shall execute an agreement with the host community6 setting forth the conditions to have a marijuana establishment ... located within the host community which shall include, but not be limited to, all stipulations of responsibilities between the host community and the marijuana establishment or a medical marijuana treatment center. An agreement between a marijuana establishment ... 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. ...

G.L. c. 94G, § 3(d).

C. The Cannabis Control Commission

Section 4 of the Act sets forth the various responsibilities of the CCC, the five-member commission tasked with overseeing the use and distribution of recreational marijuana pursuant to the Act.7 Under that section, the CCC: [S]hall have all the powers necessary or convenient to carry out and effectuate its purposes including, but not limited to, the power to: ...

(ix) require an applicant for licensure under this chapter to apply for such licensure and approve or disapprove any such application or other transactions, events and processes as provided in this chapter;

(x) determine which applicants shall be awarded licenses;

(xi) deny an application or limit, condition, restrict, revoke or suspend a license. ...

G.L. c. 94G, § 4(a).

Section 5 of the Act, entitled "Licensing of Marijuana Establishments," provides, (

  1. Upon receipt of a complete marijuana establishment license application and the application fee, the commission shall forward a copy of the application to the city or town in which the marijuana establishment is to be located, determine whether the applicant and the premises qualify for the license and has complied with this chapter and shall, within 90 days:

(1) issue the appropriate license; or

(2) send to the applicant a notice of rejection setting forth specific reasons why the commission did not approve the license application.

(b) The commission shall approve a marijuana establishment license application and issue a license if:

(1) the prospective marijuana establishment has submitted an application in compliance with regulations made by the commission, the applicant satisfies the requirements established by the commission, the applicant is in compliance with this chapter and the regulations made by the commission and the applicant has paid the required fee;

(2) the commission is not notified by the city or town in which the proposed marijuana establishment will be located that the proposed marijuana establishment is not in compliance with an ordinance or by-law consistent with section 3 of this chapter and in effect at the time of application;

(3) the property where the proposed marijuana establishment is to be located, at the time the license application is received by the commission, is not located within 500 feet of a pre-existing public or private school providing education in kindergarten or any of grades 1 through 12, unless a city or town adopts an ordinance or bylaw that reduces the distance requirement; and

(4) an individual who will be a controlling person of the proposed marijuana establishment has not been convicted of a felony or convicted of an offense in another state that would be a felony in the commonwealth, except a prior conviction solely for a marijuana offense or solely for a violation of section 34 of chapter 94C of the General Laws, unless the offense involved distribution of a controlled substance, including marijuana, to a minor.

G. L. c. 94G, § 5(a) - (b).

D. The Regulations Regarding Applicants For RMEs

Section 4 of the Act tasks the CCC with "adopt[ing] regulations consistent with this chapter for the administration, clarification and enforcement of laws regulating and licensing marijuana establishments." G.L. c. 94G, § 4(a1//2). The CCC has promulgated the regulations at 935 Code Mass. Regs. ("CMR") § 500.001, et seq. ("Cannabis Regulations"), which became effective on March 29, 2018.8

The Cannabis Regulations go into detail regarding the requirements for RME license applications. New applicants, like Mederi, are required to file an application...

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