SJC Rules Bourne’s Ban on Recreational Marijuana Establishments is Valid

Caroline E. Smith

The Supreme Judicial Court, in its decision in the case of Haven Center, Inc. v. Town of Bourne, 490 Mass. 364 (2022), upheld as valid the Town of Bourne’s general bylaw ban on recreational marijuana establishments. The Town’s approach was impeccable and the decision is instructive.

In 2016, Massachusetts voters enacted a state ballot initiative legalizing the sale and use of
recreational marijuana. This law, codified as M.G.L. c. 94G, gave individual cities and towns the ability to ban recreational marijuana establishments from their communities if the majority of voters in the municipality voted “no” on that ballot initiative and then enacted such a local ban by December 30, 2019.

The majority of the voters in the Town of Bourne on Cape Cod in 2016 had voted “no” on this ballot initiative. In May 2017, the Town then voted to impose a temporary moratorium on recreational marijuana establishments. It would last either until November 30, 2018, or until the Town enacted zoning bylaw amendments to regulate such establishments.

In October 2018, two bylaw amendments were presented at Bourne Town Meeting. Warrant Article 14 (Article 14) proposed an amendment to Bourne’s general bylaws to prohibit all commercial recreational marijuana establishments in Town. Warrant Article 15 (Article 15) proposed amendments to the Town’s zoning bylaw that would regulate recreational marijuana establishments.

An amendment to a general bylaw requires a simple majority vote while an amendment to a zoning bylaw requires a two-thirds majority vote. Article 14 did pass by a simple majority vote, but Article 15 did not pass after failing to receive the requisite two-thirds majority vote. The general bylaw became law, while the zoning did not.

The Haven Center, Inc.—a company seeking to operate a retail recreational marijuana establishment in Bourne—filed suit in state court seeking a declaratory judgment that Article 14 was invalid. The Haven Center argued that Article 14 violated the Home Rule Amendment, because Article 14 constituted a zoning bylaw and was inconsistent with the Zoning Act, M.G.L. c. 40A, §§ 5-6.

The Home Rule Amendment allows municipalities to enact local ordinances or bylaws that are not inconsistent with the Massachusetts Constitution or laws. The Haven Center argued that Article 14, as a matter of law, should be regarded as a zoning amendment—and not a general bylaw, as the Town had characterized it—because it prohibited a particular use of land.

The argument continued that since Article 14 was in effect a zoning bylaw, its enactment procedure (no public hearing and passed by a simple majority vote) violated the procedural requirements set out in c. 40A, §§ 5-6.

The language in M.G.L. c. 94G indicates that a municipality may prohibit recreational marijuana establishments through general bylaws or zoning bylaws. Nonetheless, under Massachusetts court precedents, even if the Town intended Article 14 to be a general bylaw, it could be deemed a zoning bylaw, subject to , if certain factors were met.

Such factors are whether other municipalities have adopted similar bylaws as zoning bylaws, whether the municipality whose bylaw is being scrutinized has previously regulated the topic through comprehensive zoning ordinances, whether the bylaw is intended to prohibit or permit any particular listed uses of land, and whether the dominant purpose of the bylaw pertains to interests typically addressed by the zoning process.

The SJC, hearing the case on appeal, ruled that Bourne’s temporary moratorium of recreational marijuana establishments was not a comprehensive zoning scheme and that Article 14 was not a zoning bylaw, simply because it indirectly prohibited the use of land in Town for recreational marijuana establishments. Because the Court ruled that Article 14 was not a zoning bylaw, it was not subject to the procedural requirements of M.G.L. c. 40A.

The Haven Center’s second argument was that Article 14 was inconsistent with the provision under M.G.L. c. 94G, § 3(a)(1) that prohibits municipalities from using zoning bylaws to prevent the conversion of a medical marijuana treatment center into a recreational marijuana establishment.

The SJC held that Article 14 was not subject to § 3(a)(1), because § 3(a)(1) only prohibits zoning bylaws that prevent the conversion of a medical marijuana treatment center into a recreational marijuana establishment. Because the SJC determined Article 14 was not a zoning bylaw, § 3(a)(1) did not apply to Article 14.

The Haven Center’s final argument was that Article 14 was inconsistent with the provision under G.L. c. 94G, § 3(a) that prohibits “unreasonably impractical” bylaws. The SJC ruled that the specific state statutory authorization to adopt a complete ban of recreational marijuana establishments under § 3(a)(2)(i) superseded any general requirement that a bylaw not be unreasonably impractical.

Thus, under the principles of Home Rule, bylaw application, and statutory interpretation in Massachusetts, the Town of Bourne succeeded in prohibiting all commercial recreational marijuana establishments in Town.

An Associate at McGregor Legere & Stevens PC, Caroline Smith is a member of REBA’s Environmental and Renewable Energy Section and New Lawyers Section. She can be reached at csmith@mcgregorlaw.com.

Challenging Decisions on Host Community Agreements – Tilting at Windmills?

By Julie P. Barry

A recent decision by the Essex Superior Court reinforces just how difficult the law makes it for a disappointed “Retail Marijuana Establishment” (RME) applicant to challenge a municipality’s

denial of a Host Community Agreement (HCA). At the same time, the case provides insight into the process courts will use to evaluate

such challenges, and points to strategies for fashioning the strongest possible claim. The decision is important to future HCA applicants not as much for the upholding of the City’s decision, as it is for the process used by the Court in deciding the appeal, and tips for those seeking to challenge a municipality’s denial to enter an HCA.

The case arose when the mayor of  Salem decided not to enter an HCA with plaintiff Mederi, Inc.  Mederi challenged the City’s process alleging it was unfair, because successful applicants were those who “could best fill the City’s coffers, … agree to HCAs containing fees in excess of those allowed by the Act,” and engage in “backroom deals” with the City.  In a 29-page decision (Mederi, Inc. v. City of Salem, et al., Essex Superior Court CA No. 1877CV01878) on the parties’ cross-motions for judgment on the pleadings, the Court recognized the substantial discretion granted to municipalities concerning the issuance of HCAs to applicants and upheld the decision by the mayor.  The Court found that the issuance of HCAs is a discretionary action that could be challenged only on “the ‘arbitrary or capricious’ standard.”  This discretionary action could be overturned, the Court held, only if the decision is unreasonable and made willfully “without consideration and in disregard of facts and circumstances” (quoting Long v. Commissioner of Pub. Safety, 26 Mass. App. Ct. 61 65 (1988)).

Here, the City published guidelines listing the criteria and the minimum expectations for any HCA. The Review Committee evaluated each of the eight applicants based on these criteria, and issued written memoranda supporting its decisions.  The Court approved the City’s objectives of ensuring diversity of geography and neighborhood impact. It also held that the City’s decision to favor the most experienced and capable applicants—and those with sufficient financial assurances—provided a rational basis in its review of HCA applications.

While the Court’s upholding of the City’s action may have been predictable given the circumstances, the decision is important to disappointed HCA applicants nevertheless, because it provides a blueprint for any challenge to a municipality’s dealings with cannabis operators.  First and foremost, is the need to include in the administrative record every possible document to support the appeal.

In an administrative record review case like this one, the burden is on the disappointed HCA applicant to provide evidence necessary to show that it met the criteria for an HCA, and not just to attack successful applicants or the process in general. Without demonstrating the applicant’s entitlement to the HCA based on the established criteria, the Court must defer to the decision making of the mayor and Review Committee.

Even if Mederi’s charges that the successful applicants were those “who could best fill the City’s coffers” were true, the Court held they were not sufficient to find the Mayor’s discretionary decision was arbitrary or capricious. The Court found the Mayor had sufficient basis to limit the City to only four HCAs, with a “strong interest in ensuring the high quality of the entities with which they execute HCAs, and which, in turn, receive RME licenses from the CCC … and to effectively limit the number of RMEs that could operate in the same geographical area."

The take-away from the Mederi decision for disappointed applicants seeking to challenge a municipality’s denial of an HCA? Consider the following:

• Scrutinize your application: does it address all the necessary criteria?
• If possible, shore up your financial assurances if the municipality expresses concern about this key requirement; remember, it will also be an important issue in your application with the CCC.
• If your application could benefit from additional experience, consider partnering with an established operator or investor.
• Consider geographic diversity in choosing the location for your proposed RME; the Court found this a sufficient basis – particularly in light of Mederi’s perceived shortcomings – to deny the application. The bar may be set higher when applications are clustered in a particular zone.
• Make sure all meetings are held under the rules of the process established by the municipality, and remember these rules may vary.
• A final point, it is important to remember that the Salem Court’s decision only addressed the discretion afforded the municipality for the issuance of an HCA.  It does not protect nor provide any precedent for any other actions of the municipality.

HCA Update

The Mederi case is not a death knell for all challenges to municipalities. In fact, recent events suggest the tide is turning against municipalities that are acting capriciously. A little more than a week ago, Massachusetts legislators moved a bill forward to place stricter requirements on “unrestrained and expensive” HCAs that have the effect of harming social equity applicants. Sponsored by Sonia Chang-Diaz (D. Jamaica Plain), the bill “specifies that no financial obligations of any kind are permissible beyond the maximum 3% of gross sales fee.” The bill also provides that municipalities could waive the HCA requirement altogether in response to complaints by some municipal officials that the process was burdensome and duplicative of already established processes for business permitting. Next, the bill must pass the House and Senate as well as obtaining the Governor’s signature.

A REBA officer and co-chair of both the association’s strategic communications committee and its Environmental Law Section, Julie Barry heads the environmental law practice at Prince Lobel Tye LLP. She has more than 20 years of experience in state and federal courts, including the Massachusetts Appeals Court, Superior Courts, Land Court and Probate Courts, and the U.S. District Court, and First Circuit Court of Appeals. She represents developers, commercial and residential property owners, businesses, and individuals.  Her email address is jbarry@princelobel.com.