Judge Rules Cambridge, Mass., Cannot Delay Licensed Medical Cannabis Dispensaries from Entering Adult-Use Market
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Judge Rules Cambridge, Mass., Cannot Delay Licensed Medical Cannabis Dispensaries from Entering Adult-Use Market

Saul Ewing’s Zachary Berk discusses the case that the firm’s client, Revolutionary Clinics, brought against the city, and the ruling’s broader impact on the industry.

February 3, 2020

A Massachusetts judge ruled Jan. 24 that licensed medical cannabis dispensaries in Cambridge must be able to immediately seek licensure in the adult-use market in an order that has received mixed reactions from industry stakeholders.

Revolutionary Clinics became a licensed medical dispensary (called a Registered Medical Dispensary, or RMD, in Massachusetts) with a business in Cambridge after the state legalized medical cannabis in 2012, said Zachary Berk, partner in Boston-based Saul Ewing Arnstein & Lehr’s Litigation Department and a member of the firm’s National Cannabis Practice Group. Berk was one of three of the firm’s attorneys who helped secure a favorable ruling for Revolutionary Clinics.

When Massachusetts passed its adult-use cannabis laws in 2016, one of the provisions indicated that pre-existing RMDs like Revolutionary Clinics would be able to convert their medical cannabis licenses into what the state calls a “co-located” license, which would allow the businesses to sell to both the medical and adult-use cannabis markets from their shops.

“The only delay that was permitted in that conversion right was to allow cities and towns to adopt zoning regulations related to adult-use cannabis—just typical time-, place-, and manner-type zoning regulations,” Berk told Cannabis Business Times.

As time passed without many cities and towns adopting ordinances to regulate the adult-use market, the attorney general’s office became involved and mandated that municipalities had to adopt zoning rules by Dec. 31, 2018, Berk said. The deadline passed without Cambridge adopting an ordinance.

In June 2019, city councilors proposed an amendment to Cambridge’s near-final ordinance that would bar existing RMDs in the city from getting an adult-use license for two years in order to give licensing priority to Economic Empowerment Applicants, which is a defined term under the Massachusetts Cannabis Control Commission’s regulations and refers to historically disadvantaged groups that were most impacted by the state’s past prohibitionist policies.

“Our position was, under the statute, our client had a right to get their adult-use license and start adult-use cannabis sales promptly, without delay, and not only had Cambridge delayed until mid-2019 to even consider adopting an ordinance, but now they were further delaying an additional two years,” Berk said. “Once they adopted the ordinance in September 2019, under the terms of the ordinance, our client would not be able to start adult-use sales until September 2021 at the earliest. So, we ended up filing the lawsuit, alleging that the Cambridge ordinance and the two-year delay was illegal under state law because it directly conflicted with the laws that were passed by the legislature. … Our client’s intent is to do nothing more than to get the benefit of their statutory right and open for business.”

Ultimately, Middlesex Superior Court Judge Kathleen M. McCarthy found that Cambridge’s ordinance was in direct conflict with state law—and also in direct conflict with the Cannabis Control Commission’s adult-use cannabis regulations.

“That was one of our arguments, that the Cannabis Control Commission is the authority in Massachusetts charged with overseeing and implementing the cannabis laws and licensing these businesses to operate,” Berk said. “One of the regulations that the Cannabis Control Commission passed says that RMDs such as our client … and the Economic Empowerment Applicants are both priority applicants, and the Cannabis Control Commission will consider their applications on a priority basis and on a one-for-one basis, an alternating basis. … Cambridge’s law is they’re not going to let any RMDs to operate in Cambridge for two years, and it directly conflicted with that process.”

McCarthy indicated that her ruling would promote the public interest, Berk added. “The public had voted for this and they wanted it. Hopefully, this decision will help facilitate getting these types of businesses open in Cambridge, as the citizens wanted them to be. … Again, I just want to emphasize that our client’s goal wasn’t to impede anybody—they just want their statutory right recognized.”

In addition, as Berk pointed out, the RMDs were given the benefit of the state’s adult-use cannabis law, in part, because they partnered with the state in the program’s initial medical cannabis program rollout, but some argue that their priority status is infringing on Economic Empowerment Applicants in the program.

Supporters of Cambridge’s ordinance and the city’s move to prioritize Economic Empowerment Applicants said the measure would provide a window of time for disenfranchised entrepreneurs to find property, raise money and launch their operations without competition from larger investor-backed cannabis firms, according to a Boston Globe report.

“The city is disappointed with the Superior Court’s decision to issue a preliminary injunction,” Cambridge Spokesman Lee Gianetti said in a statement issued to the news outlet. “The city believes that it did not exceed its authority in adopting the temporary moratorium … [and that] the two-year moratorium is not in conflict with the state Cannabis Control Commission’s regulations.”

Cambridge officials are deciding whether to appeal the ruling, the Boston Globe reported.

Blake Mensing, a Massachusetts attorney who helps cannabis businesses navigate the state’s licensing process, told the news outlet that Revolutionary Clinics was wrong in its quest to secure licensure ahead of Economic Empowerment Applicants, but added that their arguments in the case were technically viable.

“Morally, I think it’s incontrovertible that what Revolutionary Clinics is doing is unsavory,” Mensing said. “That said, unfortunately, I think they’re 100% correct, legally.”

But Berk insisted that Revolutionary Clinics’ intention is not to hold Economic Empowerment Applicants back and added that the company has even been working to assist Economic Empowerment Applicants in securing capital and inventory for their start-ups.

“The irony of this whole thing is they’ve been actively working with and trying to assist Economic Empowerment Applicants to get them up and running in Cambridge and working on ways to provide them with capital to get their businesses going,” Berk said. “Before this ordinance was implemented, there were various proposals on the table, and one of them included helping to provide capital [and] inventory at reasonable cost to help these businesses get up and running. They’ve always expressed their willingness and openness to working with the cannabis community and Economic Empowerment Applicants to make this a vibrant entrepreneurial space in Cambridge.”

Whatever the case, the ruling could prevent other cities and towns from pursuing similar ordinances that prioritize Economic Empowerment Applicants in the adult-use licensing process.

“I believe that other cities have been contemplating taking similar action, so hopefully this decision will make them think twice about that because the judge found it would be unlawful to deprive the RMDs of their rights under the state statute,” Berk said.