BOSTON (CN) — In a test case for how much control local governments can have over the burgeoning marijuana industry, the Massachusetts high court struggled Monday to figure out if cities and towns can require some dispensaries to operate as nonprofits.
The dispensary in this case “has invested in a facility but now they won’t be able to operate it unless they get a new facility” in another part of town that’s zoned differently, worried Justice Scott Kafker. “Even though they’re completely legal.”
“A not-for-profit has a greater impact on the community than a for-profit?” he asked skeptically.
But Justice Serge Georges Jr. suggested that the town’s zoning didn’t negate the state’s marijuana legalization law.
“I’m still struggling” with the zoning rule, he said. “There is still an opportunity here for folks to operate in the town. … How does it render [the state law] futile?”
With marijuana now completely legal in 17 states and medical marijuana permitted in 19 others, the question of how far local regulation can go is becoming a hot topic nationwide.
Monday’s case involved the town of Mansfield, a community of 23,000 about halfway between Boston and Providence. Most of Mansfield is a quiet suburb but it’s also the site of a 20,000-seat performing arts center. And it sits next door to Foxborough, which regularly attracts more than 60,000 visitors for New England Patriots games.
Ellen Rosenfeld started a nonprofit medical marijuana dispensary in the town at a time when both state law and the town zoning bylaws required such dispensaries to be nonprofit. In 2017, however, the state began allowing for-profit dispensaries, and in 2018 Rosenfeld converted her business to for-profit status.
A neighboring business took her to court, arguing that, while the state law had changed, the town bylaws hadn’t, and therefore she shouldn’t be allowed to continue operating. But a trial judge ruled in her favor, holding that the state law preempted the town bylaws.
The state law was intended “to increase access to medical marijuana,” the judge said. And “by limiting medical marijuana facilities to nonprofit entities, the bylaw, while not prohibiting those facilities, does restrict them in a way that the state explicitly determined they should be not be limited.”
That argument interested Justice Frank Gaziano, who said that the state law “specifically takes out nonprofits” and has no requirement as to corporate identity. “But your zoning law does,” he told the neighbor’s lawyer, Benjamin Tymann of Tymann Davis in Boston. “I don’t understand that.”
Tymann replied that, “it’s not as though Mansfield has forbidden medical marijuana dispensaries.” Rosenfeld could easily fix this just by moving or converting back to a nonprofit, he said. “All the municipality has done is to pursue its ordinary zoning functions.”
But Kafker countered: “The state has made a determination that that’s no longer a valid consideration. And they didn’t create a grandfathered right for municipalities.”
Gaziano and Kafker tool a different tone, however, when grilling Rosenfeld’s lawyer, Jason Talerman of Mead Talerman.
“Nobody’s prohibiting anyone from dispensing marijuana. The issue is how much money you’ll make. That’s what this is really all about,” Kafker observed.
And Gaziano said about preemption: “What we’re talking about is whether the local law and the state statute can live in the same universe,” and he suggested that maybe they could.
Justice Dalila Wendlandt wanted to know how big the alternative zoning district was where for-profit dispensaries were allowed, suggesting that there might be preemption if the zone were too restrictive.
“What if the zone were one city block? Wouldn’t that conflict with the state law?” she asked.
Talerman picked up on this point and began describing the alternative zoning district as “paper-thin and very small.” He said the town obviously shouldn’t be allowed to offer Rosenfeld only a “postage-stamp-sized district.”
At one point Talerman cited an amicus brief written by a lawyer who co-authored the 2016 statewide referendum permitting recreational marijuana. Boston attorney Valerio Romano argued that requiring dispensaries to be nonprofit doesn’t make any sense legally because federal law prohibits dispensaries from receiving any federal or state nonprofit tax benefits.
But to suggest that that means a town can’t require nonprofits “can’t be true,” Kafker said flatly, and Talerman backed away quickly.
All seven judges on the court were appointed by the current Republican governor, Charlie Baker. Baker vigorously opposed the statewide referendum legalizing recreational marijuana and drew harsh criticism when he shut down recreational marijuana sales during the pandemic.
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