Municipal Barriers to Cannabis Enterprises

Take zoning in Rhode Island, for example. Each city and town – independent of one another – decides which zones within its municipal limits are permissible for cannabis industry uses. Many municipalities have limited cannabis operations to specific locations. Others have taken steps to “zone out” cannabis businesses entirely. Moreover, a handful of cities and towns require not only that a cannabis operation locate within a specific zone (light industrial, commercial, etc.), but that certain distance buffers exist between the cannabis business and preexisting entities such as places of worship, schools, residences, youth centers and the like. The cumulative result is that there is limited real estate in the state suitable for cannabis enterprises and significant barriers to establishing a marijuana enterprise.

While the Rhode Island Department of Business Regulation does not require any other local permissions or approvals other than zoning compliance as a precondition to the award of a cannabis license, other jurisdictions vary. For example, the Massachusetts’ Cannabis Control Commission requires letters of non-opposition from the municipality in which the cannabis business intends to locate before applying for a cannabis license. The process for obtaining these letters differs. In Fall River, for example, a letter of non-opposition is awarded at the sole discretion of the mayor. In other municipalities, the letter is awarded through city or town council processes.

In addition to letters of non-opposition, cannabis businesses in Massachusetts are also required to enter into community host agreements as a prerequisite to the award of licenses to operate. Contractual in nature, these agreements arrange for impact fees to be paid by cannabis operators to the cities or towns in which they locate. The agreements must be negotiated and approved through proper municipal channels.

While cannabis operators have gained a foothold in states across the country, barriers to enter this rapidly evolving industry such as those that exist in municipalities will continue to play a huge role in the short and long term. Interested parties are wise to stay informed to better manage the risk against the reward when considering entering the highly-regulated cannabis industry.