The adult-use cannabis industry is an emerging field rife with economic potential. But due to the heavily regulated nature of this market, opening a cannabis establishment can be a costly and time-consuming endeavor.
Between finding the right site, securing permits, negotiating balanced Host Community Agreements (HCA), and rallying local support, entrepreneurs and investors face significant obstacles. More often than not, they find it difficult—if not impossible—to navigate these complexities alone.
Tenax Strategies’ team of lobbying and public affairs professionals specializes in the emerging cannabis industry, fighting hard for our clients to site cannabis facilities in Massachusetts.
If you want to successfully launch an adult-use cannabis venture, HCA approval is an absolutely critical step in the process. But what is an HCA exactly, and why does it present so many challenges to cannabis industry newcomers?
What Is a Host Community Agreement (HCA)?
To satisfy state regulations, a retail cannabis facility must execute an HCA with the municipality in which it seeks to operate.
Together, both parties negotiate the terms that a cannabis facility must satisfy to operate within a community. These terms may include:
- Obtaining approval of the new location prior to any relocation
- Providing job opportunities to local residents
- Implementing a keypad or electronic access card system to control access to areas containing marijuana or marijuana products
- Providing a paid police detail during peak hours of operation
- Participating in educational programs on public health and drug abuse prevention
- Paying a “community impact fee” to the municipality for a period of up to 5 years
In addition to securing HCA approval, new cannabis facilities must obtain a license from the Cannabis Control Commission (CCC).
Risk Profiles for HCA Approval in Massachusetts
Every municipality in Massachusetts has its own method for vetting and approving HCAs. The requirements and timing can vary based on the regulations governing a particular community.
Not only do you need to know the ins and outs of a municipality’s HCA terms, you also need to understand how long that process might take—and how much it might cost you.
Without proper guidance, industry newcomers who have already purchased property often find themselves paying exorbitant—and unanticipated—real estate holding costs as they await HCA approval. Even worse, they could endure this costly process only to face outright rejection from the municipality.
We help our clients evaluate risk profiles for HCA approval along these general guidelines:
- Low Risk Profile: Some municipalities require approval of an HCA before a business owner can purchase real estate for a cannabis facility. Once the HCA is secured, applicants can buy property with confidence, knowing that they have permission to operate in the community. (The HCA approval process can still be costly and time-consuming, but the risk is limited.)
- Moderate Risk Profile: Some municipalities require a meeting with town administrators, Select Boards, and other stakeholders before the HCA application process even begins. Business professionals with recently purchased real estate for a retail cannabis facility must hold their property, accruing real estate holding costs while awaiting approval.
- High Risk Profile: The strictest municipalities require approval of a Special Permit prior to HCA application. Obtaining this permit does not guarantee approval, and after such an investment, an applicant may still have their HCA denied. Permit expenses, combined with ongoing real estate holding expenses, can become cost-prohibitive.
Determining the Best Path to HCA Approval
Tenax Strategies evaluates key data points to help our clients navigate risk and determine the most successful approach to securing an HCA and opening a cannabis facility:
- We assess the number of available licenses and make strategic recommendations based on market saturation
- We analyze cost and availability of real estate to help our clients avoid real estate holding costs
- When necessary, we advise our clients to consider a different location where they’ll face fewer obstacles to opening a cannabis facility
If you’re looking to site a cannabis facility in Massachusetts, you need a team of experts on your side to guide you through the complicated regulatory process and fight for you every step of the way.
Contact Tenax Strategies today for assistance getting your new business off the ground.
