Zoned and confused: Local red tape is hindering cannabis businesses

City and town voters have wide latitude in deciding whether to allow marijuana shops and how many businesses to license. But a city that allows cannabis businesses should not use restrictive zoning policies as a backdoor way of limiting the number of stores that can open.

A Land Court judge will decide whether Malden’s cannabis zoning is too onerous in a case that could have widespread ramifications for other municipalities. In an industry where cities and towns are often gatekeepers, the judge’s ruling ideally will lay out clear standards for what municipal zoning can and can’t do.

At the center of the case is Benevolent Botanicals, a company founded in 2018 by Warren Lynch and Stee McMorris, two Malden residents who are filmmakers and longtime cannabis users. The partners wanted to open a marijuana store with a small, high-end growing site. They found a property to lease that was too close to a residence and applied for a zoning variance. The request was denied, and the company could not find an appropriately zoned parcel.

“We looked at close to 150 properties to find a single one not in any buffer zone, and there literally wasn’t one,” Lynch said.

Although two cannabis companies have opened in Malden, the city has one of the state’s strictest zoning regulations. Local code requires cannabis businesses to be in an industrial or highway business zone or a marijuana establishment overlay district. There are six types of buffer zones keeping marijuana businesses away from residences, schools, day-care centers, religious institutions, parks and recreational facilities, and substance abuse treatment centers. A marijuana company must be the only use of a parcel, and cannabis companies cannot abut each other.

According to a court motion filed by Benevolent Botanicals, there are 13,454 properties in Malden, of which 55 are in an appropriate zoning district and comply with the buffer zones. Not all these properties are suitable — they include multi-tenant parcels like strip malls — and at any given time none may be for sale.

State law says municipalities can pass local ordinances regulating marijuana businesses as long as they are not “unreasonably impracticable,” which is defined as a rule that would subject entrepreneurs to “unreasonable risk” or would require such a high investment of risk, money, or time that a “reasonably prudent businessperson” would not open a business.

Lawyers for Benevolent Botanicals say Malden’s zoning violates this law. Malden city officials decided to issue five licenses, the minimum required under a state law that ties the number of cannabis licenses to a town’s liquor licenses. A Malden committee approved five companies — including Benevolent Botanicals — to move forward in the licensing process. (In a community like Malden that voted for cannabis legalization, changing that minimum requires voter approval.)

But both Benevolent Botanicals and another approved company, Dris, have been unable to find sites. A fifth company identified a possible site but is still going through the licensing process. Benevolent Botanicals’ attorney, Adam Gutbezahl, said Malden is trying “to zone cannabis out of their town despite the fact that the people who should be making that decision are the voters.”

Malden city officials did not respond to requests for comment. In court briefs, the city’s attorney argues that cities have wide latitude in zoning, and Malden’s zoning is “rational, reasonable, and related to public health, safety, and welfare.” Buffer zones, the brief says, are intended to protect certain activities, like day-care centers and playgrounds, in a densely populated city.

This is the first time a court is being asked to interpret the “unreasonably impracticable” standard as applied to zoning, and legal experts say municipalities will be watching the case closely.

There have been similar cases involving another industry. The state Supreme Judicial Court ruled in 2022 that Waltham’s zoning barring large-scale solar energy systems in all but 1 percent to 2 percent of municipal land impermissibly restricts the Legislature’s interest in promoting solar energy. But solar and cannabis are legally different because solar is protected through the Dover Amendment, which limits municipal authority over solar projects.

Another wrinkle is that Benevolent Botanicals and Dris are both “social equity” businesses, companies run by people from communities disproportionately affected by prior enforcement of drug laws that are supposed to get state licensing priority. The company qualifies for that designation because Lynch was arrested and served a year of probation on a charge of marijuana possession with intent to distribute before cannabis was legal. Social equity entrepreneurs have long complained that municipal barriers make it hard for them to open. The Cannabis Control Commission has been developing guidance for municipalities to conform with a new law requiring communities to have municipal equity policies. But as more communities hit their caps on how many marijuana businesses they will allow, it is getting harder for any new business to find a site.

With the marijuana market having matured over the five years recreational stores have been open, now is a good time for communities to review their cannabis bylaws. Some, like Holyoke, may want to consider stricter laws regulating things like odor control after neighbor complaints. Greenfield has been considering how to distinguish between indoor and outdoor growing sites. And while a judge will decide whether Malden’s zoning is legal, it would behoove all municipalities to voluntarily review their cannabis laws in light of lessons learned and determine what rules best serve their communities without overly stifling a legal industry.

With the marijuana market having matured over the five years recreational stores have been open, now is a good time for communities to review their cannabis bylaws.