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PALMER —  Baystate Wing Hospital has announced an investment of $30,000 in grants to benefit local community-based nonprofit organizations. The grant awards were given to the Quaboag Valley Community Development Corporation, the Quaboag Connector to support local transportation in the region, the Ware Fire Department to support Emergency Medical Services (EMS) and paramedic training, and to the Ware Regional Recovery Center to increased access to support and expand knowledge about recovery support services and resources in the region.

“Everyone is strengthened when we work together to build and sustain a culture of health and wellness within our communities,” said Molly Gray, president and chief administrative officer for Baystate Health’s Eastern Region, which includes Baystate Wing Hospital and Baystate Mary Lane Outpatient Center. “We are very happy to support the work with our community partners with these grant investments.”

Baystate Health’s Eastern Region represents 15 communities comprising a population of approximately 120,000 people. Programs supported by the hospital’s grant investments include:

 

Quaboag Valley Community Development Corporation, the Quaboag Connector: The $30,000 grant to the Quaboag Valley Community Development Corporation (QVCDC) will provide continued support to the Quaboag Connector Transportation Initiative which addresses the lack of transportation to employment, education, healthcare, workforce training, shopping, and benefit services within and outside the region. The service which began in January 2017 has provided thousands of rides to community members. In March 2022, the Quaboag Connector surpassed all previous months in number of rides providing 1,397 rides demonstrating the continued need for this service.

 

The Ware Fire Department $11,500: The $11,500 grant was awarded to the Ware Fire Department in support of EMS Paramedic training for a member of the Ware Fire/EMS Team.

 

Growing Strong: Ware Regional Recovery Center’s Next Chapter

The $3500 grant to the Ware Regional Recovery Center, a program of the Western Massachusetts Training Consortium, will support their work in the Quaboag Hills Region to respond with increased momentum in raising community awareness about local access to recovery support and resources, to decrease stigma and to encourage people to seek out recovery support services in a time of critical need.

 

Law

LLCs in the Bay State

By Benjamin M. Coyle, Esq.

Benjamin M. Coyle

Benjamin M. Coyle

Many families have homes or other real estate that parents hope to pass along to the next generation. In the world of estate planning, there are a variety of ways to achieve the movement of a family home from parents to children — sometimes through a trust, sometimes through a will after death, or even sometimes by outright gift.

While all these methods have their place, another option that should be considered is the formation of a limited-liability company (LLC) to hold title to real estate.

In Massachusetts, a limited-liability company is a business entity, formed with the secretary of the Commonwealth, and offering great flexibility in its management. This flexibility is very appealing, particularly when a home or other real estate is to be owned, used, and managed by a group.

For example, parents may want their four children to inherit a property equally. By using an LLC, rather than deeding each child a 25% interest in the property outright, parents would be able to transfer shares in the LLC to their children. Doing things this way is beneficial for several reasons.

One of the most important advantages of an LLC is the ability to work under an operating agreement — a formal, written document that clearly states the owners/members of the LLC, their respective interests, and the manner in which the LLC is operated and governed. The operating agreement can also allocate profits and losses to various members (which can be different than their ownership interest). Most importantly, the operating agreement also clearly states rules for use of the property by the members, and allocation of expenses.

“One of the most important advantages of an LLC is the ability to work under an operating agreement — a formal, written document that clearly states the owners/members of the LLC, their respective interests, and the manner in which the LLC is operated and governed.”

This gives everyone involved a crystal-clear understanding of their privileges and responsibilities relative to the property.

Once an LLC is formed and an operating agreement established, the real estate in question would be transferred into the LLC by deed, and the LLC would then be the owner of the property. By transferring the property to the LLC, the grantor has essentially converted real estate into tangible personal property, thereby avoiding many of the probate complexities of real estate.

Additionally, an LLC offers continuity in the property’s title, while still providing for the flexibility of changing ownership interests and membership shares (in contrast to multiple deeds divvying up the property, which could cause significant title confusion).

In the event the property is rented, the LLC provides limited-liability protection for its members, either short term or long term. Further, LLCs often offer tax advantages (over outright ownership) with respect to rental income, repair costs, renovations, and other expenses associated with the property. Additionally, since the LLC is a recognized business entity, it may often be easier for the LLC to obtain insurance or borrow money from a bank, in contrast with the banking difficulties that can be experienced by individuals with a shared interest via deed, or if the property were held in a trust.

Although there are significant advantages to the LLC, there are also startup costs and recurring annual expenses associated with the formation and continued maintenance of the LLC. Initial formation costs include a filing fee of $500 with the secretary of the Commonwealth, and any legal fees associated with the completion of articles of organization and the operating agreement.

Massachusetts requires that LLCs file an annual report with the secretary of the Commonwealth. For LLCs formed outside of Massachusetts, the Commonwealth requires a foreign LLC to register in Massachusetts and comply with the state’s annual filing requirements.

It is good practice (and may even be required by the operating agreement) for the members of an LLC to hold regular meetings, at least annually, where they discuss the business of the prior year and the upcoming year as it pertains to the LLC and the operation of the property. The LLC should maintain a corporate book that includes the minutes of each membership meeting, as well as minutes for any special meetings that may occur throughout the year. Since the LLC is a business entity, it will require its own tax-identification number and annual tax return. Depending upon the tax election chosen by the LLC, if there is any associated tax liability, those costs can potentially be passed on to each member to be addressed on their individual tax returns, and the expenses associated with annual fees and costs can be deducted from any LLC income.

An LLC is an excellent option to consider when determining the best way to address transferring real estate from one generation to the next. The transfer can occur during the lifetime of the current owners with relative ease and can be added to many existing estate plans, thereby providing families with effective ownership transitions and limited liability for the members of the LLC.

Benjamin M. Coyle is a shareholder with Bacon Wilson, P.C. He specializes in matters of estate planning and administration, and also has extensive experience with real estate, business, corporate, and municipal law; (413) 781-0560; [email protected]

Law

What’s Next for the Cannabis Industry?

The cannabis industry is off to a fast and quite intriguing start in the Bay State, and two new categories of license have particular potential to move this sector in new directions: one for home delivery of cannabis products, and another for social-consumption establishments, or cannabis cafés.

By Isaac C. Fleisher, Esq.

We are nearly three years into the Commonwealth’s experiment with recreational cannabis, and the industry is finally moving beyond an amusing novelty.

The Cannabis Control Commission (CCC) reports that retail sales in 2019 alone have already exceeded $190 million, and this is just the tip of the iceberg. To date, the CCC has issued only 72 final licenses for marijuana establishments, but there are currently another 400 license applications that are pending or have received provisional approval.

Isaac C. Fleisher

This all means that, over the next few years, the Massachusetts cannabis industry is set to grow at an unprecedented rate. What we don’t know is how this growth will change and shape the industry.

Much of the excitement and rhetoric around legalization has focused on the potential to create new business and employment opportunities for communities that have been disproportionately harmed by prohibition and for local entrepreneurs. Lawmakers attempted to pursue these goals (with mixed success) through the design of the original regulations, with provisions for local control by cities and towns, special categories for equity applicants, and caps on the number of licenses that a single business could control.

The CCC has recently been grappling with these issues once again as it revises its regulations.

On July 2, after months of policy discussions and hearings, the CCC released new draft regulations for both medical and recreational marijuana, which will be open for public comment until Aug. 16. While most casual observers will not find the draft regulations to be scintillating reading material, there are a number of interesting new provisions that can tell us a lot about what the future of Massachusetts’ cannabis industry could look like.

Two new categories of license have particular potential to move the cannabis industry in new directions; one for home delivery of cannabis products, and another for social-consumption establishments (i.e., cannabis cafés).

Social Consumption

A social-consumption license would authorize businesses to sell cannabis products to customers for on-site consumption. Just think of your neighborhood bar, but it serves cannabis instead of alcohol. Under the proposed regulations, cannabis could be consumed at a social-consumption establishment in almost any form, except for combustible (i.e. smoking it the old-fashioned way), but even that possibility is left open by a provision for an outdoor smoking waiver.

Cannabis edibles would have to be prepackaged and shelf-stable, but there is no prohibition on serving prepared food on site, so long as the food isn’t directly infused with marijuana. That means we could soon be seeing cannabis restaurants that offer gourmet food alongside gourmet pot.

“There is no prohibition on serving prepared food on site, so long as the food isn’t directly infused with marijuana. That means we could soon be seeing cannabis restaurants that offer gourmet food alongside gourmet pot.”

The CCC is taking an incremental approach to this new class of license by including provisions for a social-consumption pilot program that would be limited to only 12 municipalities. Towns that participated in a working group on social consumption — including North Adams, Amherst, Springfield, Provincetown, and Somerville — would be among those able to opt into the pilot program. Licenses would initially be available only to applicants that were already licensed as a ‘microbusiness’ or a ‘craft marijuana cooperative,’ or applicants certified by the CCC as an ‘economic empowerment’ applicant or ‘social equity’ applicant. The pilot program is an interesting attempt to address the demand for new cannabis markets, while still preserving access for small, local, and minority-owned businesses.

Home Delivery

A licensed ‘delivery-only retailer’ could deliver marijuana products directly to a customer’s residence. Advocates for home delivery have long touted its potential to level the playing field between large, well-funded businesses and the small, local entrepreneurs the CCC seeks to attract.

In theory, a delivery-only licensee wouldn’t need much more than a vehicle in order to begin operating. However, the draft regulations include a number of provisions that could create substantial barriers to entry for small-time operators. Home-delivery orders would still need to go through a traditional brick-and-mortar retailer, who would presumably not be particularly interested in providing their product to competitors at wholesale prices.

Additionally, the draft regulations prohibit deliveries to any residence in a town that has banned brick-and-mortar retailers.

Numerous security provisions included in the draft regulations create further costly (and controversial) requirements for delivery-only retailers. Each delivery vehicle would need multiple surveillance cameras, and delivery agents would need to wear body cameras to record the entire delivery, including the customer. This has predictably resulted in a number of concerns about privacy and regulatory overreach.

At a recent CCC meeting, Commissioner Shaleen Title pointed out that, “to the extent that home delivery to [medical-marijuana] patients has been ongoing, there may already be security in place that goes above and beyond our regulations, and to my knowledge there haven’t been incidents … That seems to be an argument that you should not be putting in additional burdens and regulations.”

While body cameras got the most attention at the CCC’s meetings, one provision in the proposed home delivery regulations with the potential to be far more consequential is the option to use a “third-party technology platform provider” to facilitate the ordering process. In simpler terms, we could soon be saying “there’s an app for that.”

While there is still a thorny tangle of federal and state laws preventing a true e-commerce for cannabis, it’s not hard to imagine startups racing to be the first ‘Uber for weed.’ This would certainly make the consumer experience even more convenient, but it would mean yet another blow to the delivery only retailer’s profit margin, and does not seem consistent with the goal of lowering the barrier to entry for small businesses.

Of course, excitement about new markets comes with the important caveat that the rules still need to be finalized and, in some cases, there would need to be a corresponding change in state law. Nevertheless, it is encouraging to see that regulators are willing to consider new ideas for Massachusetts’ cannabis industry. The lines around the block at the first retailers have everybody seeing dollar signs, but with no statutory limits on the number of licenses that the CCC can issue, it is only a matter of time before supply exceeds demand.

In states that are further along in this process there is already evidence of a boom-bust cycle, as oversupply causes wholesale prices to plummet and smaller operators are forced out of the market. In Massachusetts, where the cannabis industry is still relatively nascent, there is still opportunity for regulators, consumers, activists, and entrepreneurs to play important roles in shaping the future of the industry.

Attorney Isaac C. Fleisher is an associate with Bacon Wilson, P.C., where his practice is focused on business and corporate law, with particular emphasis on the rapidly expanding cannabis industry. An accomplished transactional attorney, he has broad experience in all aspects of business representation, for legal matters ranging from mergers and acquisitions to business formation and financing; (413) 781-0560; [email protected].

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