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Law Special Coverage

Such a Move Could Bring Order to Cannabis Control Commission

By Scott Foster, Esq. and Johannah Huynh

For business and civic leaders in Springfield, the appointment in 2004 of the Springfield Control Board remains a watershed moment in the city’s fiscal history.

Regardless of how one felt about the city being plunged into receivership by the Legislature through the appointment of the Control Board, the results were unmistakable, as the city went from having an annual budget deficit of $41 million in 2004 to having cash reserves of $34.5 million when the Control Board was disbanded in 2009. Springfield has continued to enjoy the fruits of the newfound fiscal responsibility with an ever-increasing bond rating since 2009.

Bruce Stebbins, a longtime resident of Western Mass., but then a recent resident, was elected to Springfield’s City Council in the midst of the Control Board’s tenure and had a ringside seat to the Control Board’s temporary reign over the city. He continued to serve on the council through the end of the Control Board and then became become Springfield’s Business Development administrator, reporting to the city’s chief Development officer.

Scott Foster

Scott Foster

Johannah Huynh

Johannah Huynh

Stebbins’ experience engaging with the Control Board and helping bring the city to financial stability may prove immensely valuable if the Massachusetts Office of the Inspector General (OIG), the top watchdog agency in Massachusetts responsible for preventing fraud and waste and abuse of public funds, get its wish.

In a recent six-page letter addressed to the Commonwealth’s top elected officials, the OIG strongly urged the Massachusetts Legislature to immediately appoint a receiver to run the day-to-day operations of the Cannabis Control Commission (CCC) while the Legislature concurrently reviews the CCC’s statutory governance structure.

Over the past two years, the CCC has been plagued by internal turmoil, which the OIG suggested is partially a result of the CCC’s enabling statute failing to clearly define or delineate the duties and responsibilities of the leadership hierarchy. The OIG’s recommendations for the Legislature to overhaul the governance structure seek to address the root of the CCC’s problems.

“Not only might the temporary appointment of a receiver allow the Legislature to resolve the CCC’s governance structure, but it could also better promote the efficiency of a regulatory body, which would be a welcome development for the hundreds of businesses that rely on the CCC’s oversight.”

Since the enabling statute is, according to the OIG, “unclear and self-contradictory with minimal guidance on the authority and differing responsibilities of the CCC’s commissioners and staff,” it’s surprising that the CCC has been able to oversee $322 million in tax and non-tax revenue in the most recent fiscal year.

The OIG was also concerned that, despite spending $160,000 on mediation services since May 2022 to draft a governance charter, the commissioners have yet to release meeting minutes relating to the discussion of the charter, publicly release a draft charter, approve the new charter, or even provide assurance that the mediation process is complete. Even if a governance charter were adopted, the OIG emphasized, such a charter would not have the force of law — only binding the CCC to the extent the commissioners agree.

 

Internal Strife

Acting CCC Chair Ava Callender Concepion has pushed back on the call for a receivership by citing the commission’s recently proposed blueprint of a governance structure in its final stages of legal review subject to a public meeting.

The ongoing lack of an official chair of the CCC was also cited by the OIG as an area of concern. Amidst the suspension of CCC Chair Shannon O’Brien by the treasurer since Sept. 14, 2023, the commissioners have disagreed on who held the appropriate authority to appoint Callender Concepcion to the role of acting chair. Just last month, the CCC voted to relieve the acting executive director, Debbie Hilton-Creek, of her day-to-day responsibilities, leaving the CCC without a duly appointed leader to oversee the operations of the agency.

Even in the absence of clarity on who has authority to do what, the OIG notes that compliance with the Open Meeting Law, which prohibits two or more commissioners from discussing matters outside of a publicly posted meeting, is simply impractical with respect to a large state agency overseeing day-to-day operations.

With such decentralization of management and ambiguous authority at the CCC, the OIG has stressed the urgency of appointing a receiver with the authority to manage the day-to-day operations of the CCC. Specifically, the OIG recommended that the receiver should be expressly authorized to both carry out the daily administrative functions of the CCC and carry out said functions notwithstanding any assertion of by the chair, acting chair, or commissioners under Chapter 76.

If the Legislature were to heed the OIG’s findings, the appointed receiver would have unchallenged authority to carry out the CCC’s administrative operations until the Legislature has resolved the CCC’s governing structure.

In this context, for an agency responsible for bringing in approximately $322 million in tax and non-tax revenue in FY 2023 alone, a receiver that was statutorily authorized to do what the CCC cannot, per the OIG, would be in the best interests of the cannabis industry, its consumers, and ultimately the constituents.

Not only might the temporary appointment of a receiver allow the Legislature to resolve the CCC’s governance structure, but it could also better promote the efficiency of a regulatory body, which would be a welcome development for the hundreds of businesses that rely on the CCC’s oversight.

 

Scott Foster is a partner at Bulkley Richardson in Springfield, and Johannah Huynh is a summer associate at the firm.