U.S. Attorney's Office Investigating Newton Marijuana Contracts

NEWTON, MA — The U.S. Attorney's office asked Newton, Brookline and several other Massachusetts communities to turn over documents related to the host community agreements they signed with marijuana retailers as part of a federal grand jury inquiry. The investigation is an effort by federal prosecutors to crack down on potential corruption at the local level in the state's newly-legalized recreational marijuana industry, on the heels of a scandal in Fall River.

"I can confirm that we did get the subpoena much like Brookline and every other place," Ellen Ishkanian, a spokesperson for the Newton mayor's office. "And we are going to fully cooperate and give them all the information they need."

Ishkanian noted that all the Community Host Agreements are all online.

"You can read them all there, we have nothing to hide," she said.

As part of the licensing procedure at the local level, the recreational cannabis retailer must work together on and then sign a host community agreement. The agreements have been controversial, as they typically require the retailer to make payments to the host community.

State law is murky on what is and is not acceptable. The state says municipalities can only collect up to 3 percent of revenue for five years, and that the money be used to offset impact related to hosting the stores. But communities have argued the law does not prevent them from collecting separate fees or requiring the retailers to make donations.

In Newton, for example Garden Remedies agreed to pay the city 3 percent of the store’s medical and recreational marijuana revenues. It also makes a $2,500 annual donation to a local charity.

And Ascend, which plans to open in 2020 if everything goes to plan, volunteered to provide an additional financial support to Newton nonprofit(s) of $2,500, increasing by 5 percent annually.

Ascend has also promised to invest in the renovation and build-out of the vacant building, using local construction crews. The company promises to bring 35 salaried jobs to the area, which it intends to source locally. Ascend indicated it will provide 3 percent of gross revenue to the city.

Critics say those upfront payments combined with the high legal and consulting fees needed to secure licensing are stacking the deck in favor of big, corporate players in the state's cannabis industry.

A spokesperson for the U.S. Attorney's office declined comment Tuesday to Patch. But the Boston Globe reported that the office is reaching out for a wide range of documents related to the agreements, including unsigned drafts of the agreements, emails and other communications between officials and the applicant, as well as among officials, documents about municipal employees trying to secure marijuana retailers or who have gone on to work in the industry and minutes from meetings where host agreements were discussed.

The probe is far-reaching. The newspaper said Great Barrington, Eastham, Leicester, Northampton, and Uxbridge have all received the subpoenas, and that there are likely other communities being asked to turn over the documents. Brookline confirmed to Patch that they, too had received a subpoena.

In September, the U.S. Attorney's office charged Fall River Mayor Jasiel Correia with extorting marijuana vendors for more than $600,000 to secure a host city agreement. Federal prosecutors said at one point he accepted $75,000 in the backseat of a car for the letter of non-opposition one retailer needed for their state license.

-Additional reporting from Dave Copeland/ Patch Staff.