Host Agreement with HEKA for adult use marijuana not recommended

Ward 6 City Councilor William Onyski (WNG file photo)

WESTFIELD – The Legislative & Ordinance Committee voted 3-0 on Thursday not to support a resolution of the City Council for the Mayor to sign a Host Community Agreement with HEKA for adult use marijuana at 89 Sgt. TM Dion Way.
City Advancement Officer Joe Mitchell presented the resolution to the committee, saying he had been working with HEKA for a couple of years on medical marijuana. HEKA Health previously signed a Host Community Agreement in May, 2016 with Westfield for medical marijuana
Plans changed for the company when adult use was approved in the November, 2016 election in Massachusetts. Mitchell said when the Cannabis Control Commission set up the ground rules, medical marijuana establishments were fast-tracked for approval. He said a city cannot create zoning ordinances to prohibit adult use where medical marijuana is allowed.
HEKA then indicated they wanted to enter into adult use, and a new Host Community Agreement was drafted. Mitchell said the new Host Community Agreement will supercede the previous agreement with HEKA.
Mitchell said the CCC has limited Host Community Agreements to a 3% fee. He said what is slightly different with HEKA, is that the previous agreement included a 1% infrastructure improvement fee, and HEKA did do road improvements. The previous agreement also had a 3% excise tax and 3% impact fee.
Mitchell said the business has the potential in the second year of operation to generate $1.6 million in excise taxes and community impact fees. He said the impact fee is restricted in its usage. He said the new growth could equal that of a $42.5 million property, the size of Wal-Mart, Home Depot Warehouse and Gulf Stream combined.
At-large Councilor Nicholas J. Morganelli, Jr. who serves on the L&O committee, asked about the public safety factor.
Mitchell said that all of the cannabis entities are heavily regulated by the CCC regarding security, and interaction with the police. He said there is a paragraph in the Host Community Agreement requiring them to work with the Westfield Police Department, and to notify them within 24 hours if any product goes missing.
Morganelli commented that the business is “uncharted territory,” since prior to the Nov. 2016 vote, marijuana use was illegal. Mitchell said because Westfield voted in favor of medical marijuana in 2016, they can’t vote against adult use at all.
Mark Dupuis of HEKA then came forward to speak to the committee. He said he is a 35-year resident of Westfield, who raised his four children in the city, and has operated a business in Westfield since 1998. He said he pays $30,000 a year in business and residential taxes.
He said originally HEKA Health had planned just a small medical facility, and had begun major construction in October, 2016. The business has since converted from a non-profit to a for-profit company with private offerings, and in early 2018, received two private offerings of $5 million. He said the balance of the funds will be coming in at the end of this month, and the construction of the facility is almost complete.
Dupuis also said that they have put in more money than required into security, with 150 cameras operating. He said regulations to control the facility are extremely high, and the CCC makes unannounced inspections twice a month. He said he also has employed an on-site security officer.
Dupuis said after the construction is completed, he expects to be able to start cultivating in eight weeks or so. He said they plan to start with 50 to 80 pounds a week, increasing to 125 pounds a week by the end of the year, and 200 pounds a week by the spring of 2020.
He also said he is looking to open in July of 2019 in Westfield, and in August of 2019 at another facility in Pittsfield. He anticipates $500,000 of tax income this year, and $1.5 million or more by next year.
L&O Chair William Onyski said what the committee was voting on was a resolution to allow the Mayor sign the agreement with HEKA. He said one of his concerns has been the timeline of the business, since the medical marijuana was voted on and they haven’t opened in more than two years. “That worries me a little bit,” Onyski said.
L&O member Michael Burns agreed. “The timeline is what I’m looking at.”
Mitchell said the Mayor and he were concerned as well, and put in the new Host Community Agreement a requirement that from the date signed, if they don’t open in two years, the agreement would be null and void.
Earlier in the meeting, during public participation, several residents also spoke against the agreement, saying that HEKA had not met any of its promises or timelines to date. However, an attorney representing the company also spoke, disputing the claim, saying one of the speakers was not a disinterested party, and was part of a group competing with and suing HEKA over contract issues.
Onyski said that any mention of a lawsuit would not be considered in their deliberations at the meeting.
“The whole business has been accepted by the public by vote,” said Morganelli, adding that although he disagreed with that vote, the business will bring in tax revenue into the city. “We’re on a learning curve with this whole process,” Morganelli said.
A motion was then made to recommend authorizing the Mayor to sign the Host Communtiy Agreement, which failed, with all three committee members voting no. The negative recommendation will now go the full City Council for a vote. Seven positive votes are required in the City Council for passage.

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