Leaping Over A Legal Barrier

Land Court ruling paves the way for talks between the town and a company seeking to start a retail pot business

By Mark E. Vogler

Sanctuary Medicinals – the lone company out of seven applicants that obtained a special permit (S-2) last December from selectmen to locate a retail marijuana dispensary in Saugus – hasn’t done anything since because of a lawsuit filed by one of its competitors which challenged the permit. But a ruling this week by the state Land Court granted a motion by Sanctuary Medicinals to dismiss the part of the lawsuit filed by Northeastcann which challenged the S-2 permit issued to Sanctuary. A four-page opinion issued Monday (June 10) by Judge Michael D. Vhay determined that Northeastcann had no legal basis for challenging Sanctuary’s S-2 permit.

Sanctuary has submitted plans to build its dispensary at 181 Broadway, site of the former 99 Restaurant. Issuance of the S-2 permit enables the company to enter into a host community agreement with Town Manager Scott C. Crabtree.

“Sanctuary is free and clear from litigation now, so we’re happy with this ruling,” said Saugus Attorney Peter Flynn, who has been working as a legal consultant for Sanctuary.

“Our clients are just looking forward to setting up a host community agreement with the town manager and moving forward on this soon and hope to take this to the town manager within days,” Flynn told The Saugus Advocate in an interview this week.

Flynn explained that Sanctuary being named as a defendant in Northeastcann’s lawsuit against the town “sort of froze things up,” creating an environment that wasn’t conducive to negotiations with the town, the attorney noted.

“Judge Vhay was very clear in his ruling that this was a baseless lawsuit. And it set us back a quarter of a million dollars, when you consider the time lost, legal costs and having to pay rent at the location where we want to start our business,” Flynn said.

“We’re ready to start work on the 99 and converting it into a facility for our business. But we need to get the host agreement set up with the town manager,” he said.

“As it stands right now, we’re the only one holding a permit [to open a retail marijuana facility in Saugus] and who is not part of any litigation. Sanctuary is in the best position to do business financially.”

A closer look at the judge’s ruling

Northeastcann had sought an S-2 permit for its proposed site at 1529 Broadway, where the Avalon Motel is located. But its application failed on a 2-2 vote by selectmen. That prompted a lawsuit early this year by Northeastcann against the Town of Saugus, the Board of Selectmen and Sanctuary which challenged two decisions. The first count of the complaint challenged the denial of Northeastcann’s application. The second count – the one which Judge Vhay dismissed – challenged the permit obtained by Sanctuary.

Lawyers for Sanctuary filed a motion with the Land Court, contending that Northeastcann lacked standing under state law to challenge Sanctuary’s special permit. Judge Vhay agreed. “Abutters to a property that’s received a special permit have a rebuttable presumption that they’re persons aggrieved,” the judge wrote in his ruling.

“But Northeastcann doesn’t own property abutting the site of Sanctuary’s proposed marijuana facility. In fact, Northeastcann neither owns nor rents any land whatsoever in Saugus,” Judge Vhay said.

“Northeastcann thus lacks the statutory presumption of standing. It nonetheless argues it has standing sufficient to survive Sanctuary’s motion to dismiss on account of (1) being a party to a letter of intent to lease the site of its own proposed marijuana facility in Saugus and (2) its reduced chances of getting a license from the Town of Saugus to open Northeastcann’s own facility [assuming the Court reverses the Selectboard’s decision denying Northeastcann’s permit application, the subject of Northeastcann’s Count 1] now that Sanctuary has its special permit. Neither argument is persuasive,” the judge concluded.

The judge said Northeastcann would still lack standing as an abutter if it owned the property that it plans to build on. Northeastcann’s proposed site at 1529 Broadway is 2.8 miles from Sanctuary’s proposed site at 181 Broadway.

Since Northeastcann doesn’t enjoy a presumption of standing, it must show that it is “a person aggrieved,” the judge said. “In other words,” he added, the permit issued to Sanctuary must cause harm to Northeastcann.

“That the granting of Sanctuary’s special permit may reduce the chances of Northeastcann getting a cannabis-facility is not an interest Saugus’s Zoning Bylaws or the Zoning Act expressly protects,” the judge said.

“Northeastcann concedes that the Zoning Bylaw doesn’t cap, for example, the number of special permits available to marijuana retailers; instead, Northeastcann is fearful that, with a special permit in hand, Sanctuary will proceed to get a separate cannabis operating license (a non-zoning approval), which in turn will allegedly reduce Northeastcann’s chances of getting a similar non-zoning license,” the ruling continued.

“Northeastcann cites no authority that a party’s interest in obtaining a non-zoning approval generally, or a cannabis license in particular, falls within those interests the Zoning Act protects, a prerequisite for claiming ‘aggrievement’ … This court will not be the first to so rule.”

Northeastcann criticized the town manager

In the lawsuit filed early this year, Northeastcann lawyers alleged that Sanctuary Medicinals’ project contained numerous adverse conditions that prevented it from being a marijuana establishment. In the complaint, the lawyers were also highly critical of Town Manager Crabtree and his use of the seven-member Marijuana Establishment Review Committee (MERC) to make recommendations on which companies to issue an S-2 permit. “There is an apparent political dispute between the town manager and selectmen members,” the complaint said.

“The town manager failed to follow the bylaws related to the Host Community Agreement,” according to the Northeastcann attorney.

“Selectmen improperly relied on the findings of the MERC. Selectmen came to meetings with preconceived decisions,” the complaint said. “Selectmen came to the meeting for the special permit, improperly swayed by the MERC and its flawed process.”

Sanctuary was only one of two candidates that received a recommendation from the seven-member Marijuana Establishment Review Committee (MERC) for the S-2 permit. The business received a total of 118 points out of a possible 140 in a scoring system.

“The Respondent’s proposed location is advantageous, and its extensive cannabis experience and current vertical integration business model are significant benefits,” the committee concluded in its analysis.

“The Respondent appeared to be one of the strongest positioned to open, succeed, and provide minimal or manageable impact to the surrounding neighborhood,” it noted.

MERC report rated Northeastcann poorly

Northeastcann finished fifth in the MERC ranking with 32 points. The committee found the proposed site at 1529 Broadway, the current Avalon Motel, as “adequate.” But the committee was concerned about its proximity to existing cannabis retail businesses operating in Malden and Melrose. Access to the site is difficult, due to significant traffic congestion in the immediate area. In addition, the current and future development of Essex Landing has already added significant traffic and roadway layout challenges, according to the committee.

Conclusion: “The lack of an open retail cannabis business and verifiable cannabis retail experience are a concern to the Review Committee. In addition, the proposed location presents negative impact concerns and challenges.”

At the selectmen meeting last December, Selectman Corinne Riley made the motion to approve an S-2 permit for Northeastcann, for its proposed site at 1529 Broadway, the current Avalon Motel. Selectman Anthony Cogliano voted to approve the permit. But Selectman Michael Serino and Board of Selectmen Chair Debra Panetta voted against it citing their confidence in the MERC report’s recommendations. It failed 2-2.

Pat Russolillo, a retired major in the Massachusetts State Police, challenged the MERC findings about access being an issue for the site.

“The best location was the Avalon Motel [Northeastcann], because it would eliminate that public safety nightmare and replace it with a first-class facility,” Selectman Cogliano said in an interview after the December meeting.

Selectman Riley also spoke in support of Northeastcann’s application. “To me, it’s unfortunate that the proposed facility at the Avalon Motel [Northeastcann] wasn’t one of the applications approved, as I feel it would be a better use of the site than the current motel with the state renting rooms to migrants, putting a strain on our Police Department and school district,” she said.

Board of Selectmen Chair Debra Panetta defended the way the MERC conducted business in making its recommendations. “Both Sanctuary Medicinals and Uma Flowers received the highest scores on location by the Town of Saugus Marijuana Establishment Review Committee,” she said in an interview last December after the vote.

“As a Selectman, I have trusted the recommendations of our Police Chief, Fire Chief, Public Health Director and Building Inspector, where these four individuals were members of this committee. I welcome Sanctuary Medicinals to Saugus, and I wish them the best of luck,” she said.

She noted that the Board of Selectmen’s responsibility was to grant an S-2 permit (special permit) based on the best location, traffic flow, neighborhood impact, access/egress, proximity to schools, circulation flows, parking and queuing, etc., “as required by our zoning bylaws.”

“Once the Board issues the special permit, it’s the Town Manager’s responsibility to enter into the host community agreement. Then it’s up to the state, the Cannabis Control Commission, to issue the license,” she said.

Another pending lawsuit

Uma Flowers, LLC, with a proposed location at 24 Broadway (Route 1 North) – the site of a former house that was torn down – was the unanimous selection of the seven-member committee, achieving a perfect score of 140 total points, based on an “exceptional” rating by each member in each of the five categories that were considered. But Uma Flowers could only muster three of the selectmen’s four votes for the issuance of an S-2 permit.

Selectman Anthony Cogliano, who has been an outspoken critic of the MERC report and its ranking of Uma Flowers with a perfect score, cast the lone vote against Uma Flowers at the Dec. 12 meeting when selectmen issued just one of a possible three S-2 permits. “I don’t believe it’s in the top three locations,” Cogliano said at the December meeting.

“I’m not going to be boxed in on the vote,” he said.

Uma Flowers claimed in its appeal to the Land Court that Selectman Cogliano appeared to be biased against Uma and in favor of Bostica, LLC – a company managed by a personal friend. Uma’s complaint seeks to refer its application back to the board for reconsideration with orders that Cogliano be disqualified from participating in the public hearing or voting on the application. In its appeal, lawyers for Uma noted that Cogliano admitted to having a personal relationship with Raymond Falite, manager of Bostica and a personal friend for 30 years. The court complaint noted that Cogliano had even filed a conflict of interest disclosure. During the hearing process, Cogliano disparaged Uma and made factually inaccurate statements about the company, Uma alleged.

“Mr. Cogliano’s personal interest conflicted with his public duty,” the complaint said.