By Thomas Grillo, Special for The Journal
City Hall has been served with a subpoena as federal prosecutors investigate alleged potential corruption between marijuana retailers and the city, according to documents obtained by The Lynn Journal.
The two-page grand jury summons from U.S. District Court in Boston and U.S. Attorney Andrew Lelling requested records relating to companies that have applied for a pot shop license in Lynn.
The city is not the only community to receive a subpoena. Several other communities, possibly every municipality that has agreements with marijuana shops, are being investigated.
Lelling’s Public Corruption Unit is seeking copies of so-called host agreements, contracts between marijana sellers and the city that specify financial benefits these retailers will provide; all communications between officials and applicants; and records of public meetings on the topic.
Lynn has until Dec. 13 to provide the documents. Sources said municipalities with multiple license applicants have easily generated more than 5,000 emails.
A spokeswoman for the U.S. Attorney’s Office would not confirm or deny the investigation noting grand jury sessions are secret.
George Markopoulos, Lynn’s city solicitor, did not respond to a request for comment. Through a public records request, the city’s Law Department provided The Journal with host agreements from Apothca, Essex Apothecary, Old World Remedies, Bostica, Mass Green Retail, and Lynn Organics.
Apothca, on the Lynnway, is the only pot shop in the city while the others are in the planning stages.
A review of the documents revealed the contracts signed by Mayor Thomas M. McGee appear to be in line with state law. The Legislature limited the value of payments to municipalities to 3 percent of a company’s annual revenue for a maximum of five years. It also mandates that any payments be related to the actual costs generated by the marijuana facility.
Lynn’s subpoena comes two months after Fall River Mayor Jasiel Correia was arrested for allegedly extorting $575,000 from companies seeking to operate marijuana businesses in that city.
Correia, who was defeated in his bid for reelection earlier this month, faces up to 70 years in prison and a $750,000 fine. He has pleaded not guilty.
During a press conference, Lelling said Correia “has allegedly engaged in an outrageous, brazen campaign of corruption that turned his job into a personal ATM.”
He warned his office would continue probing corruption around marijuana businesses and said pot bribes may be happening in other communities.
The Boston Globe was the first to report that at least six communities, including Great Barrington, Eastham, Leicester, Newton, Northampton, and Uxbridge have received subpoenas. The Boston Herald later revealed Boston, Dracut, and Leicester have also been served.
In total, 78 host agreements have been signed with 45 cities and towns, according to the Cannabis Control Commission, the state agency in charge of monitoring pot retailers. Sources say it’s likely that all of the municipalities with host agreements have received a subpoena.
The contracts, which each recreational marijuana firm must sign with the community where they propose to operate before applying for a state license, typically call for substantial payments to the municipality.
McGee has said Apothca anticipates $10 million in revenue in their first year. Of that, $600,000 would go to the city’s coffers.
But some critics have charged that mayors, town managers, city councils, boards of selectmen, and aldermen seek more money than allowed under state law. They argue local control over cannabis companies could create opportunities for corruption.
But David Torrisi, executive director of the Commonwealth Dispensary Association, a trade group which represents licensed marijuana operators, said it’s unlikely investigators will find any corruption.
“What happened in Fall River was the genesis of this larger investigation, but my gut tells me the former mayor of Fall River was an outlier,” he said. “Most municipal officials are honest people trying to do good by their communities and trying to get as much revenue for their city or town. I’d be shocked to see more than the Fall River case.”
Thomas Grillo can be reached at [email protected]