Massachusetts wants to do legal cannabis the right way. Interestingly enough, Massachusetts was the first U.S. state to formally criminalize recreational cannabis. A century later, in 2016, they joined the short list of states to legalize it. Massachusetts now joins 9 other states and the District of Columbia, who have all legalized recreational cannabis. The majority of states in the U.S. have decriminalized or legalized cannabis is some form, which means each state has had to decide how to regulate and control the industry operating within their state.

When the voters of Massachusetts made their voices heard in 2016, state and local lawmakers had to come up with guidelines for how cannabis businesses would be able to operate. In 2018, President Trump signed a law which removed hemp-derived CBD from the list of Schedule I substances and reclassified it as an “agricultural commodity.” These recent legal progressions show the rising importance of cannabis and the cannabis industry in the United States and Massachusetts. The Boston Globe Spotlight Team recently launched an investigation into Massachusetts’ new cannabis laws in order to better understand how this new industry has begun to operate in our state.

How Is It Regulated?

In their investigation, The Boston Globe looks into the types of regulations being placed on the Massachusetts cannabis industry and who the players in that industry are. In their articles, they deep dive specifically into the licensing process and what it takes to physically open a new cannabis-related business in Massachusetts. They dissect what it takes to acquire licenses as a small business owner, how new cannabis businesses are being funded, and what the Massachusetts legislature is doing to regulate the industry and fairly distribute opportunity.

The cannabis industry in Massachusetts can be described as a “gold rush.” Massachusetts decriminalized small amounts of cannabis in 2008 and legalized the medical use of cannabis in 2012. The decriminalization of cannabis did not allow for the industry to form, as the sale and cultivation of cannabis was still illegal within the state. In 2012, the legalization of medical cannabis allowed for some businesses to form but the total profit potential based on market size and clinical nature of medical cannabis is not as appealing for entrepreneurs as recreational cannabis. The voter-approved legalization of recreational cannabis in 2016 opened the doors for entrepreneurs big and small to turn their eye to new opportunities. Business owners began to enter the licensing and permitting processes, and the first two recreational stores in Massachusetts opened in 2018. There are now two dozen retail dispensaries across the state.

Massachusetts legislators enacted the law that legalized the use of cannabis for adults 21+ years old. Recreational marijuana (the law actually calls it “adult use”) legalization came with several goals and restrictions. For example, companies are limited to owning, managing, or influencing up to three recreational licenses. This is in an effort to limit large companies swooping into Massachusetts and monopolizing the industry. Massachusetts was also the “first in the nation to make social justice goals a cornerstone of marijuana legalization.” This innovative inclusion, which was part of the initiative approved by the voters and written into the law, has been recognized as an example of how other states might address disadvantaged communities.

What Are The Outcomes?

Is Massachusetts seeing the intended outcomes of this law? The Globe Spotlight Team, and many people, think not. According to Kevin Murphy, CEO of Acreage Holdings, “the race to be the Coca-­Cola of cannabis is just beginning.” While minority and smaller entrepreneurs struggle to utilize the system and open businesses, there are many large companies, such as Acreage Holdings, that have been attempting to acquire more than the three permitted licenses. If they remain unchecked, these larger companies could potentially assert influence over numerous operating licenses and threaten the diversity of the industry. Despite the original intentions of Massachusetts voters and their legislators, the behavior of some large industry players have created cause for concern. According to the Globe report –

“Massachusetts lawmakers, mindful of this dynamic and of the disproportionate enforcement of cannabis laws against black and Latino communities, sought to level the playing field by mandating preferences for potential minority operators and by setting a three-license limit for all companies trying to enter the market. But, despite those rules, the field remains severely tilted thus far. Of the 15 recreational cannabis stores opened as of the start of April, not one is run by a minority operator.”

What Does This Mean For The Future?

This does not mean that won’t change in the very near future. There are currently numerous minority entrepreneurs who are working towards opening their doors without money or influence from larger companies. According to one such entrepreneur, “owning a business creates an opportunity for generational wealth, [and] creates an opportunity to affect the lives of people other than yourself.” However, Massachusetts regulations require applicants to show that they possess $500,000 just to sign the initial paperwork. Therefore, many companies with bigger backers and more disposable income were able to open their doors quicker.

City and town officials must approve each individual application for a cannabis business license by entering into a host community agreement with applicants. These municipal officials have a lot to sort through when it comes to cannabis applications. Not only must they work to uphold the people’s desire to prevent monopolies and provide opportunities for minorities, but they must also balance safety and drug use concerns with the hope of new jobs and tax revenue. Local communities are theoretically meeting the wishes of their individual community’s voters, while the state Cannabis Control Commission (not the legislators) are trying to implement the intent of voters state-wide to provide opportunities for communities disadvantaged by the war on drugs. The cannabis industry in Massachusetts is just getting started, and the CCC and legislators will have to keep a close eye on things to ensure the industry remains both equitable and profitable.

Sources:

The Boston Globe

DISA Global Solutions