While dysfunction at the state’s Cannabis Control Commission has captured headlines, Central Massachusetts cannabis business owners are more focused on a number of other reforms tucked into the legislation signed by Gov. Maura Healey’s on Sunday.Operators care less about governance, more about rules affecting revenue, expansion, and survival.The bill, a result of long discussions over the future of the state’s cannabis regulatory body and the overall industry, came as a compromise between the Massachusetts Senate and House of Representatives. It dissolved the Cannabis Control Commission as it sat, shrinking it from five commissioners to three, all of whom will be appointed by the governor. Current CCC employees have been transferred to the new version of the agency. The fresh start may allow for a reset at the CCC, but business owners who spoke to WBJ were taking a wait-and-see approach when it comes to the impact of restructuring. Instead, more of their focus is on regulatory changes included in the bill.“I don't know how this will impact us,” Alex Mazin, president & CEO of Buds Goods, a business with dispensary locations in Worcester, Abington, and Watertown. “I'd like to see people with a bit more business experience on the board to help guide the industry.”Alex Mazin, president & CEO of Bud's Goods & ProvisionsUlysses Youngblood, president of Major Bloom dispensary in Worcester, said other provisions in the bill are more relevant to his business. At the top of that list is the change allowing consumers to purchase and possess two ounces of cannabis instead of one. With Major Bloom offering delivery services, Youngblood says customers making purchases from the comfort of their own homes typically buy in larger quantities, potentially boosting that aspect of the business. Another important delivery-related aspect is the opening up of more markets by the new bill. Previously, deliveries were only allowed to cities and towns that either permitted retail stores or specifically opted-in to delivery with the commission. Now, in order to ban cannabis home delivery, municipalities have to specifically opt-out. Municipalities in Central Massachusetts where delivery is prohibited include Ashland, Auburn, Holden, Southborough, and Westborough. “Next to Worcester, our next-highest municipality of where people that shop with us come from is Auburn,” Youngblood said.Ulysses Youngblood, founder and president of Major BloomThe bill made some major changes to the licensing structure, which will allow a single entity to possess six retail licenses, up from three. Youngblood, Mazin, and Jason Reposa, founder & CEO of Good Feels in Medway, all agree this could have a big impact on the space and lead to more consolidation. Perhaps even more impactful was the raising of the threshold of equity a person may hold in a cannabis business — from 10% to 20% — before it is considered ownership for purposes of the state’s licensing limit, Reposa said.“You could get five rich friends together, and you just go buy a store; and you might have 100 stores if you wanted to,” he said.Reposa said the changes to licensing limits are one of the more controversial aspects of the bill in cannabis circles. Some pitch it as a way for social equity businesses to exit the space if they are looking to sell, while others feel it could lead to a few large firms dominating the industry.The state’s social equity program is designed to create sustainable pathways into the industry for individuals most impacted by the War on Drugs, including people of color and other communities which were targeted with disproportionate amounts of cannabis arrests when the substance was still illegal. “I don't want to see social equity companies impacted by this, because now a big multi-state operator can just pop up a store next to them, because now they have their fourth, fifth, or sixth, license,” he said. Mazin expects M&A activity in the industry to heat up over the next year, as the dust from the new regulations settle.“You never know if you know your competitor will get purchased by a bigger, more sophisticated operator,” he said. “That will bring greater competition to you, but simultaneously, you could do the same thing to someone else.”Part of the bill attempts to tackle overdue bills between cannabis businesses, a large problem for both big and small companies in the space. The legislation creates a list of businesses which have bills to others more than 60 days past due, banning those firms from doing business with other cannabis companies until that debt is paid off. It follows a similar tactic used by the Alcoholic Beverages Control Commission to prevent companies from accumulating too much debt or jumping from vendor to vendor.Reposa regularly deals with dispensaries unable to pay for products purchased from Good Feels, he said, noting he does everything he can to reach an agreement with social equity businesses who are struggling. While attempting to tackle a very real problem, he feels that inclusion on that list may be a death sentence for businesses, particularly social equity businesses that lack capital and find themselves without any other options. “If you can't pay your bills, you shouldn't exist,” Reposa said. “But I still feel the delinquency list is going to expedite receivership for a lot of companies.”Jason Reposa, founder & CEO of Good Feels PHOTO COURTESY OF GOOD FEELSReposa said the Cannabiz Credit Association, a private source for business credit scores and reports launched in 2023, has been effective in keeping business owners informed about who pays and who doesn’t.All of this change comes as a ballot campaign to recriminalize adult-use cannabis sales looms over the industry. Youngblood, Mazin, and Reposa all expressed some level of skepticism Massachusetts voters will suddenly reverse their opinions on cannabis a decade after first legalizing the substance. But even as polling has shown a high amount of opposition towards the initiative, all three are urging the industry to take this threat seriously. “We just want to start getting it on people's radar that this initiative is a real thing, and we're going to need their vote and their support,” Mazin said, adding that he plans on doing direct outreach to customers to tell them to vote against the initiative. “As time evolves, as we get into late summer, early fall, you're going to see more and more communication and PR efforts.”EDITOR'S NOTE: This story, originally written before Gov. Maura Healey signed the cannabis reform legislation, has been updated to mention the law approved by Healey on Sunday. Eric Casey is the managing editor at Worcester Business Journal, who primarily covers the real estate and banking & finance industries.
