State considering revised cannabis regulations regarding equity, host community agreements
Photo | Courtesy of Green Meadows
A cannabis flower strand known as Canuk Cookies growing at Green Meadows' cultivation facility in Southbridge.
The Senate is planning next week to debate legislation targeting persistent issues with host community agreements and social equity in the growing legal cannabis industry in Massachusetts.
There was no objection Thursday among members of the Senate Ways and Means Committee to favorably advancing a redrafted version of a bill to put tighter restrictions on the legally-required contracts between marijuana businesses and their host communities, establish a Cannabis Social Equity Trust Fund and lay the groundwork for cities and towns to allow on-site cannabis consumption establishments. Five committee members, three Democrats and two Republicans, opted to reserve their rights and did not weigh in favorably or unfavorably.
The Senate placed the bill (S 2801) on the agenda for Thursday, April 7, and established a deadline of 3 p.m. Monday for senators to propose amendments.
The Legislature has long maintained a mostly hands-off approach to marijuana policy. Lawmakers passed up their opportunities to act before voters approved decriminalization in 2008, medical marijuana in 2012 and adult legalization in 2016, but then delayed and rewrote significant portions of the 2016 ballot law legalizing marijuana. Otherwise, the Legislature has largely avoided cannabis issues though some provisions in the bill the Senate plans to take up next week mirror those of a bill that the House passed in early 2020 but which never surfaced in the Senate.
The bill would make grants and loans, including no-interest loans and forgivable loans, available to participants in the Cannabis Control Commission's social equity (SE) program or economic empowerment (EE) priority applicants through a Cannabis Social Equity Trust Fund. Each year, the fund would get 10 percent of the money in the Marijuana Regulation Fund, which is where revenue brought in by the state's marijuana excise tax, application and licensing fees, and industry penalties is deposited.
For fiscal year 2021, a 10 percent share of just the cannabis excise revenue ($112.37 million) would have worked out to about $11.24 million for the trust fund.
Massachusetts was the first state in the country to mandate that equity and inclusion be part of its legal cannabis framework and was the first to launch programs specifically designed to assist entrepreneurs and businesses from communities disproportionately harmed by the decades of marijuana prohibition.
But more than three years since the first legal sale here, just 6 percent of the licenses issued for the cannabis industry have gone to SE program participants or EE priority applicants, the Joint Committee on Cannabis Policy said when it released its draft of the legislation. Out of more than 1,000 applications submitted to the CCC as of November, just 232 came from SE or EE applicants.
Sen. Sonia Chang-Diaz, who co-chairs the Joint Committee on Cannabis Policy, said the bill the Senate will debate next week "will take major steps to change that."
"By reducing high costs of entry and providing new avenues to capital for social equity entrepreneurs, this bill tackles long-identified problems that have kept the cannabis industry in predominately white and already-wealthy hands," the senator, who is also running for governor, said. "It's a major breakthrough, not just for racial equity in this industry, but also towards closing our state's gaping wealth divide overall and repairing some of the harms from the War on Drugs."
The Senate bill also includes a provision that appears to redirect one percent of marijuana excise tax collections from social equity businesses to the municipalities where those businesses are located.
The bill text refers to a "sum equal to 1 per cent of the total sales price received under this section [dealing with the state's 10.75 percent marijuana excise tax], from a marijuana retailer that is a social equity business" while a Senate Ways and Means Committee summary of the bill refers to "a sum equal to 1 per cent of the total sales received in the marijuana excise tax from marijuana retailers who are social equity businesses." A spokesman for the committee did not immediately respond Thursday to a request for clarification.
On the issue of host community agreements (HCAs), the bill would direct the CCC to "review and approve host community agreements" and also to "regulate and enforce all host community agreements." The CCC could only approve applications for provisional licensure or renewal if it has certified that the HCA is in compliance.
The bill would also more specifically define what can and cannot be included in the contracts, and would codify a municipality's right to waive the requirement to have an HCA as a handful have already done.
HCAs have given businesses, prospective businesses and regulators fits basically since the CCC began licensing businesses here. Entrepreneurs, lawyers, lobbyists and regulators have pointed to stories about cities and towns demanding more from businesses than the state's marijuana laws allow, up to 3 percent of gross sales. The CCC began wrestling with the issue in 2018, determined it lacks the authority to intervene or reject an application based on the HCA and voted in January 2019 to formally request that the Legislature give it that authority.
The bill to be considered in the Senate also addresses an issue that has kept social consumption sites -- establishments where an adult could both purchase and use marijuana -- from becoming a reality in Massachusetts.
More than two years ago, the CCC approved regulations that paved the way for establishments where adults could use marijuana together in a social setting. But the agency says the pilot program it has designed for up to 12 communities "would not be able to begin without a change in state law or the passage of legislation that will first allow cities and towns to authorize social consumption in their communities."
The Senate bill includes language that would create a process for voters to "request that the question of whether to allow, in the city or town, the sale of marijuana and marijuana products for consumption on the premises where sold, be submitted to the voters of the city or town."
The Senate on Thursday also teed up its own version (S 2802) of a House-approved women's rights history trail bill for consideration next Thursday.
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