A significant reorganization of the state’s cannabis business is being attempted under a new House bill.
ThebillPassed by the House on June 5, the Act Modernizing the Commonwealth’s Cannabis Laws seeks to improve the Cannabis Control Commission (CCC), promote access and commercial opportunities, raise tax revenue, and address issues with hemp regulation and equity in the sector. The Senate has yet to take any action.
Restructuring the CCC leadership would be the biggest adjustment. In order to consolidate power, the governor would designate two associate commissioners on a part-time basis and a full-time chair. At the moment, the governor, treasurer, and attorney general appoint the five members of the CCC, with the treasurer choosing the chair.
The dysfunction and turnover at the CCC, which the inspector general referred to as “rudderless” and “tainted by controversy” last year, are addressed by the shift in governance and oversight.
It also comes after former Commission Chair Shannon O. Brien was fired by state Treasurer Deborah Goldberg after she was suspended from her position in 2023 for committing egregious misbehavior.
The Joint Committee on Cannabis Policy’s chair, Representative Dan Donahue, claims that the structural adjustments would guarantee the industry has an efficient regulator by enabling it to respond more quickly to business demands.
According to Steve Reilly, head of government relations for the cannabis corporation Insa, this measure provides a lifeline to a sector that is desperately in need of assistance. Like the House, I hope the Senate sees how urgent this is.
Retail & licensing changes
Over a three-year period, the law would raise the retail maximum from three to six licenses per operator. a contentious decision because some claim it benefits big businesses.
However, by making it simpler to sell or switch to employee-owned enterprises, which provide tax advantages, the license expansion would assist owners strengthen their exit strategy, according to Reilly.
According to business executives, it would also assist companies in expanding till they turn a profit.
Additionally, the bill would double the existing one-ounce restriction on cannabis flower purchases, allowing users to buy up to two ounces every day.
Additionally, it would eliminate the need for in-house cultivation and processing, allowing medical marijuana businesses to operate only at retail.
According to Donhanue, the action would detach medicinal marijuana from the vertical paradigm, facilitating the entry of new businesses into the medical sector. Additionally, it would facilitate patient access for retail-only medicinal dispensaries and assist small operators that wish to get involved without having to invest a significant amount of money.
Investment & equity impacts
Small or minority-owned businesses have found it challenging to raise finance due to the current 9% ownership and investment limitations, according to Reilly. According to Reilly, he would want to see the cap raised to 49%, which would allow founders to retain majority ownership, even if the new rule would only raise it to 35% from outside investors.
Equitable Opportunities Now contends that by facilitating corporate domination, the law could hurt socially conscious and small enterprises.
This law is a death sentence for small and socially conscious businesses and a gift to corporate cannabis. How can someone who owns one, two, or three stores compete with someone who purchases six or more? The group’s cofounder, Shanel Lindsay, stated in a statement last week.
It will undo all of the hard work Massachusetts has put into creating the most egalitarian cannabis market in the nation, she added.
Hemp regulations
The bill would restrict the sale of hemp-based beverages to authorized cannabis dealers exclusively, eliminating them from convenience stores and gas stations, and impose a 5.35% sales tax on them.
It would bridge gaps in the federal Farm Bill of 2018, which authorized hemp but permits producers to take advantage of the law. The bill restricts THC to 0.3% by weight, which is effective for plant material but permits significantly larger levels to be present in beverages and other items. Additionally, it permits the unregulated sale of less potent, THC-like cannabinoids generated from hemp.
From a public health and safety perspective, hemp beverages are a serious threat to our sector and are not being tested or regulated, according to Ryan Dominguez, executive director of the Massachusetts Cannabis Coalition.
State of the industry
The timing of the state bill couldn’t be more ideal. Oversupply, rivalry from neighboring states, and ambiguous legislation are all contributing factors to the Massachusetts cannabis industry’s difficulties.
According to Reilly, Massachusetts developed an industry to satisfy the needs of other nearby states. However, they have now caught up and made marijuana sales legal. Although the industry is now selling the right quantity, it is overbuilt in relation to demand.
Dominguez claims tiny firms in the marijuana market continue to close every week, despite the fact that the state’s marijuana establishments established a new record last year with gross sales of over $1.64 billion.
Further complicating operations, according to Donahue, are federal difficulties such as the Farm Bill hemp loophole and 280E tax code limits that do not apply to all marijuana firms because it is still unlawful to obtain the same tax benefits as small businesses on a federal level.
“It will be much worse if the legislation doesn’t pass,” Reilly warned.
What s next?
Although lawmakers have not established a schedule for the bill’s progress, it will now be considered by the Senate.
Stakeholders in the business agree that immediate action is required to stabilize the market and elucidate legislation, especially with regard to hemp products and the CCC’s governance.
Who knows what the industry’s future holds?
Timothy Shaw, COO of MariMed, Inc., a marijuana company, stated, “I’ve given up on having a crystal ball in this industry.” A slam dunk is never what it seems. I’m no longer surprised.
For Boston.com, Beth Treffeisen works as a general assignment reporter, covering local news, crime, and business in the New England area.
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