Massachusetts cannabis advocates rejoiced on November 8, 2016, when voters passed a ballot initiative to legalize recreational cannabis. But when the rejoicing was finished, the waiting began. Many legislators had vocally opposed legalization and remained highly skeptical of the relatively permissive terms of the ballot initiative. Others were supportive of legalization, but wanted strong regulations that could preserve the benefits of the cannabis industry for a broad swath of demographics.
After multiple postponements and delays, the first adult-use retail stores finally opened their doors in November 2018. As of today, there are still only 47 retailers in the entire state that are authorized to operate.
This slow rollout is due in large part to the labyrinthine, and occasionally contradictory, framework of state and local compliance. Applications for a state license require contributions from numerous professionals and multiple rounds of review, resulting in a process that usually takes more than a year. Applicants must also obtain myriad local approvals, including a host community agreement, which typically mandate a community impact fee of up to 3% of gross revenue. Municipalities are afforded broad discretion in their permitting requirements and can even limit the number of marijuana establishments they will allow, or pass an outright ban.
However, with the economic volatility and black market diversion that is endemic in some less regulated states, there is a persuasive argument that the slow rollout in Massachusetts is a fair price to pay for a stable and sustainable cannabis industry. At nearly 7 million residents, Massachusetts is the largest adult-use state in the Northeast, but instead of turning over this vast market to big business, the regulations impose a strict limit of three licenses (of each type) that any one entity can own or control. Additionally, every license application must include an approved diversity plan and a plan for benefiting regions in the state that were disproportionately impacted by prohibition.
In 2020 the license review process has finally begun to streamline and, due in large part to pressure from activists, there has been a renewed focus on increasing diversity among the ownership of marijuana businesses. Additionally, the Cannabis Control Commission has begun reviewing the first applications in a new pilot program for home delivery licenses, and another pilot program for social consumption licenses is in the works.
With the Massachusetts cannabis market projected to reach $1.35 billion by 2024, it is starting to look like slow and steady just might win the race.
Isaac C. Fleisher | Bacon Wilson, P.C.
Isaac Fleisher is an attorney with Bacon Wilson, P.C., and a founder of the firm’s cannabis law group, where he represents clients in all aspects of the regulated cannabis industry.