For the first time since rewriting the voter-approved legalization law in the summer of 2017, Massachusetts lawmakers are poised this session to reform state cannabis policy as the House and Senate have each now approved legislation targeting some of the most persistent issues in the young industry.
The House voted 153-2 on Wednesday afternoon to pass a bill that aims to promote greater diversity in the legal marijuana industry, ratchet up oversight on the host community agreements that marijuana businesses are required to enter into with municipalities, and to lay the groundwork for cities and towns to green light on-site cannabis consumption establishments within their borders. The 'no' votes were cast by Rep. Jeff Turco, a Winthrop Democrat, and Rep. Marc Lombardo, a Billerica Republican. The Senate unanimously passed similar legislation last month.
"Since the passage of legal recreational cannabis, the creation and growth of the legal industry in the commonwealth has been, in most cases, a success, leading to hundreds of new businesses, thousands of new jobs and the creation of new revenue streams for the commonwealth and its municipalities through this new and innovative industry," Rep. Dan Donahue of Worcester, the House chair of the Cannabis Policy Committee, said as he introduced the bill. "It is, however, time to revisit the initial legislation to provide clarity on the intent of legislation and to work to ensure we continue to remove barriers to entry into this unique industry for those communities who are so disproportionately harmed and impacted by the prohibition of marijuana."
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 20 of the 346 marijuana businesses (less than 6 percent) that had started operations as of January are connected to participants in the Cannabis Control Commission's social equity program or economic empowerment entrepreneurs, Donahue said. Access to the capital necessary to start a business has repeatedly been singled out as a serious impediment facing SE program participants or EE priority applicants as they try to break into the industry.
The House bill would direct 20 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, into a new Social Equity Trust Fund. That fund would offer grants and loans to boost participation in the cannabis field among populations disproportionately harmed by the War on Drugs.
The original House bill called for 15 percent, but representatives adopted a Rep. Chynah Tyler amendment Wednesday to push the figure to 20 percent. For fiscal year 2021, a 20 percent share of just the cannabis excise revenue ($112.37 million) would have worked out to about $22.47 million for the trust fund.
"This increase is necessary because, as business owners, they'll tell you that they need about $1 million to realistically break ground to get into this industry. So if we really want to bring social equity to this industry, if we really want to do what we say by putting our money where our mouth is, we have to invest real dollars," Tyler said.
The Senate bill created a similar fund for the same purpose, but called for seeding it with 10 percent of annual Marijuana Regulation Fund revenue.
Both bills put the fund under Executive Office of Housing and Economic Development oversight in consultation with a Cannabis Social Equity Trust Fund board consisting of "individuals from, and with experience advocating on behalf of, communities that have been disproportionately harmed by marijuana prohibition and enforcement," but the House bill gives more power to the executive branch to write the rules for the fund.
On the issue of host community agreements (HCAs), the bill would more explicitly define what can and cannot be included in the contracts, codify a municipality's right to waive the requirement to have an HCA as a handful have already done, and would direct that the CCC "shall review and approve each host community agreement as part of a completed marijuana establishment or medical marijuana treatment center license application and at each license renewal."
The CCC would be prohibited from approving a final license application "unless the commission approves the host community agreement and certifies that the host community agreement complies" with the language proposed in the bill.
HCAs have given businesses, entrepreneurs and regulators fits basically since the CCC began licensing businesses in Massachusetts. Prospective businesses, lawyers, lobbyists and regulators have pointed to stories about cities and towns demanding more from businesses than state law allows, up to 3 percent of gross sales, and requiring payments that aren't reasonably related to the costs incurred by the town for hosting the marijuana business.
"When a municipal official ... asks for more than is reasonably related to the operation of an establishment, they create demands and erect barriers which many small businesses and local entrepreneurs cannot overcome or fairly compete amongst," Donahue said.
Shaun Suhoski, the town manager in Athol and chair of the Small Town Administrators of Massachusetts, wrote to House lawmakers Wednesday asking them to support Rep. Natalie Blais' amendment (#19) to add language to exempt any HCAs in effect before the bill becomes law from commission review throughout the initial term of the agreement. He argued that towns like Athol that were on the leading edge of the legal industry in Massachusetts sought a financial benefit for citizens in exchange for embracing a new industry with unknown consequences.
"Substantial time, effort and money was expended to create local bylaws, ordinances and zoning reforms necessary to allow these new enterprises. Now, perhaps because a very few bad actors acted in bad faith, the entire host community agreement process that was followed in good faith and which has resulted in at least one thousand mutually agreed contracts across the Commonwealth appears to be under fire," Suhoski wrote. "These existing contracts should speak for themselves and not be subject to ex post facto regulation."
The Blais amendment was withdrawn without any discussion on the House floor, as were about a dozen other proposals representatives filed for consideration Wednesday.
More than two years ago, the CCC approved regulations that paved the way for social consumption establishments where adults could buy marijuana and use it in a social setting. But the agency said the pilot program it 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 House bill includes what Donahue said are "technical fixes" to allow municipalities to vote by a local referendum vote or through a vote of the municipal government for social consumption to take place in their community.
"Social consumption sites are important to establish because many residents do not have a location where they may legally consume cannabis products. This issue disproportionately affects renters, especially those in public housing and medical patients. In addition, social consumption businesses tend to have lower startup costs than other license types," Donahue said.