Update on the Massachusetts Cannabis Regulatory Scene

 

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By Vice President Christopher Niles

After a week of debate and compromise, the Massachusetts Cannabis Control Commission (CCC) is poised to vote to adopt final regulations this week that will govern the recreational cannabis market in the Commonwealth. While the CCC approved parameters for a robust industry, they did vote to delay controversial provisions included by the CCC in earlier versions of the regulations that would have allowed delivery services and “social consumption” businesses that would also sell cannabis (e.g. cafes, movie theatres and yoga studios). As part of the compromise CCC committed to revisiting these issues in October and to provide those licenses to populations disproportionately impacted by the “war on drugs.”

Access to the substantial capital needed to operate a cannabis business and the ability to complete many financial transactions remain a significant problem. The rescission of the Cole memorandum that provided some safe harbor for state initiatives by U.S. Attorney General Jeff Sessions, coupled by comments by US Attorney for the District of Massachusetts Andrew Lelling, have limited the ability of cannabis businesses to bank and in some cases complete debit card transactions. The banking pinch is concerning enough that CCC Chairman Steven Hoffman recently floated the idea of a state supported bank for cannabis businesses. While likely not an immediate option for consideration, it speaks to the limitations that these companies will have to work around in the near term.

More on the recent CCC actions can be found here.

The CCC has navigated a complex set of issues and the licensing process appears on track to meet the July 1stdeadline, establishing a competitive market that some estimates believe to reach $1 billion by 2020. However, significant operational challenges remain for businesses to be up and running by July 1st, and the potential conversion of the 22 existing medical marijuana dispensaries to also offer recreational sales on July 1st will put a strain on supply. To that end, the CCC mandated that medical cannabis dispensaries must retain 30% of their supply for medical patients.

With clear guidelines from the CCC nearly in place, attention will begin to shift to the local level as businesses work to locate in municipalities across the Commonwealth, moratoriums, zoning and host community agreements will have to be addressed and overcome as the cannabis industry attempts to integrate into our social and economic landscape.

O’Neill and Associates has successfully assisted cannabis businesses since the medical cannabis law was approved by voters. For more on our capabilities or questions around this issue please contact us.