Equitable Measures in Massachusetts Cannabis
*What is the Social Equity Program?
The Social Equity Program (SEP) is a free, statewide, technical assistance, and training program that provides education, skill-based training, and tools for success in the cannabis industry. The SEP focuses on those most impacted by the War on Drugs, marijuana prohibition, disproportionate arrests and incarceration, and provides education and entry across four areas: entrepreneurship, entry- and managerial-level workforce development, and ancillary business support. Applicants are eligible for the SEP if they demonstrate at least one of the criteria.
*What is Economic Empowerment Priority?
Requires the Commission to prioritize review and licensing decisions for “applicants seeking retail, manufacturing, or cultivation licenses who were able to demonstrate experience in – or business practices that promote – economic empowerment in disproportionately impacted communities.” Applicants were certified as Economic Empowerment Priority Applicants if the individual or group of individuals applying met three of six criteria.
*What is a Medical Treatment Center?
A Medical Marijuana Treatment Center, commonly referred to as an MTC, is an entity licensed under the medical regulations. An MTC acquires, cultivates, possesses, processes, transports, sells, distributes, delivers, dispenses, or administers marijuana, products containing cannabis or marijuana, related supplies, or educational materials to registered qualifying patients or their personal caregivers for medical use. MTCs may deliver marijuana and marijuana products directly to patients and caregivers after receiving Commission approval.
*Pulled directly from the Massachusetts Cannabis Control Commission webpage.
Equitable Measures in Massachusetts Cannabis
Massachusetts has been known as a state paving the way for social equity in the cannabis industry. States new to the legal cannabis industry such as New Jersey, are being advised to create equity among licensees, looking at Massachusetts as an example. However, equity is hard to come by, and many barriers have been created in the cannabis industry. While not made purposefully, these barriers have slowed the process for social equity applicants to be licensed and fully functioning facilities.
There are numerous license types in Massachusetts, all with different criteria for entry and benefits. Massachusetts currently has both Adult-Use and Medical cannabis legal. Minority-Owned Licenses (including veterans, woman-owned, disability-owned, LGBTQ, etc) are also kept separate as well. Two equity programs have been created by the Commission to help combat the equity issues in the industry. The Social Equity Program is free and has technical support and training, supporting people most impacted by the War on Drugs. The Economic Empowerment Priority supports people following specific criteria in places of disproportionately impacted areas. While these programs are revolutionary to the cannabis industry, there are conversations about whether enough is being done to help these applicants.
After reviewing the current Cannabis Control Commissions data on licensees, it has been found that out of all licenses:
- There are currently 145 Final Licenses for Medical use and 83 Provisional Licenses.
- Only 3 Final Licenses for Economic Empowerment, and 11 Provisional Licenses.
- The only Social Equity Retailer was licensed prior to obtaining the Social Equity status.
- Currently, there are 22 Final Minority-Owned Licenses and 80 Provisional Licenses
It’s important to note that some MTC applicants have converted their license directly into the larger Adult use market, where taxation is greater. These applicants had used the perks of the MTC licensing program to begin their start in the Adult-Use market faster. After the acquisition, the patients were not served. The Adult-Use market has potential for higher profits which has motivated the MTC applicants to continue doing this.
Host Community Agreements -
Currently, to gain access to a provisional license in Massachusetts, a Host Community Agreement must be obtained. This means that the municipality will allow the licensee to conduct business and adhere to any local regulations. Currently, there are 351 municipalities in Massachusetts. Of the 351, only 239 currently have Host Community Agreements, or zoning in processed/planned. If the remaining 112 municipalities (which currently have bans) were to prioritize Social Equity and Economic Empowerment Applicants, there would be an increase in the number of these types of licensees.
One thing to keep in mind for understanding the disparity among licenses is the availability window as well. Medical licenses can be obtained year round from the Cannabis Control Commission, however, Social Equity and Economic Empowerment Applicants can only obtain their credentials at specific times, lowering the opportunity to apply for provisional licenses. The Social Equity Program has only had two cohorts, one in Spring of 2019 and one in Spring of 2020. Not only does this create a time barrier of entry for this applicant, but they must also apply for the program as well, creating a barrier for entry to simply obtain Social Equity status. Along with the Social Equity Program, there has only been one cohort of Economic Empowerment Applicants. The date to submit application materials was between April 1-15th in 2018. Allowing only a small window of time to obtain Economic Empowerment status.
The current sources of funding for Social Equity and Economic Empowerment Applicants are scarce and have created a barrier to entry for most. One of the most common reasons why an applicant may be considered for Social Equity or Economic Empowerment is because they are from a disproportionately impacted community, potentially with low income as well. Without funding, it can be challenging to break into an expensive industry.
GFA Federal Credit Union is one of the only financial institutions currently offering loans in the Massachusetts cannabis industry. This means that there are limited options for getting this valuable funding. When first accepting cannabis loans, GFA CEO Tina Sbrega even had federal officers storming her bank on her worst-case scenario list. Thankfully with over two years gone by, more banks have begun to look at the example GFA has set and more funding should be surfacing soon.
Currently, the most common form of funding for these SE/EE applicants is investments from friends and family. This more personal form of support and funding has been proven successful for current EE Applicant Major Bloom, LLC. Through efforts of their own funds, licensing skills, and close friends, what started out as a pipe dream for Ulysses Youngblood and Laury Lucien has since become a reality. With only a few months left until opening their manufacturing, retail, and delivery operations in Worcester, key community investors and friendships from prior to cannabis being legalized in Massachusetts helped them get to where they are today.
Moving Forward -
Delivery Exclusivity has been deemed a controversial topic among the Massachusetts industry. The CCC had approved it for Economic Empowerment and Social Equity applicants only. Allowing for more licensees as there is potential for lower start-up costs, and new ways to break into the competitive market. However, many Adult-Use operators have been enraged by this directive, calling for the CCC to only make this exclusivity a three year window, or perhaps even less. While this will allow them to proceed with delivery in the upcoming years, some retailers are still unsettled and have begun talks about suing the CCC. It is important to remember though, that this won’t just hurt the CCC, but hurt the equity applicants that need this leg up on their competition.
Not only does the CCC need to continue to help equity businesses and licensees continue to grow, but the industry as a whole needs to support each other. The market for cannabis has been so oversaturated, and high sales are continuously forecasted for all businesses. Adding more equity firms will not only help the areas of disproportionate impact but help increase the demand for cannabis across the state. With more Host Community Agreements focused on equity businesses, and more funding coming to fruition, there is a higher possibility for success and fewer barriers to entry.