Grow, Gift, Repair

Industry barriers still too high

The roll-out has not been easy for many entrepreneurs. One of the biggest bumps has been the need to find a location.
Many cities and towns implemented moratoriums, and some instituted outright bans, on marijuana businesses. The moratoriums, which were meant to give towns time to write planning and zoning regulations, mostly expired at the end of 2018, which could open up many more potential opportunities.
“One hundred thirty-five cities and towns that were sitting on the sidelines for the first year of operation are now coming off the sidelines,” Hoffman said.

But a continuing challenge has been the host community agreements that marijuana businesses must negotiate with municipalities. Although state law caps the “community impact fees” that cities can charge at 3 percent of sales, it does not explicitly preclude municipalities from requiring donations to nonprofits or charities or imposing additional fees. Practically, almost all the host agreements so far require marijuana businesses to pay more than 3 percent of sales. That is in addition to state and local taxes.

The Cannabis Control Commission has asked the Legislature for authority to regulate host community agreements. It will be up to lawmakers whether to pass a legislative fix.

Massachusetts marijuana overseers want authority to regulate municipal marijuana agreements

In the meantime, an advocacy group representing marijuana growers is expected to take the commission to court. The growers say the commission already has authority to regulate these agreements.

The host community debate is one part of a larger issue, which is the challenges facing “equity” applicants. State law requires the Cannabis Control Commission to ensure that communities disproportionately affected by enforcement of marijuana laws — often black and Latino communities and urban cities — are able to reap the benefits of the legal industry.

The commission gave priority status to some “economic empowerment” applicants, but so far none have opened businesses. The commission is also starting a “social equity” program, which will offer training, technical assistance and guidance to people who have drug records or are from communities disproportionately affected by marijuana enforcement who are trying to enter the industry.

Massachusetts crafts ‘social equity’ program to help minorities and drug offenders enter marijuana industry

The question will be whether those programs are enough in an industry that also includes multistate marijuana conglomerates.
Kamani Jefferson, president of the Massachusetts Recreational Consumer Council, said it is difficult for small business owners to get the initial money needed to pay for things like legal fees and acquiring land. Only a small number of banks accept marijuana business, since marijuana is still illegal at the federal level. Those banks that do accept marijuana business charge high fees.

“As much as they’re trying to bring down the barrier of entry, it’s still a high barrier to get into this industry,” Jefferson said.