Grow, Gift, Repair

Is this industry sustainable?

Shawn Collins, executive director of the state Cannabis Control Commission, pointed to the state’s campaign, More About MJ, as part of its campaign to educate the public about risks and safety.

The political introduction of adult-use cannabis, “Let’s regulate it like alcohol,” also clouded the safety issues, according to Norman Birenbaum, implementation director for policies and programs at the Rhode Island Department of Business Regulation and a former field director for several Massachusetts politicians. He said cannabis is far more nuanced and complex.

“The public doesn’t understand long-term public health impacts because we don’t,” he said.

And with cannabis still illegal under federal law, research and policy development have been limited. Much of the recent research is coming from Israel and Canada, Birenbaum said. Previous studies on plants from 30 years ago, are comparing “apples and oranges.”

“It’s like a startup, but a startup on steroids,” said Jonathan Havens, a partner at the law firm of Saul Ewing Arnstein & Lehr LLP in Maryland, and a former Capitol Hill staffer and Food and Drug Administration regulator.

Banking remains a major challenge, with marijuana operators having to pay high fees and be responsible for their own transport of cash to the few institutions that will take their deposits.

Even with that, Havens said, “Banking is not capital. Banking is depository services.”

Limited access to capital is squeezing small operators and driving consolidation with multistate operators, particularly those that have foreign backers. Ironically, he said, “Canadian companies can go public in the U.S., but U.S. companies cannot.”

Currently 33 states have legalized medical marijuana and 11 have adult-use, according to Havens, creating a patchwork of laws and programs.

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Federal legalization would benefit the industry and the community in several ways beside financial viability, Havens said, including setting uniform safety standards and addressing discrimination against medical marijuana patients who are prohibited from having marijuana on college campuses because of federal funding conflicts.

But he didn’t predict federal legalization would happen within the next two years, calling it the third rail of politics. Banking and taxation reform may come first.

Federal drug regulation is “a big, rusty creaky ship and it takes a long time to turn its rudder,” Havens said.

O’Brien echoed Havens’ concerns about capital and banking options for cannabis operators, saying it takes at least a year and $1 million to open one retail pot shop. A cultivation and processing facility can cost tens of millions and take more time to site.

Local control, written into Massachusetts’ law, also must be taken into account. “I think the fear factor is mostly related to retail,” O’Brien said. “Twenty-nine or 30 retail establishments are open now. The sky has not fallen.”

Still, he said, many more stores are needed for a market to thrive. He encouraged people in the industry to remember that 46% of state voters opposed legalizing adult-use marijuana and they need to be brought along, not dismissed.

As part of a sustainable industry, and to avoid bad press, O’Brien said, “Everybody needs to play by the rules.” In a discussion about host community agreements, O’Brien called for municipalities to be accountable as well.

Host community agreements are required under state law but have recently come under question as U.S. Attorney Andrew E. Lelling is investigating the agreements. His office is not commenting on the investigation but it comes on the heels of charges being filed against Fall River Mayor Jasiel Correia II, allegeding that he solicited bribes worth hundreds of thousands of dollars from four marijuana businesses in exchange for permission to operate in the city.

State law doesn’t prohibit municipalities from charging fees in addition to the maximum 3% community impact fee, according to a report on host community agreements released last March by the CCC. Some agreements require payments to a charity or nonprofit as part of local approval.