An advisory group to the state’s Cannabis Control Commission is pushing for a state-certified incubation program to help smaller operators from diverse backgrounds break into the highly capitalized and competitive industry.
The suggestion was given at a joint meeting of the CCC and its Cannabis Advisory Board on Monday, as part of feedback on the latest round of regulatory changes, and comes during a broader conversations on how to increase diversity within the industry.
The commission is in the late stages of revising its regulations but the incubator program is not currently included in the draft regulations. Commission Chairman Steven Hoffman said after the hearing that the idea would be discussed at a future meeting.
“We take all the public comments seriously and particularly from our advisory board,” Hoffman said. “All I can promise you is we’ll discuss it. I can’t promise you an outcome. But I think it’s an intriguing idea that is certainly worthy of discussion.”
Advisory Board Member Kim Napoli outlined a program that would allow larger marijuana operators to develop an incubator that would provide seed funding, free space, materials, executive level mentorship, technical assistance, and aid obtaining a contract with a local municipality.
Small businesses incubators are common in Massachusetts, but most aren’t open to cannabis companies since it remains illegal to sell or posses under federal law. A few large cannabis companies offer mentorship and incubation programs, but they often require participants to give up a percentage of equity or sign distribution agreements on items developed.
The model Napoli envisions would be strictly altruistic, providing small cannabis entrepreneurs desperately needed capital, space and advise.
“Adult use operators and vertically integrated operators can really pull their efforts to support social equity,” Napoli said.
For a period of time, the incubator could exclusively help applicants in the commission’s economic empowerment program, which is a group of applicants certified early on by the state as being disproportionately harmed by the war on drugs.
To incentivize large operators to participate, the commission would allow the incubator to fulfill the requirement all cannabis operators have to positively impact areas disproportionately harmed by the war on drugs.
If the incubator idea doesn’t come up for a vote at the commission’s Aug. 28 hearing, it’s unclear when such an idea might come to fruition. Hoffman said the commission staff and the industry needed a break from a constant cycle of regulatory changes.
“After the regulations are voted on, we’ll discuss what we think makes sense, and try to find the right trade off between giving people a breather, but addressing issues that we feel are important to be addressed,” he said.
Other efforts to provide capital to small cannabis operators have so far floundered, including bills that would have to redirected cannabis tax revenue to no- or low-interest loans for equity applicants.
