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Massachusetts Cannabis Companies Call for State Aid Amid Coronavirus

Massachusetts lawmakers considered legislation on Tuesday that, if passed, could provide coronavirus-related relief to state-legal cannabis businesses. So far, much of the cannabis industry has been left out of financial help provided by federal coronavirus bills because cannabis remains federally illegal. State relief for the cannabis industry is another story, though, and Massachusetts is the first state where lawmakers have put the question up for debate, and into the spotlight. 

Massachusetts’ Joint Committee on Community Development and Small Businesses held a virtual hearing on S. 2643, An Act establishing a Massachusetts Paycheck Protection Program (PPP) for businesses ineligible for the comparable federal PPP, and S. 2564, An Act to support MassMakers. 

After nearly three hours of testimony, plenty of speakers turned their frustration toward Gov. Charlie Baker’s decision not to consider adult use cannabis sales as “essential.” Massachusetts is the only state where adult use is legal to halt those sales amid the coronavirus pandemic. While a group of cannabis businesses sued Baker, a Superior Court justice denied the preliminary injunction. (Read Cannabis Wire’s coverage of how cannabis regulators have reacted to coronavirus.)

One reason for Baker’s shutdown of adult use sales was because they are a short drive away from states that haven’t yet legalized cannabis for adults. In other words, consumers from states like New York, Connecticut, Rhode Island, and New Jersey are driving to Massachusetts for access to legal cannabis. 

“Making those sites available to anybody from the northeast would cut completely against the entire strategy we’re trying to pursue here in Massachusetts to keep people safe,” Baker said at a news conference in early April. “That’s why they’re not an essential business.”

In his decision against the cannabis businesses, Justice Kenneth W. Salinger wrote that, “It was reasonable for the Governor to be concerned that the relatively few adult-use marijuana establishments in Massachusetts are more likely than liquor stores or MTCs to attract high volumes of customers, including people travelling from other States. The Governor’s decision to treat medical marijuana facilities and liquor stores differently than adult-use marijuana establishments has a rational basis and therefore is constitutional.” 

Senator Sonia Chang-Díaz, who represents the 2nd Suffolk District, said during Tuesday’s hearing that she came with a bit of a “mixed message.” 

“While I certainly support the spirit of this legislation,” Chang-Diaz said, “I think it would be a damn shame, honestly, if we have to end up going there as a state because it would be a self-inflicted wound.” 

In other words, she said, lawmakers are thinking about how to spend money to “keep this industry afloat rather than allowing this industry to be a help to Massachusetts in this hour of need,” as a driver of economic activity. 

“I just think it’s bananas that we are not allowing these retailers to open again in a way that’s safe, that’s controlled, and that can serve the greater needs of the Commonwealth in the state of emergency,” said Chang-Díaz. 

Segun Idowu, executive director of the Black Economic Council of Massachusetts, agreed, saying that the state should reconsider its halting of adult use cannabis sales. 

“For us, it’s vitally important that the decision to close recreational cannabis establishments be rescinded. We believe that the cannabis industry provides Massachusetts with a unique opportunity … in already suffering communities,” Idowu said. 

Idowu said that Baker’s order closed adult use cannabis shops, “right as they were getting off the ground,” includes the state’s first economic empowerment shop, which opened its doors one week before Baker’s stay at home advisory left out these cannabis businesses. This, Idowu continued, “may have been well intentioned, but it will have the disastrous effect of destroying any chance that the state had created equity in an industry that was already and is already deeply inequitable.”

David O’Brien, president and CEO of Massachusetts Cannabis Business Association, which represents the “smaller and emerging” companies in the cannabis industry, talked about a survey that his organization conducted the day after Baker’s order. The survey asked industry members what they felt would be the “greatest impact” on them as a cannabis business owner during the coronavirus pandemic. Respondents listed industry layoffs as a top concern, O’Brien said, adding that “some folks have laid off anywhere from 50 to 90 percent of their staff.” 

“They want to get them back, but they want to get them back and be reopened,” O’Brien said, adding that other concerns included health concerns both for their employees and their customers, and access to capital to be able to cover their expenses during the pandemic. 

Angela Brown, owner and CEO of T. Bear Inc, a family-owned cannabis business that worked for two years to secure licensing, said she closed the day before they were able to make their first cannabis sale. Since then, Brown testified, she was “forced to furlough our entire team, lock the building, and walk away. All I can do now is wait with no income and no revenue.” While Brown waits to learn when she can reopen her company, she says she is still paying rent, utilities, lenders, and the health insurance for her furloughed employees. 

“All small business owners are dealing with these issues,” Brown said, but there’s one major difference: other small businesses have access to various forms of economic relief. 

“How can we be expected to overcome these unprecedented times with no help, while help is being given to other industries?” Brown said. “As a Massachusetts company, I pay taxes, very expensive licensing fees to the state, and give back to my local community through a host community agreement. As a small business in Massachusetts, I should have access to the economic relief. Without this bill passing, local cannabis companies face extinction before we get going. We can’t let this be our legacy.”