Grow, Gift, Repair

Predictions for 2019

Will the dispensary floodgates open?
By this time next year, experts say the number of dispensaries open around the state will be in the dozens.

Krane sets the over-under at 45. Kevin Conroy, a former Massachusetts deputy attorney general, also puts the number of new pot shops somewhere in the 40s.

“We’re going to see a pretty big expansion,” said Conroy, who is currently a partner at the Boston-based law firm Foley Hoag and works with cannabis companies in the licensing process.

Steve Hoffman, the chairman of the Cannabis Control Commission, says the agency has found its stride licensing dispensaries headed into 2019.

“I think we’re in a rhythm where … four to eight retail stores will open every month,” Hoffman told the Boston Herald last month, noting that the CCC is also licensing cultivators, product manufacturers, labs, and other business types.

“It’s not just retail stores, but that’s certainly the most visible part of the rollout,” he said.

Jim Borghesani, a cannabis industry consultant and former spokesman for the 2016 legalization campaign, estimates that the state could see somewhere in the range of 50 to 60 cannabis businesses of all license types open this year. And while the dispensaries are the most consumer-facing, the licensing of cultivators could have a big impact on the supply and diversity of marijuana products in 2019 and beyond.

Unlike the state’s medical marijuana program, there is currently no vertical integration requirement for adult-use cannabis companies, meaning that dispensaries do not have to grow and process the marijuana they sell to customers. Rather, the CCC is licensing cultivation companies that solely grow, process, and package products to sell to retail stores.

Experts say these wholesale producers will significantly increase the diversity of marijuana products — including things like edibles, cannabis-infused drinks, and CBD products — available on the market, as well as the overall supply. Amid the early surge of customers, the first five dispensaries that opened have all limited individual sales to make sure they have enough products to go around. Conroy thinks a lot more cultivators will come online toward the end of 2019.

“The CCC is putting a real emphasis on cultivation because we’re going to need the product to meet demand,” he said.

Will more towns mellow out?
While 2018 was the year Massachusetts saw its first legal weed sales, 2019 could be the year more local towns begin to see a different type of green.

More than half of Massachusetts communities had at least temporarily banned recreational marijuana dispensaries (and, in most cases, all cannabis companies). And while the vast majority of the more than 100 moratoriums on licensing pot businesses expired on the last day of 2018, there are still more than 80 indefinite bans. There are also towns without any sort of ban that simply aren’t signing the necessary host community agreements with cannabis companies.

“They’re not banning them, they’re just delaying that,” Conroy said.

Pro-legalization advocates have long contended that those towns will reconsider those measures as they idly watch their neighbors benefit from the windfall of tax revenue.

“When towns start seeing all the tax revenue that begins to flow into their neighboring communities, my guess is that we’ll start to see a thawing,” Krane said.

In Colorado, where recreational marijuana became legal to possess and sell in 2014, 221 of the state’s 322 municipalities still ban pot shops, according to a state report this past September. However, there have been towns that eased their stance and began licensing dispensaries — to the tune of millions in tax revenue.

“Local opposition will eventually wane, but it will take a while,” Borghesani said, noting that the vast majority of bans and moratoriums in Massachusetts were imposed before any stores even opened.

“So those actions were based on fear and falsehoods, not on facts or reality. I think as more stores open there is going to be a significant reconsideration among a lot of leaders and voters,” he said. “They’re going to look at the security and the muted appearance of these stores — not to mention the money they’re generating for towns — and they’re going to realize that their fears were utterly unfounded.”

Borghesani says another “major problem” is the policing of the host community agreements. Municipalities are allowed to impose a local tax of up to 3 percent on marijuana retail sales, as well as a “community impact fee” of up to 3 percent of gross annual sales that is “reasonably related to the costs imposed upon the municipality” by the company. But as The Boston Globe has reported, some towns and cities are demanding even more from dispensaries seeking a host community agreement.

“The cannabis legislation allows communities a total of six percent of gross sales, a figure far beyond anything any other business pays, and towns are making operators pay even more,” Borghesani said. “It’s unfair, and it should be stopped.”

The CCC ruled in August that it wasn’t clear that they had the legal authority to do anything about the payments, which sparked criticism from the activist community. Hoffman told the Herald last month that they might ask state legislators to explicitly outlaw the excessive payments when they revisit the current regulations, but added that the CCC is still in “assessment mode” and that “most of the cities and towns are playing the game the right way.”

“If we feel there is a need for legislative action, we’ll go when the Legislature reconvenes, which I think is late January, and ask them for help,” he said. “But we haven’t made that determination yet.”