The Massachusetts Cannabis Control Commission approved new guidelines at its April 7 monthly meeting that update the ownership rules for cannabis license holders.
“This has been an ongoing issue for the Commission Control. it’s a very complex topic,” said CCC Chair Stephen Hoffman ahead of the CCC’s vote to approve the new proposed guidance. “It does not have a legal definition. we have tried, through regulations and now through guidance, to provide as much clarity as we could about our definitions.”
The Commission wrote the new guidance based on ongoing concerns Commission members have had about ownership while also incorporating concerns they received from previous public comment periods.
The state law that allows the cannabis market in Massachusetts specifically caps license limits for “licensees.” The term “licensee” is further defined as anyone with direct or indirect ownership, neither of which are technically legal definitions, according to Hoffman.
“The enabling legislation puts ownership caps on what any individual or entity can own,” he said. “This is done so that the market would not be dominated by larger players.”
The new guidance defines an owner with “direct control” as one who has more than 10% equity or voting interest in a company, has the ability to make operation, strategic or planning decisions, or can appoint more than half of the board members.
An owner with indirect control is when they have direct control over an indirect holding or parent company of the cannabis operator in question.
The distinction on ownership is an important one, since there are ongoing discussions among state regulators whether to break up vertically integrated medical operator licenses into individual licenses for each stage of cannabis production. It is also an important issue in light of Cresco Labs’ recent announcement that it would acquire Columbia Care, providing Cresco with more licenses in Massachusetts than it can legally use.
“While these matters have been addressed in multiple versions of the Commission’s regulations since 2018, the industry’s maturation and evolution has necessitated the need for additional guidance to help answer common questions concerning ownership and control,” said an unsigned April 11 press release from the CCC.
The state currently has 1,074 approved cannabis licenses, 380 of which have commence operation orders, as of April 7.
The commission put together the guidance based on ongoing concerns the commission members have had about ownership while also incorporating concerns they received from previous public comment periods.
Residents and operators alike will have about a month to add to those public comments about the new proposed guidelines.
“I think this is needed right now in this industry,” said Commissioner Nurys Camargo. “We are regulators, we are not business owners.”