New England’s oldest adult use cannabis market is set for a regulatory overhaul now that Massachusetts governor Charlie Baker signed a major cannabis reform bill ostensibly intended to improve opportunities for social equity applicants.
Cannabis regulation in the Bay State continues to be viewed as a model among other New England states, given that it was the first to allow adult use sales, beginning in late 2018.
The law increases state oversight of Host Community Agreements (HCAs) between cannabis operators and municipalities, it creates a method for towns and cities to opt in to allowing social consumption licenses. It also calls for the creation of a social equity fund to create financing opportunities and it requires municipalities to prioritize social equity applicants while also redirecting excise tax funds to municipalities that host social equity operators.
A pilot program for social consumption lounges is also likely to be an early step in the new regulatory process, as the Cannabis Control Commission (CCC) already wrote rules for the license type before realizing that a technicality in the existing law failed to prescribe a method for towns and cities to opt in.
HCAs will likely be a major point of contention during the rule-making process. HCAs allow towns and cities to basically demand direct payments from cannabis operators in the form of impact fees. In theory, these payments offset any financial impacts the town or city may face as a result of hosting a weed shop or a grow site.
The problem is that many cities and towns fail to properly assess the actual impacts of cannabis operators. At the same time, operators in the state have an easy worst-case-scenario to point to in former Fall River mayor and current federal inmate Jasiel Correia. For those not local, then-Mayor Correia attempted to extort cannabis operators by demanding expensive HCAs in his hometown.
On top of that, there are at least two pending lawsuits in the state challenging the legitimacy of impact fees. Haverhill Stem sued the City of Haverhill in April, 2021, while HVV Massachusetts sued the City of Gloucester seven months later in November.
On the other hand, the Massachusetts Municipal Association (MMA) has been outspoken in its support for the current HCA structure. After all, why wouldn’t they want to preserve their current method of pulling revenue from the cannabis market.
“We are however deeply concerned that the bill has the potential to invalidate existing host community agreements,” wrote MMA Executive Director Geoffrey Beckwith in an open letter submitted to the governor’s office on August 1 following the legislature’s last-minute passage of the bill.
Beckwith’s beef with the bill is that it allows the CCC to approve or deny any host community agreement. This creates state-level oversight on what had previously been viewed as a strictly municipal matter.
“HCAs are going to be a major scope of any of the work that we do,” said Collins during the August 11 CCC meeting.
With the governor’s signature on the bill, as of August 11, the CCC has 90 days to officially start the regulatory review process. The CCC then has one full year to write, vet and implement the rules.
Cannabis regulations in Massachusetts, as well as most other legal states, are a work in progress. This is understandable considering that the first legal adult use sales happened just eight years ago on Jan. 1, 2014 in Colorado.
Massachusetts began crafting its adult use regulations in 2017 once the Cannabis Control Commission was formed. This next round of regulation writing will be the largest rule-writing overhaul since the Commission’s inception.
Based on comments from Commissioner Ava Concepcion during the Aug. 11 meeting of the Commission, the enormity of the changes are not lost on regulators.
“I know there are a lot of steps to go through, but I think it’s important to take a moment to recognize the magnitude of this impact,” she said. “This is monumental. We don’t know when this will happen again.”
From here, the Commission must begin writing new rules, which will also have to be publicly vetted and likely refined before facing a final approval. In short, the Massachusetts CCC has a tedious bureaucratic process ahead of them.
It’s tough to find anyone in the legal cannabis market who will equivalently say their home state has gotten it 100% correct on adult use cannabis. That said, newer states to the game, such as New York, New Jersey, Vermont, Connecticut, and Rhode Island can continue to learn from the ongoing process in Massachusetts.