Cannabusiness Advisory

On December 21, 2017, the Massachusetts Cannabis Control Commission filed a first draft of regulations for the purpose of implementing the legality of adult-use marijuana. The draft—935 CMR 500.000—reflects more than 80 policies discussed and voted upon the prior week.

It details, among other things, the approval of products and requirements for labeling, packaging, advertising, and serving sizes, as well as the enforcement of regulations, security, and municipal protections.

Following is a summary of some of the regulations pertaining to business establishments.

Marijuana Establishments

General Requirements

• No licensee shall be granted more than three licenses in a particular class, except as otherwise specified. An independent testing laboratory or standards laboratory may not have a license in any other class. No individual or entity shall be a controlling person over more than three licenses in a particular class of license.

License classes are as follows:

1. Marijuana Cultivator:

               Tier 1: Up to 1,000 square feet of canopy

               Tier 2: 1,001 to 5,000 square feet of canopy

               Tier 3: 5,001 to 10,000 square feet of canopy

               Tier 4: 10,001+ square feet of canopy

2. Craft Marijuana Cooperative
3. Marijuana Product Manufacturer
4. Marijuana Retailer (Storefront, Delivery-Only, Marijuana Social Consumption Establishment, Primary Use, Mixed Use)
5. Marijuana Research Facility
6. Independent Testing Laboratory
7. Marijuana Transporter
8. Marijuana Micro-Business

Marijuana Cultivator

• A marijuana cultivator may cultivate, process, and package marijuana, for delivery to marijuana establishments and for transfer to other marijuana establishments, but not to consumers.
• A marijuana cultivator may submit an application, in a time and manner determined by the Commission, to change the tier in which it is classified. It may change tiers to either expand or reduce production. If applying to expand production, it must demonstrate that it has sold 85% of its product consistently over the six months preceding the application for expanded production.

Craft Marijuana Cultivator Cooperative

• A craft marijuana cultivator cooperative may be organized as a limited liability company or limited liability partnership, under the laws of the Commonwealth or such other business structure approved by the Commission.
• The members or shareholders of a craft marijuana cultivator cooperative must be residents of Massachusetts for the 12 months immediately preceding the filing of an application for a license.
• A craft marijuana cultivator cooperative license authorizes the cooperative to cultivate, obtain, manufacture, process, package, and brand marijuana and marijuana products for delivery to marijuana establishments, but not to consumers, in compliance with these regulations.
• A craft marijuana cultivator cooperative is limited to one license, under which it may have up to:
  • 6 locations for activities authorized for marijuana cultivators; and
  • 3 locations for activities authorized for marijuana product manufacturers.

Marijuana Product Manufacturer

• A marijuana product manufacturer may obtain, manufacture, process, and package marijuana and marijuana products, for delivery to marijuana establishments and for transfer to other marijuana establishments, but not to consumers.

Marijuana Retailer

General Requirements

• A marijuana retailer may purchase and deliver marijuana and marijuana products from marijuana establishments, and deliver, sell, or otherwise transfer marijuana and marijuana products to marijuana establishments and to consumers.
• A marijuana retailer shall operate all marijuana-related activities solely at the address identified in the license.

Storefront Marijuana Retailer

• This is a marijuana retailer providing a retail location accessible to consumers 21 years of age or older or in possession of a registration card demonstrating that the individual is a registered qualifying patient with the Medical Use of Marijuana Program.

Delivery-Only Retailer

• This is a marijuana retailer that does not provide a retail location accessible to the public, but that is authorized to deliver directly from a marijuana cultivator facility, craft marijuana cultivator cooperative facility, marijuana product manufacturer facility, or micro-business.

Marijuana Social Consumption Establishment

• A marijuana social consumption establishment may purchase marijuana from licensed marijuana establishments and sell single servings of marijuana to consumers for consumption on the premises.
• Primary Use: A primary-use marijuana social consumption license shall be required for any commercial enterprise for which 51% or more of average monthly revenue is derived from the sale of marijuana products to be consumed on the premises.
• Mixed Use: A mixed-use marijuana social consumption license shall be required for any commercial enterprise for which the consumption of marijuana is a secondary or shared purpose to a non-cannabis business purpose.
  • 50% or less of average monthly gross revenue of a mixed-use business shall be derived from the sale of marijuana products to be consumed on the premises
  • Mixed-use business licensees that sell marijuana shall only do so in a manner closely connected to or closely integrated with the primary or shared business product or service
  • Mixed-use business licensees shall only allow employees who are 21 years of age or older to have contact with marijuana products
  • Mixed-use business licensees shall only acquire marijuana products from a marijuana establishment and must comply with the tracking requirements of 935 CMR 500.105(H)(5)
  • Mixed-use business licensees must maintain a separate, locked, on-premises storage area for marijuana products. This area shall be limited in access to only those employees who are 21 years of age or older and who have completed a responsible vendor program training in compliance with 935 CMR 500.105(B)

Marijuana Research Facility

• A marijuana research facility may cultivate, purchase or otherwise acquire marijuana for the purpose of conducting research regarding marijuana and marijuana products.
• A marijuana research facility may be an academic institution, non-profit, or domestic corporation or entity authorized to do business in the Commonwealth of Massachusetts.
• Any research involving humans must be authorized by an institutional review board.
• A marijuana research facility may not sell marijuana cultivated under its research license, but may also hold a marijuana retailer license. Any marijuana or marijuana products sold by a marijuana research facility pursuant to a marijuana retailer license must comply with all applicable requirements for the sale and handling of marijuana and marijuana products, including, but not limited to, tracking, sanitary, testing, and waste-disposal.
• All research regarding marijuana must be conducted by individuals 21 years of age or older.

Independent Testing Laboratory

• An independent testing laboratory shall be:
  • Accredited to International Organization for Standardization (ISO) 17025 by a third-party accrediting body that is a signatory to the International Laboratory Accreditation Cooperation (ILAC) Mutual Recognition Arrangement; or
  • Certified, registered, or accredited by an organization approved by the Commission.
• An executive or member of a marijuana establishment is prohibited from having any financial or other interest in an independent testing laboratory that provides testing services for any marijuana establishment.
• No individual employee of a laboratory providing testing services for marijuana establishments may receive direct financial compensation from any marijuana establishment.
• A laboratory meeting the requirements of the independent testing laboratory may be licensed as a standards laboratory, to ensure consistent and compliant testing by the independent testing laboratories. An independent testing laboratory may not serve as a standards laboratory.
• Upon request by the Commission, a standards laboratory shall test samples of marijuana or marijuana products in a time and manner to be determined by the Commission.
• The testing shall be performed in a manner determined by the Commission, so as not to reveal to the laboratory the source of the marijuana or marijuana products.
• The standards laboratory shall submit the results of testing to the Commission for review.
• The standards laboratory shall retain the marijuana or marijuana products tested until directed to transfer or dispose of them by the Commission. Any disposal shall take place in compliance with 935 CMR 500.105(L).

Marijuana Transporter

• An entity may only transport marijuana or marijuana products when such transportation is not already authorized under a marijuana establishment license if it is licensed as a marijuana transporter.
• All marijuana transporters, their agents, and their employees who contract with a marijuana establishment to transport marijuana or marijuana products must comply with the Act and 935 CMR 500.000(3). All marijuana transporter agents who transport, deliver, or otherwise handle marijuana or marijuana products shall register as marijuana establishment agents prior to transporting, delivering, or otherwise handling marijuana or marijuana products.

Marijuana Micro-Business

• A micro-business is a co-located Tier 1 or Tier 2 marijuana cultivator, marijuana product manufacturer, and marijuana delivery service.
• A marijuana micro-business shall comply with all operational requirements imposed by 935 CMR 500.105-140 on marijuana cultivators, manufacturers, and delivery-only retailers, to the extent the licensee engages in such activities.
• A micro-business licensee shall not have an ownership stake in any other marijuana establishment, and a majority of its executives or members must have been residents of Massachusetts for no less than 12 months prior to application to be eligible to apply for a license.
• Application and license fees for marijuana micro-businesses shall be set at 50% of the combined sum of the application fees and license fees for each of the following activities in which the licensee engages: cultivation, manufacturing, delivery.