In Massachusetts, a Return to Economic Empowerment in the Marijuana Industry

On September 24, 2019, the Cannabis Control Commission (“CCC”), the Massachusetts government agency that oversees and regulates the state’s marijuana industry, voted to approve a set of revised marijuana regulations that provides for a number of updates to the existing versions, including several significant changes.  Of note, the CCC is contemplating the establishment of a licensing process that would permit marijuana companies to engage in new lines of business, including social consumption and delivery services.  While home delivery services are expected to begin within the coming months, the CCC noted that the newly approved “Social Consumption Establishment Pilot Program” may require legislative action before it can be implemented.

Under this Social Consumption Establishment Pilot Program, certain brick and mortar marijuana establishments will be permitted to sell marijuana products to customers who could consume the goods on-site.  Similar businesses, often referred to as “cannabis cafés” or “cannabis lounges”, were first made popular in Amsterdam and have recently become a hot topic in the domestic U.S. industry, as more states, such as California, have passed regulations allowing for their proliferation.  While many have voiced valid concerns regarding such businesses (including local neighborhood nuisances and the intoxicated operation of motor vehicles), there is also a significant interest in the tax revenues that local municipalities could realize, as well as the stimulus of ancillary businesses.

The new regulations that would permit the Massachusetts flavor of such marijuana cafés contain some of their own unique criteria for licensure.  Notably, once the new regulations go into effect, they will put in place a 24-month exclusivity period, in which only those individuals or companies that meet certain criteria will be able to apply for the license needed to operate a social consumption venue.  Applicants seeking to obtain such licensure during this exclusivity period will need to show that they satisfy the requirements needed to be designated as an “Economic Empowerment Priority Applicant” or a “Social Equity Program Participant”.

Some will remember that the option to apply for marijuana licensure using a priority status afforded to applicants qualifying under the economic empowerment program was a part of the original set of Massachusetts cannabis regulations.  That original priority application period was only two weeks long, was not exclusive, and occurred early in 2018, well before many of those who may have been eligible were able to be in a position to take advantage of such priority status.  While there is currently a social equity program established by the CCC for those in (or seeking to enter) the cannabis industry, there has been an ongoing call to revamp the economic empowerment portion.  Taking the lead on this, the City of Boston has included the criteria for the original economic empowerment program in its process of reviewing applications for marijuana establishments in the City.  The CCC, by adopting a significantly longer and exclusive period for economic empowerment and social equity applicants seeking to obtain social consumption marijuana licenses, would be taking a significant step in working to assist those from communities that have been disparately impacted by the “War of Drugs”.  Given the CCC’s recent approval of the new regulations, the resurrection of economic empowerment provisions in Massachusetts’ cannabis regulations is certainly a trend worth monitoring.