Massachusetts Senators Approve Comprehensive Social Equity Cannabis Bill, Here's What's In It

Massachusetts Senators have approved a sweeping Social Equity Cannabis Bill, which would create a fund to support equal rights in the cannabis industry. The measure is now heading to the Massachusetts House of Representatives for further consideration.

The Bay State is also seeking to streamline the local licensing process to help members of communities who have been disproportionately affected by cannabis prohibition and enforcement to participate in the state’s burgeoning marijuana market. 

Why It Matters

The fund will support the Cannabis Control Commission (CCC), the state’s regulatory body. It is expected that by 2023, the fund will obtain 10% of the annual marijuana excise tax revenue totaling $18 million.

The fund also responds to concerns about the process of negotiating Host Community Agreements (HCAs) to keep industry costs high.

The cannabis industry confirmed that HCA fees are limited to 3% of the annual gross sales of a cannabis business but apply to the costs associated with hosting a cannabis business in a city or town.

In addition, municipalities that host social equity marijuana businesses would be rewarded with a share of the excise tax (cost-neutral for consumers).

The CCC will also set up rules and regulations for municipalities to encourage full participation in the industry by formerly harmed communities.

By clarifying the existing law’s authorization of social consumption businesses, municipalities will have the option of passing local ordinances or holding local referendums to allow on-site cannabis consumption businesses.

According to the news release from MassSenate, the launching of a marijuana store is projected to generate $1 to $1.5 million in liquidity.

In addition, manufacturing facilities are expected to produce almost $3 to $5 million in liquidity.

To allow businesses to access capital easier, the social equity fund makes grants and loans - forgivable and no-interest loans - to equity partners.

Senators’ Views

Senate president Karen E. Spilka (D-Ashland) said she was proud that the equity program was part of a move to legalize the commercial marijuana industry in 2017.

This bill addresses those historically harmed by marijuana prohibition by “providing resources to support social equity businesses and putting guardrails in place on the Host Community Agreement process.”

Senator Michael J. Rodrigues, chair of the Senate Committee on Ways and Means, said the recent move “promotes the continued growth of a competitive and equitable industry here in our state, and I hope to see it advance to the Governor’s desk very soon.”

Senator Sonia Chang-Díaz (D-Boston) added, “Lowering entry costs and opening up new avenues to capital will put this multi-billion dollar industry within reach for many talented equity entrepreneurs.”

Senator Patricia Jehlen (D-Somerville) said she hoped the new bill is “even clearer in stating the intent of the law and the ability of the CCC to achieve the goals of promoting social equity.”

Photo: Courtesy of David Gabrić on Unsplash