In 2016, 53.7 percent of Massachusetts residents voted for legalization of recreational cannabis, but progress has inched forward slowly, with the first dispensary opening in July 2018. Many applications have been submitted, but few are getting through because Massachusetts has given more power to local municipalities than any other state. Towns are allowed to opt-out of legalization, resulting in a minefield of bureaucracy for dispensary hopefuls.
Under state law, cannabis companies can’t move forward without local approval, and local governments wield full control when it comes to approvals and delays. By February 2019, only fifteen recreational dispensaries operated in the state. The number is low compared to progress in other states. As of August 8, 2019, only eight cannabis businesses in Boston had gotten through the process. Across the state, forty to fifty manufacturers and cultivators are in operation.
Revenue opportunity lost
The Bay State is uniquely situated, because it is the only northeast state with legal recreational cannabis. Industry experts expected Massachusetts to become a tourism destination and generate millions in additional tax revenue. Unfortunately, local-level red tape is forcing people to resort to the illicit market or growing their own. While the illicit market is thriving, the state is losing out on a major revenue opportunity and consumers continue to put themselves at risk with untested products.
Comparing 2018 tax revenue between Washington state and Massachusetts (states with similar populations and legal recreational cannabis), the difference is telling:
• Massachusetts tax revenue: $5.2 million (population: 6.9 million).
• Washington tax revenue: $319 million (population: 7.5 million).
Massachusetts has chosen to opt out of millions of dollars in additional tax revenue that could support new jobs, local projects, substance abuse treatment programs, and medical research. Entrepreneurs hoping to open businesses in local municipalities often are blindsided by inefficiencies in the application process. They’re also losing thousands of dollars a month due to arbitrary waiting periods.
Getting an application through
In order to obtain a license, cannabis businesses must start the application process by submitting three detailed information packets on the local level:
1. Application of intent.
2. Background check.
3. Management and operations profile.
The key requirement in the application process for licensure as an adult-use cannabis establishment is hosting a community outreach meeting. The meeting must be conducted within six months prior to filing the application of intent, and the applicant must ensure the meeting notice includes the time, place, and subject matter of the meeting and the proposed address of the cannabis establishment. At least seven days before the meeting, the proposed business must publish a notice about the meeting in the newspaper, file with the town clerk and any other necessary city leadership, and notify all adjoining businesses that surround the proposed location.
Getting approval from city residents is crucial to moving forward with the next steps. The Cannabis Control Commission for the Commonwealth of Massachusetts suggests asking a respected leader of the community to moderate the meeting as a nonpartisan organizer. It also suggests creating a presentation with visuals such as pictures of the location as it currently stands at the time of filing and how it will look once completed. Also smart: providing information regarding security measures to reassure the community.
Potential business owners must be ready to answer questions and concerns from the community about aspects including accessibility to minors, aesthetics, and even potential odors that might emanate from the facility. The meeting also provides the business owner an opportunity to talk with locals about how the business will produce a positive impact on the community and increase tax revenues. Communities often assume cultivators and dispensaries want to build an eyesore facility that will create unwanted traffic and noise. Business owners must be prepared to refute those claims, as well as educate residents and other businesses about what the infusion of new tax revenue could mean for the town.
To the dismay of pro-cannabis voters, local approval is becoming increasingly difficult to obtain because some towns delay the public meetings, and they have the right to do so. The potential cannabis business owner is at the mercy of the town, and there is no way to predict how fast or slow city leadership will be. Some businesses are seeing waiting periods of two to six months, while others have been in limbo for more than a year. Waiting for a local authority to approve a meeting date can hit the wallet of the proposed establishment and drain resources.
Solutions to address resistance
Businesses hoping to operate in Massachusetts in the next few years should be aware of all possible licensing obstacles in their path and take precautions at the local level. Here are four forward-thinking steps to take when potential businesses are going through the approval process:
1. Reduce stigma. Businesses should emphasize developing concrete plans regarding how they will help the town bring in jobs and ancillary businesses to help revitalize the town. In other words, be prepared to tell the community why having your business in their town will make the town a better place. What that entails will vary from one city to the next, which means you need to thoroughly research the community beforehand and figure out what residents would like to see improved. In one city, the interest might be higher paying jobs. In another city, residents may want fewer vacant storefronts. The key is getting to know the community and creating a plan that will catch attention and garner support.
2. Start early. Launch an exploratory campaign and talk to local residents months before submitting a formal application.
3. Be financially prepared. The wait time can be extreme. To minimize losses, plan and budget for the worst-case scenario.
4. Think local. Locals are afraid of outside businesses taking over their towns. Send the message you want to work with the town by hiring local architects, contractors, designers, and others to construct your dispensaries and/or facilities.
Education and communication are the pillars of getting communities to listen to future cannabis businesses that want to comply with state laws and help the local municipality thrive. Listen to concerns, but make sure you are armed with extensive details about why you and your business will be a good neighbor.
Dylan Sheji, Esq., is legal team manager at CannaRegs. He earned a doctor of jurisprudence degree from the University of Colorado, Boulder, where he focused on topics related to cannabis law and interned with several cannabis law firms. Sheji joined the CannaRegs team as a legal research analyst in 2017. He has hosted several webinars about topics related to cannabis and hemp, from in-depth looks at state-specific systems to general issues and concerns that affect the hemp industry.
