CCC Ready to Take Input on Rewritten Cannabis Industry Rules

Workforce Diversity, Oversight of Municipal Agreements At Center of Draft Regs

STATE HOUSE, BOSTON, AUGUST 11, 2023…..A swath of regulatory changes are coming to Massachusetts’ cannabis industry, including measures to clear the way for people with past criminal records to work in marijuana shops and to allow all cities and towns to eventually host cannabis cafes.

In late July, the Cannabis Control Commission unanimously approved draft regulations intended to reflect the cannabis industry reform law former Gov. Charlie Baker signed last summer. The commission has spent the last few months re-writing the regulations that have been in place since legal marijuana sales started in 2018.

The changes seek to increase diversity in the field, ramp up oversight on agreements between marijuana businesses and municipalities — a chronic trouble spot for the young industry — and move closer to social pot consumption sites.

“We can protect the health and safety of our citizens while reducing … overly cumbersome and costly regulatory burdens, which help more businesses achieve and maintain profitability,” Chairwoman Shannon O’Brien said.

The commission is planning a public hearing Sept. 8 to accept public comments on the proposals in the draft regulations.

In accordance with the new cannabis law, the regulations will eliminate previously existing disqualifiers that prevented people with certain criminal charges on their records from being hired into the industry.

Marijuana establishments can still consider criminal offenses that involve the distribution of a controlled substance to a minor, including cannabis, or if they are hiring someone applying to work in a lab, the commission’s enforcement counsel Rebecca Lopez said at a July 28 meeting.

The change is intended to help move people who are selling pot illegally into the legal market, Commissioner Ava Callender Concepcion said during a presentation to fellow commissioners.

“It’s important to remove unnecessary suitability requirement barriers and allow people with criminal records to work for three key reasons,” she said. “Employment has been proven to be one of the most effective tools for successful reintegration and reducing recidivism rates. By providing individuals with the opportunity to secure stable employment, we empower them to become productive members of society, which significantly lowers the chances of them returning to a life of crime.”

Concepcion continued, “Second, moving the legacy market to the legal market. Employment acts as a deterrent to criminal behavior. By encouraging individuals with criminal records to find employment in the cannabis industry, we then provide them with an alternative and lawful means to provide for themselves and reduce the likelihood of them resorting to engaging in the legacy, or illicit, market to meet their basic needs.”

Concepcion added that opening the hiring pool for those with prior criminal records helps employers, by providing “access to talent that brings new ideas and expertise from the legacy market.”

The rewritten regulations also bulk up the CCC with new authority to examine and approve host community agreements, which marijuana businesses are required to enter into with the cities and towns where they do business.

Under the 2022 reform law, these host community agreements (HCAs) will only be permitted for the first eight years a marijuana company is in business. “Community impact fees” that businesses pay to the city or town will not be allowed to surpass 3 percent of an establishment’s gross sales and the fee amount must be “reasonably related” to costs the municipality faces as a result of the marijuana business’s operation.

The draft regulations give the commission the authority to issue sanctions against a host community that is noncompliant with the requirements of their agreement, hold off on considering new license applications from that community or publish a list of municipalities that are out of compliance.

Seeking to apply greater oversight of community impact fees, the commission approved a draft change that would require municipalities to include specific details on how the fees were spent, including line items for the cost and purpose of each good or service.

The proposals would also prohibit a town from requiring a business to make upfront payments as a condition for operating in the community and from obligating a business to set aside money in an escrow, bond or other account for the host community’s use.

Under the proposal, the commission would have a maximum 90 days to review an HCA.

HCAs have long been the subject of disagreements between businesses and municipalities, and the CCC had asked the Legislature for power to regulate the agreements for years.

Commissioner Kimberly Roy said during the commission’s meeting Thursday that she recently met with Massachusetts Cannabis Business Association President David O’Brien to discuss the proposed updates.

“They were very grateful for our work, but our work is not done,” she said. “There is more work to do. They already highlighted during that roundtable areas of concern, angst, if you will, around some loopholes that still exist.”

Roy said she expects many businesses to be at the Sept. 8 public hearing to weigh in.

The commission also sought to target equity in their rewrite, and would require host communities to donate, at minimum, 3 percent of each community impact fee it receives to the Cannabis Social Equity Trust Fund.

The fund was created in last year’s cannabis industry reform law, and is intended to make grants and loans available to prospective marijuana entrepreneurs with a focus on supporting people of color and other populations disproportionately harmed by the War on Drugs.

But the Boston Business Journal recently reported that money can’t be transferred into the social equity fund until taxes taken from cannabis purchases are moved into a different state fund, due to a technical issue in how the law was written.

The regulation updates would expand the commission’s pre-certification process for applicants in the state’s Social Equity Program or Certified Economic Empowerment Priority Applicants, who come from underserved backgrounds.

After May 1, 2025, the new regulations would also authorize the commission to fine cities and towns that are found to be out of compliance with the CCC’s municipal equity regulations, deposit those fines into the Cannabis Social Equity Trust Fund and publish a list of noncompliant municipalities.

Following the Sept. 8 public hearing, the commission will vote on final regulations concerning HCAs, municipal equity and the suitability hiring policies. Last year’s law requires that these regulations be distributed by the Secretary of State by Nov. 9.

Though it is not beholden to the same Nov. 9 deadline, the commission is also seeking to move closer to authorizing social consumption sites, such as cannabis cafes.

Commissioners eliminated a previously existing pilot program which would have initially limited social consumption sites to no more than 12 municipalities — thereby allowing any city or town to opt-in to hosting one of these establishments once the licenses become available.

Asked about a timeline for these businesses to be able to legally operate, Commissioner Bruce Stebbins, one of the commissioners leading the working group on social consumption sites, said he would like to say “as soon as possible.”

“We just finished getting the results of a survey back I think about a week or two ago, so our internal team is still looking at the results of that survey … I also know we’re doing additional work of looking at what other states have done,” Stebbins said. “But I will tell you that our working group continues to meet and, again, we want to try to bring something once we feel it’s good to go.”