Massachusetts marijuana shops are expected to be a $1 billion industry in the state, but they still face hurdles from banking and taxes.
BOSTON (CBS) – While legal marijuana sales have increased in 2021 as Massachusetts emerges from the epidemic, cannabis activists claim that business hurdles and government measures have hampered the industry’s development.
Massachusetts became the eighth state to legalize marijuana in 2016, but only permitted sales began in 2018.
“Right away, the Legislature put everything on hold for six months to rewrite the initiatives,” Jim Borghesani, the communications director for “Yes on 4” in 2016, stated. Massachusetts was the only state to overturn a voter-approved marijuana legalization statute.
“The CCC (Cannabis Control Commission) has just been slower in issuing licenses than in other states, and for no good reason,” Borghesani said.
During the epidemic, the sector suffered substantial setbacks, including the placement of cannabis outlets on Gov. Charlie Baker’s list of non-essential business closures in 2020. Many in the sector were outraged that they were forced to shut while booze outlets remained open.
“We should be regarded just like a package shop,” said Jim Smith, a public policy law attorney who represents cannabis businesses on a regular basis. “In reality, compared to alcohol, our product is significantly less harmful, far healthier, and far less addicting.” It’s an obvious case of discrimination.”
When the major purpose of the CCC and marijuana legalization was to shut down these shops and generate legal customers, the closure of these outlets provided the illegal market a lifeline in the state.
“Legal items have been evaluated and shown to be safe; no one knows what’s on those street corners,” Smith said. “But, with that stated, there’s still some room for development” in converting the illegal industry to a legal one.
On Cape Cod, marijuana is legal.
On Cape Cod, too, the industry got off to a poor start. Mashpee’s first medical marijuana store opened in 2018, and Provincetown’s first recreational shop debuted in 2020.
In 2021, the pace of openings accelerated with the launch of three recreational businesses in Provincetown, two in Wellfleet, and one in Eastham, as well as a medicinal dispensary in Sandwich.
According to the Cannabis Control Commission, Barnstable County has 21 license applications, including retail, production, and cultivation. There are thirteen applications for retail licenses.
Nantucket has six license applications, two of which are for retail, while Dukes County has seven, three of which are for retail.
While some Cape towns, such as Bourne, Yarmouth, Falmouth, Sandwich, Harwich, Chatham, and Dennis, have welcomed adult-use marijuana merchants, others, such as Bourne, Yarmouth, Falmouth, Sandwich, Harwich, Chatham, and Dennis, have outlawed them. In 2018, the municipality of Barnstable banned retail sales, although growers, research facilities, and testing labs were allowed.
Two retail applications in Orleans were authorized by the select board last summer and are now in the process of negotiating a municipal host agreement.
Obstacles in the form of zoning and costs
Marijuana license applicants in the state may face zoning challenges as well. A clinic, for example, cannot be located within 500 feet of a school. The targeted site must also conform with local marijuana establishment rules, and businesses must adhere to host community agreements, which may include a community impact fee of up to 3% of sales.
“They either have to pay a lot to acquire a property or pay a fortune to lease it,” Smith said.
After deciding on a site, an applicant may begin applying for permissions. The procedure must first go via the city or town, and then the host community agreement must be followed by the local select board or city council.
Applicants may go to the Cannabis Control Commission to formally begin the process of obtaining a licensed facility after the host community agreement is in place. According to both Borghesani and Smith, some applicants may have to wait up to 18 months to get their license, which means they may be paying rent while waiting to start making a profit.
“At this point, just to open a simple retail store without a cultivation license would cost anywhere from $1.5 million to $2 million,” Smith said.
One endeavor to address these concerns is the CCC’s Social Equity Program (SEP), which was launched in 2018. The program’s goal is to provide “sustainable avenues into the cannabis sector for those most harmed by the War on Drugs, marijuana prohibition, disproportionate arrest, and imprisonment.”
Despite the fact that some SEP candidates get free support, Borghesani and Smith, who deal with certain SEP applicants, claim the aid does not cover the monetary aspect of the procedure. Many SEP candidates are tiny businesses that have limited access to funding compared to other applicants.
“It all boils down to capital availability.” There are overhead expenditures and consultancy fees. “You can’t obtain a loan for any of this from a bank,” adds Borghesani, who has seen firsthand how SEP applicants struggle.
As the CCC continues to assess additional applications, many candidates are still working their way through the process.
The marijuana business in Massachusetts is expected to explode.
With sales already up, the state’s marijuana sales estimates over the next four years seem to be exponential. Despite the fact that the pandemic had a detrimental impact on other companies in the state, the cannabis sector grew throughout the crisis.
Retail cannabis sales in the state have surpassed $1 billion so far this year, according to the Marijuana Policy Project. This is significant given that total revenues in 2020 are expected to be $696 million.
The sales show that there is a need for legal marijuana in Massachusetts, but satisfying that desire has been a lengthy path. Due to a paucity of supply, there is also a restriction on how much product individuals may buy at legal facilities.
“Supply is now beginning to match demand,” Borghesani remarked.