State Senate passes sweeping Social Equity Cannabis Bill

BOSTON (WWLP) – State Senators passed a sweeping Social Equity Cannabis Bill, which would create a fund to support equal rights in the cannabis industry.  

Massachusetts would also streamline the local licensing process, essentially ensuring that members of communities disproportionately affected by marijuana prohibition and enforcement can participate in the state’s growing cannabis market.  

In a news release from MassSenate, the opening of an average cannabis retail shop is expected to generate $1 to $1.5 million in liquidity. While manufacturing facilities will produce almost $3 to $5 million in liquidity.   Currently, due to federal cannabis laws, cannabis businesses are unable to access traditional bank loans, resulting in damaging equity partnerships. To facilitate new access to capital, the social equity fund, created by legislation, makes grants and loans, which are forgivable and no-interest loans, to equity partners.  

Social equity fund includes:

• Support of the Cannabis Control Commission (CCC)
• For the year 2023, the fund will receive 10 percent of the annual marijuana exercise tax revenue of $18 million.
• Responds to concerns about the process of negotiating Host Community Agreements (HCAs) to keep industry costs high
• The cannabis industry reasserts that HCA fees are limited to 3 percent 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. 
• Municipalities who host social equity marijuana businesses are rewarded with a share of the marijuana excise tax. This is cost-neutral for consumers.
• In order to encourage full participation in the industry by formerly harmed communities, the CCC should develop rules and regulations for municipalities.
• 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. In spite of the fact that medical marijuana was approved nine years ago and adult use was approved five years ago, many residents do not have access to a legal place to consume cannabis products.

Senators’ views on the Social Equity Cannabis Bill

“I’m proud that when the Senate and the Legislature legalized the commercial marijuana industry in 2017, we prioritized the creation of a first-in-the-nation equity program,” said Senate President Karen E. Spilka (D-Ashland). “Unfortunately, many barriers continue to prevent those historically harmed by marijuana prohibition from entering the industry. Today’s bill takes important steps to address these by providing resources to support social equity businesses and putting guardrails in place on the Host Community Agreement process. I thank Chair Rodrigues and Senator Chang-Diaz for their work to bring this legislation forward.”

“The legislation we passed today builds upon the goals that we have always had for the cannabis industry here in the Commonwealth – protecting consumers, supporting small business, and promoting social equity,” said Senator Michael J. Rodrigues, Chair of the Senate Committee on Ways and Means. “I want to thank Senate President Spilka for her leadership, along with Senator Chang-Diaz, Senator Cyr, Senator Jehlen and others for advocating to make sure Massachusetts remains a cannabis industry leader. Ultimately, this bill passed by the Senate 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.”

“Addressing racial justice in our state means getting real about closing our cavernous racial wealth divide,” said Senator Sonia Chang-Díaz (D-Boston). “With this bill, Massachusetts will reclaim our leadership role, carving a path to make equity a reality in the cannabis industry. Lowering entry costs and opening up new avenues to capital will put this multi-billion dollar industry within reach for many talented equity entrepreneurs.”

“When we passed recreational cannabis legislation five years ago, we sought to ensure the Commonwealth’s budding cannabis industry would be equitable, diverse, and have ample avenues of entry for small-scale and Black and Brown-led entrepreneurship,” said Assistant Majority Whip Julian Cyr (D-Truro). “Regrettably, the Legislature’s intention to build an industry rooted in social justice has not yet been fully realized. Today we are living up to that promise by establishing guardrails on host-community agreements, allowing communities interested in pursuing social consumption sites to do so, and empowering a strong, vibrant, local cannabis industry with a robust cannabis equity fund.”

“Limiting the cost of operation is part of promoting social equity and repairing harm to communities harmed by War On Drugs, by lowering one of many barriers to entry with the host community agreement reform in this bill,” said Senator Patricia Jehlen (D-Somerville). “I hope this 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. High costs of cannabis have helped preserve the illicit market for cannabis and this bill will take significant steps to expand business opportunities and lower costs across the commonwealth.”

The Senate also adopted two amendments filed by Senator Adam Gomez. One of which Gomez hopes will expunge criminal records of individuals who were arrested on minor marijuana possession charges.

The bill now moves to the Massachusetts House of Representatives for further consideration.