FOR IMMEDIATE RELEASE
Contact: Kevin Gilnack (kevin@masseon.com or 860.918.6197)
BOSTON – A local nonprofit is teaming up with local small business owners to address the persistent inequities in the Massachusetts cannabis industry.
The Massachusetts Cannabis Equity Council – a group of Economic Empowerment and Social Equity Program cannabis business leaders – is a new informal advisory committee to Equitable Opportunities Now, a nonprofit founded after Question 4 passed to support the new law’s social justice mandate by attorney and entrepreneur Shanel Lindsay and former Cannabis Control Commissioner Shaleen Title, who leads the Parabola Center thinktank.
“The insights and lessons that these business leaders provide will be invaluable in helping us develop and pass policies that enable those most harmed by prohibition to thrive in this industry as voters intended,” said EON Co-Founder Shanel Lindsay. “The support, advice, and policy recommendations that the MCEC provides — and the powerful voices of our leaders – will create positive, meaningful, and lasting change for the industry and the Commonwealth’s equity efforts.”
With the support of EON and the Black Economic Council of Massachusetts, the MCEC has met regularly since January, initially in response to a draft bill that was circulated among industry insiders but thus far not filed, which would lift the Commonwealth’s cannabis license ownership cap from three to nine (later reduced to six), enabling significant market consolidation and creating an existential threat to small local businesses.
“The Commonwealth’s license cap is vital to protecting a competitive market and our legally mandated mission to foster equitable participation in this new market,” said EON Policy Co-Chair and MCEC founding member Armani White, who owns provisionally licensed Firehouse. “With lobbyists and lawyers for large multistate operators working with a handful of business leaders to undermine small business protections, it’s vital for cannabis equity businesses to have a voice in the policymaking process.”
MCEC points to data from Arizona showing that when restrictions were lifted on their licensing scheme, cannabis equity licenses that were once worth $7-9 million were devalued to as little as $25,000, with the vast majority of equity licenses being acquired by large MSOs and non-equity operators. [NOTE: See emails to Cannabis Policy Chair Dan Donahue below for additional data with links to sources.]
“We can increase the value of our businesses, unlock new revenue and capital, reduce burdensome costs, and provide exit ramps for those who want them without joining a race to the bottom that devalues all equity licenses,” said founding MCEC member and Zèb Boutique Owner Drudys Ledbetter.
“It’s no secret that large multistate operators want to control as much of the market as possible. In state after state, they use medical first-mover status, vertical integration, and capitalization to drive a race to the bottom with prices, then offer themselves as the only savior for struggling businesses,” said EON Policy Co-Chair Kevin Gilnack, who facilitates the group. “MSOs want legislators to believe that they’re the only salvation for equity businesses because it’s in their interest, period. We’re focused on policies that increase the value of equity licenses, expand access to capital, and reduce burdens on equity businesses.”
Recognizing current challenging budget conditions, EON, BECMA, and the MCEC have focused on preserving the first full round of anticipated funding for the Cannabis Social Equity Trust Fund and developing a legislative agenda that would provide crucial support and relief for disadvantaged businesses without any significant cost to taxpayers.
“We look forward to putting forward policies that increase access to capital, expand the impact of the cannabis equity fund through private lending and increased capitalization, strengthen CCC and municipal equity programs and policies, and address industry-wide concerns related to testing, hemp products, and agent registrations,” said founding MCEC member and The Heritage Club Nike John. “We also plan to revisit how cannabis revenues can be more equitably invested back into communities harmed by the war on drugs when the time is right.”
While the group continues to gather input from its members, it has already identified a number of other likely legislative priorities, including removing unfair restrictions and costly, unnecessary burdens that target equity businesses, expanding access to small business assistance programs, enhancements to Cannabis Control Commission policies and practices, and enhancements to the Commonwealth’s policies granting equity businesses exclusive access to certain license types.
“All the resources and lobbyists of those seeking to dominate our industry can’t match the power of our collective voices and experiences,” said founding MCEC member and Laury Lucien, owner of Major Bloom and Cami Flower. “From HCA reform to delivery exclusivity to the equity fund, when we speak out together, policymakers listen. With the new forum that EON’s creating for equity businesses with the MCEC, you can expect to hear from us much more frequently.”
Founding MCEC members include:
- Shanel Lindsay and Kevin Gilnack, Equitable Opportunities Now (Advisory)
- Tristan Thomas, Black Economic Council of Massachusetts (Advisory)
- Devin Alexander, Rolling Releaf
- Ross Bradshaw, New Dia
- Jaison Cramer, Greenerside Farms
- Kobie Evans, Pure Oasis
- Chris Fevry, Dris Brands
- Nike John, The Heritage Club
- Brian Keith, Rooted In
- Drudys Ledbetter, Zèb Boutique
- Laury Lucien, Major Bloom and Cami Flower
- Kim Napoli, Esq., Underground Legacy Social Club LLC
- Ruben Seyde, Delivered, Inc
- Jeff Similien, Lowkey
- Phil Smith, Freshly Baked
- Gabe Vieira, Zyp Run
- Armani White, Firehouse
“We look forward to building on EON’s successful advocacy for the cannabis equity fund, HCA reform, and municipal equity that passed in 2022, and the impact they’ve had on CCC regulations over the years. Together with the MCEC, we’ll enable even more cannabis equity businesses to thrive in this industry,” said EON Co-Founder Shanel Lindsay.
In addition to teaming up on policy, EON and the MCEC plan to collaborate on career fairs, trainings, and other educational programs and technical assistance to support entrepreneurs and workers from communities harmed by the war on drugs.
Any cannabis business owner with at least a Provisional License from the Cannabis Control Commission and an Economic Empowerment or Social Equity Program designation is eligible to apply for membership to the MCEC, provided that no one in their leadership team has advocated against a cannabis equity policy.
MCEC members are asked to designate a portion of their Positive Impact Plan donations to EON to support their staffing, programming, and advocacy efforts in exchange for consideration of policy recommendations, input on and free or discounted access to EON programs, and staffing support.
Despite voters’ and legislators’ historic policies to promote participation in the cannabis industry by people and communities harmed by the war on drugs:
- Only 4% of all operational dispensaries are owned by Economic Empowerment applicants and only 7% are owned by Social Equity Program participants, with many classified as both
- Only 6% of all provisional licenses are owned by Economic Empowerment applicants and only 16% are owned by Social Equity Program participants, with many classified as both
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Equitable Opportunities Now (EON)’s mission is to ensure equitable ownership and employment opportunities for Black and Brown communities who have been targeted by the War on Drugs. We are seeking general support funding for our constituent-led statewide legislative and regulatory advocacy campaigns to create equitable economic opportunities in MA’s cannabis industry. Learn more at www.masseon.com
Appendix A: MCEC Message to Cannabis Policy Committee Co-Chair Dan Donahue highlighting troubling data from AZ following license limit changes
Date: Mon, Mar 11, 2024 at 5:03 PM
From: Kevin Gilnack
Subject: Thank you and follow up regarding cannabis equity operator meeting
Dear Chair Donahue,
Thank you very much again for meeting with members of our new association of Economic Empowerment and Social Equity cannabis business leaders.
We appreciate you, Douglas, and Liza taking the time to discuss the importance of the Commonwealth’s cannabis license cap for fostering competition and equitable economic opportunity in this new industry.
We are also grateful for the opportunity to discuss the importance of sustaining Cannabis Social Equity Trust Fund funding during challenging budget times, the possibility of pursuing an earmark to fund training and workforce placement efforts for cannabis equity businesses, and other legislative priorities of mutual interest and concern.
Our attendees appreciated the opportunity to share their experiences in the industry and get to know more about you, your priorities, and the work for your Committee. We were honored you took the time for photos with our group; please feel free to save and use any of these photos courtesy of Kobie Evans and the Pure Oasis team.
As we mentioned during our meeting, Arizona offers a cautionary look at how enabling large corporate cannabis operators to dominate the market will undermine the Commonwealth’s equity goals.
For the convenience of you and your staff, I have included a roundup of reporting related to how allowing companies to accumulate a disproportionate share of licenses negatively impacts the value of equity licenses and more data on the value of those licenses:
- March 3, 2024: Arizona Bill Aims To Claw Back Marijuana Social Equity Licenses From Investors And Corporate Dispensaries by Nathasha Yee of AZCIR via Marijuana Moment
- “Senate Bill 1262, introduced by Republican Sen. Sonny Borrelli, seeks to restore power to those the state’s social equity program was actually meant to benefit: people from marginalized communities disproportionately affected by past marijuana convictions. It would also allow the state Attorney General’s Office to investigate and punish entities that exploited those individuals.”
- Jan. 22, 2024: Arizona tried adding equity into marijuana licensing. Dispensary chains still took over by Ray Stern of the Arizona Republic
- “Of the 26 people who won the license lottery… most sold their licenses or control of future business operations for much less than their value. At least four received as little as $35,000 for their licenses, she said.”
- “In one case, a social equity license winner made a deal with Cookies, a multistate cannabis operator. The winner didn’t have the resources to open a business himself, and he and Cookies ultimately sold the license to Mint for $7.5 million”
- Oct. 6, 2023: Investors, cannabis corporations acquire more social equity licenses as deadline to open dispensaries looms by Natasha Yee of AZCIR
- “just four of the original 26 social equity lottery winners still have an equity stake in the lucrative licenses. Existing corporate dispensaries now own half the licenses outright, with private investors holding equity in 10 more.”
- ”among 13 Arizona dispensaries that have opened to date using a social equity license, just one of them is owned by an original licensee without support from a corporate dispensary”
- “Helping Handz sold two of its social equity licenses, neither of which belonged to Vasquez, for $8.25 million each.”
- “Helping Handz representatives claimed it would cost $21 million to open a dispensary, of which Vasquez owed $11 million as a 51% owner, Mendoza said in a phone interview with AZCIR… Helping Handz offered the couple a duffle bag stuffed with what it claimed was $35,000 in cash”
- July 27, 2023: Corporate marijuana dispensaries flex financial muscle, overtake Arizona’s social equity program by Nathasha
- “…Copperstate offered him $2.4 million to purchase his ownership share. The offer, according to Downing, was notably less than the $7-9 million valuation the Marijuana Industry Trade Association claims each social equity license is worth.”
Finally, we want to highlight and thank you, Co-Chair Gomez, and members of the Joint Committee on Cannabis Policy for favorably reporting the following EON legislative priorities:
- S. 2597 (An Act to Support Cannabis Equity Businesses) sponsored by Joint Committee on Cannabis Policy, which is a redraft of Sen. Jason Lewis’s S. 53: An Act to Support Cannabis Equity Businesses, which will enable customers to more easily find and shop at cannabis equity businesses
- Rep. Tyler’s H. 123 and Sen. Jehlen’s S. 52 to create cannabis career pathways for justice-involved individuals
- H.4409 (An Act relative to vertical integration of medical marijuana businesses) sponsored by Joint Committee on Cannabis Policy, which is a redraft of Rep. David M. Rogers’ H. 117 relative to vertical integration of medical marijuana businesses
We will stay in touch with you and your team as we further explore pursuing an FY25 budget earmark, collect additional research on license cap experiences from other states, and develop a legislative agenda that can truly help MA lead the nation in fostering meaningful opportunity in our cannabis industry for those impacted by the war on drugs.
We would be pleased to be a resource and ally as you explore these issues and other cannabis issues. Please do not hesitate to reach out if we can ever be of assistance or answer any questions you might have.
Thank you again,
Kevin Gilnack
Policy Co-Chair, Equitable Opportunities Now
Appendix B: MCEC Letter to Cannabis Policy Committee Co-Chairs Sen. Adam Gomez & Rep. Dan Donahue in opposition to license cap changes
Date: Fri, Feb 2, 2024 at 3:24 PM
From: Kobie Evans, MyPureOasis
Subject: Cannabis Equity Operators united in opposition to license cap changes
Dear Cannabis Policy Committee Chair Gomez and Chair Donahue,
Thank you for the tremendous work that you and your Committee have done since passage of Question 4 to be stewards of the voters’ and your own mandate for equitable opportunity in the Commonwealth’s cannabis industry.
We are writing to inform you that the undersigned group of cannabis equity operators and advocates are collaborating and building consensus on additional systemic reforms that will be vital to ensuring the success of the first generation of equity businesses and those who will follow.
First and foremost, we are writing to voice our strenuous opposition to any changes to the existing statutory cannabis business license caps or any legislative attempt to undermine statutory or regulatory definitions and limits on ownership.
It has come to our attention that a group of general applicant operators have drafted a bill that proposes to allow large businesses to dominate the Massachusetts cannabis industry by owning up to 9 adult use cannabis retail licenses and 9 medical cannabis retail licenses and changing the definition of an owner to enable a small number of wealth investors to wield a excessive influence on the Commonwealth’s already challenging, yet still developing, cannabis industry. This bill was developed without our input and we have not endorsed it, or any aspects of it.
While these restrictions can create challenges for Equity businesses seeking to raise capital or sell their business, they are the only safeguard preventing a small number of large operators from dominating the industry, wielding even more control over market prices and potentially eliminating Equity operators from the marketplace. There is speculation that some current operators are using straw owners in order to skirt the current legal caps. This legislation would reward bad behavior and make it difficult to control the reach of large & well funded companies to the detriment of Equity initiatives.
In addition to organizing in opposition of large, well-financed operators consolidating the industry, we are also building a lasting alliance of Equity cannabis business operators to address the ongoing challenges facing our subsector of the industry. Our goal is to support the Commonwealth’s effort to create a level playing field for all operators.
We are grateful that you, your colleagues, Speaker Mariano, Senate President Spilka, and Gov. Healey were able to pass vital legislation to enable the Cannabis Social Equity Trust Fund to move forward and are eagerly – and in too many cases, desperately – looking forward to the Executive Office of Economic Development making those funds available. While we understand that the Commonwealth faces challenging budget conditions ahead, we implore you to hold harmless desperately needed funding for the Cannabis Social Equity Trust Fund and hope you will consider bolstering this vital program’s funding when conditions allow.
Economic Empowerment (EE) applicants and Social Equity Program (SEP) participants struggle to get open and create jobs against unfavorable systemic conditions and we regret to report that the Legislature’s goal of fostering equitable opportunity in this industry is in peril without urgent further action.
We would appreciate the opportunity to meet with you and your staff to discuss opportunities for the Legislature to save small local businesses and jobs, and help deliver on the Commonwealth’s vision of an equitable cannabis industry.
Recognizing the need to meaningfully engage with you and your colleagues on the committee and in the Legislature, we write to express our unified support in principle for the following cannabis equity bills and to respectfully request that you seek an exemption from Joint Rule 10 to allow time to engage with us and other stakeholders on the important issues contained within and others to be shared with you by this group in due course:
- Sen. Jason Lewis’s S. 53: An Act to Support Cannabis Equity Businesses
- Rep. Tyler’s H. 123 and Sen. Jehlen’s S. 52 to create cannabis career pathways for justice-involved individuals
- Rep. Tyler’s H. 1790 regarding expungement and Rep. Tyler and Rep. Montaño’s H. 1787 regarding sealing records
- Sen. Miranda’s S.55 bill to increase CSETF allocation to 50% of MRF and remove public safety spending from MRF
- Sen. Liz Miranda’s S. 57 to conduct a public awareness campaign to highlight the programs and resources available to cannabis business applicants from communities harmed by the war on drugs and other disadvantaged businesses
Thank you for your consideration. We look forward to discussing these important issues in the coming weeks and months and welcome any questions you might have in the meantime. Please feel free to contact Kobie Evans at kobie@mypureoasis.com, Nike John at nikej@heritageclubthc.com, and Kevin Gilnack at kevin@masseon.com on behalf of the undersigned stakeholders.
Best regards,
- Devin Alexander, Rolling Releaf
- Sean Berte, Firehouse (Boston, MA)
- Ross Bradshaw, New Dia LLC and Equitable Opportunities Now (Worcester, MA)
- Kobie Evans, Pure Oasis (Boston, MA)
- Chris Fevry, Dris Brands & Your Green Package (Boston, MA)
- Kevin Gilnack, Equitable Opportunities Now (Lowell, MA)
- Kevin Hart, Pure Oasis (Boston, MA)
- Nike John, The Heritage Collective, (Boston, MA)
- Brian Keith, Rooted in (Boston, MA)
- Drudys Ledbetter, Zéb Boutique (Boston, MA)
- Shanel Lindsay, Equitable Opportunities Now (Boston, MA)
- Laury Lucien, Cami Flower and Equitable Opportunities Now (Boston, MA)
- Kim Napoli, Esq., Mass. Cannabis Advisory Board; Underground Legacy Social Club LLC (Boston, MA)
- Elis Omoroghomwan, Zyp Run (Boston, MA)
- Leah Samura, Yamba Boutique (Cambridge, MA)
- Sieh Samura, Yamba Market (Cambridge, MA)
- Ruben Seyde, Delivered, Inc (Clinton, MA & Holyoke, MA)
- Jeff Similien, Lowkey (Boston, MA)
- Phil Smith, Freshly Baked (Taunton, MA)
- Tristan Thomas, Black Economic Council of MA
- Gabe Vieira, Zyp Run (Boston, MA)
- Armani White, Firehouse and Equitable Opportunities Now (Boston, MA)
cc: Senate President Karen Spilka, Speaker of the House Ronald Mariano, Honorable Members of the Joint Committee on Cannaibs Policy, Honorable Members of the Massachusetts Black & Latino Caucus, Sen. Jason Lewis, Sen. Patricia Jehlen