Advocates call for expanded local and state equitable licensing ratios & removal of medical dispensary prioritization
WORCESTER – Advocates from Equitable Opportunities Now are calling on the Cannabis Control Commission to think bigger about how its new regulations can help support entrepreneurs from communities harmed by the war on drugs.
Lawmakers passed An Act Relative to Equity in the Cannabis Industry last year, empowering the Commission to prioritize equity applicants, regulate equity in the local licensing and HCA process, enable social consumption licensing to move forward, and improve access to expungement.
The Commission’s draft regulations to implement that law would require cities and towns that expand or lift their cap on cannabis licenses to license equity applicants in a one-to-one ratio with non-equity applicants. Advocates say that’s not enough.
Testifying remotely to the Commission’s hybrid public hearing today, EON Policy Co-Chair Kevin Gilnack called on regulators to expand that new rule to ensure that all cities and towns grant licenses equitably moving forward.
“Not only will this encourage municipalities to take advantage of the additional 1% on the excise tax that they can now receive on sales from equity businesses… but it will also provide an important backstop to prevent the market from continuing to hurtle toward saturation before equity operators are able to take advantage of the new statutory, financial, and regulatory benefits under the new law,” said Gilnack.
Under a 2017 rewrite of the voter-approved cannabis law, existing medical dispensaries were prioritized along with Economic Empowerment applicants from communities harmed by the war on drugs. Advocates say this compounded the challenges of already disadvantaged entrepreneurs by making existing medical dispensaries more appealing to investors, landlords, and host communities.
“Prioritization of medical dispensaries may have offered regulators the easiest lift for standing up the industry and offered consumers the quickest path to retail sales but it came at too great a cost, strangling efforts to promote an equitable industry,” said Gilnack. “There’s no making up for the time lost and harm done from starting with an inequitable policy. But we’re here doing the next best thing.”
Noting that this is the Commission’s last chance to make meaningful regulatory strides toward a more equitable industry, EON is calling on the CCC to use its new authority to prioritize the equity businesses that need it by eliminating the outdated medical prioritization and implementing its own statewide equitable licensing ratio.
Urging the Commission to “model the type of leadership it is asking of municipalities,” Gilnack asked regulators to finally give equity applicants the kind of meaningful opportunities already granted to medical dispensaries and well-financed operators. “As the Social Equity Trust Fund works toward capitalization and begins issuing grants and loans, it is crucial that the licensing process recognize that we have still not yet achieved equitable access and prevent a continued advantage to already-capitalized entities.”
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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
Background
Subject: Public Comments RE: CCC Municipal Equity & HCA Regulations
Dear Cannabis Control Commission Chair O’Brien, Commissioners, and Staff:
Thank you again for all of your diligent work and inclusive approach to implementing An Act Relative to Equity in the Cannabis Industry.
On behalf of Equitable Opportunities Now, I’m writing to share our detailed public comments regarding the Commissoin’s draft regulations regarding municipal equity and Host Community Agreements (HCAs), as well as a copy of the testimony I delivered during your hearing today.
As discussed in these documents, we are greatly encouraged by many of the strong provisions included in your draft and have identified further opportunities for the Commission to advance its legislative mandate to create a more equitable industry.
Please don’t hesitate to reach out with any questions or if we can be a resource.
Thank you,
Kevin Gilnack
Policy Co-Chair, Equitable Opportunities Now
Prepared Testimony by Equitable Opportunities Now Policy Co-Chair Kevin Gilnack for the Sept. 8 Cannabis Control Commission Public Hearing
Intro
Thank you, Chair O’Brien, Commissioners, and staff for the opportunity to speak to you today. My name is Kevin Gilnack, and I am Policy Co-Chair for Equitable Opportunities Now, a nonprofit that has been fighting for a more equitable industry since the passage of Question 4.
As a former member of the ballot question drafting committee, we appreciate all of the hard work that you and your predecessors have undertaken to bring us this far, and as one of the approx. 6,500 people pardoned by President Biden for the federal offense of simple marijuana possession – and someone lives in and advocates for communities harmed by the war on drugs – I’m very grateful for your commitment to the CCC’s equity mandate
I also want to thank you for your inclusive and thoughtful process and especially thank each Commissioner for attending the listening session that EON hosted in July.
The Problem
We’re here, in large part, thanks to two women on the Question 4 Committee who saw the “Green Rush” and profiteering that came with legalization in the states that came before us and saw the potential for MA to not just stop a racist and unjust policy and create a new industry – but to take steps to undo that harm.
In doing so, they’ve helped make MA a model for the nation, which will be watching what we do here with these final regs. So, I’d like to shout out EON Co-Founders Shanel Lindsay and former Commissioner Shaleen Title for all the seeds they planted that got us here – starting at that citizen petition drafting table.
Another reason we’re here is because of a policy and political choice that the ballot question committee made to prioritize operational and provisional medical dispensaries.
Prioritization of medical dispensaries may have offered regulators the easiest lift for standing up the industry and offered consumers the quickest path to retail sales but it came at too great a cost, strangling efforts to promote an equitable industry. The Legislature’s 2017 amendments prioritizing Economic Empowerment applicants along with Medical Treatment Centers proved too little too late as MTCs and their advantages proved more appealing to funders, landlords, and host communities
If we are truly going to create equitable opportunity in this industry, we need to acknowledge the systemic barriers and harms that we’re trying to undo, and the lingering effects of MTC prioritization is perhaps the greatest of those.
I also raise this as a reminder to advocates and Legislators in Mass. and around the country to put equity first – even when it’s politically hard because there’s no making up for the time lost and harm done from starting with an inequitable policy. But we’re here doing the next best thing.
Municipal Equity
The good news is that we’ve learned these lessons so that other states and federal leaders can hopefully avoid these pitfalls – and we have elected officials, Commissioners, and advocates who won’t be set back by the challenges created in the past.
Our first recommendation for your draft regulations related to the updates you’ve made to the application process and implementation of your new municipal equity powers and responsibilities is to eliminate MTC Prioritization.
When the Legislature passed Ch. 180, they notably inserted into the Massachusetts General Laws the CCC’s prerogative to prioritize equity applicants, without taking this step for previously grandfathered MTCs. We urge the CCC to use its new authority to prioritize Economic Empowerment and Social Equity Program participants and remove the inequitable relic of MTC Prioritization from the regulatory framework.
In that same vein, we urge you to strengthen your language regarding Licensing Ratios.
As you heard at EON’s listening session, establishing minimum licensing ratios for social equity businesses to non-equity businesses is the most straightforward and effective means of establishing equitable access to the marketplace. A 1-to-1 ratio been in effect in the City of Boston for several years, to great success, and this model is replicable throughout the state.
We applaud you for instituting a minimum ratio for municipalities that are increasing or eliminating previous license caps. This requirement can and should be implemented more broadly at both the municipal and state level.
As the Social Equity Trust Fund works toward capitalization and begins issuing grants and loans, it is crucial that the licensing process recognize that we have still not yet achieved equitable access and prevent a continued advantage to already-capitalized entities.
Not only will this encourage municipalities to take advantage of the additional 1% on the excise tax that they will now be receiving for transactions from equity businesses within their jurisdiction, but it will also provide an important backstop to prevent the market from continuing to hurtle toward saturation before equity operators are able to take advantage of the new statutory, financial, and regulatory benefits generated by the CCC and Ch. 180.
The CCC has both the power and the prerogative to update its application prioritization to include a one-to-one ratio. We urge you to rise to this moment to undo the compounded harms that MTC prioritization has wrought on equity efforts and model the type of leadership it is asking of municipalities.
Municipal Equity Sections to Retain
We will submit a detailed letter highlighting all of our recommendations and the legislative basis for them but before we move on to HCAs, we want to applaud your many improvements in your municipal equity regulations, including:
- Expansion to pre-certification
- Increased transparency around process, scoring, and individual approvals
- Protections for equity applicants during HCA negotiations
- Improved data collection to inform further improvements
- Requirements of equity licensing ratios when local licensing caps are lifted
Host Community Agreements
As has been widely documented, the HCA process has been among the most challenging hurdles for entrepreneurs from previously harmed communities. In the interest of time, we will avoid listing the many positive provisions in your draft, but you’ll find them listed in EON’s letter, and we applaud their inclusion.
I will also leave our written testimony to expand on our HCA recommendations in greater depth but I’d like to strongly urge you to strengthen these regulations by:
- Reducing real estate barriers for equity applicants by requiring host communities to negotiate in good faith with any pre-certified applicant or applicant with an LOI for a landlord in lieu or a lease
- Protecting equity applicants from overly burdensome HCA restrictions that limit the sale or transfer of their licenses beyond the requirements of the CCC, state law, and/or the Cannabis Social Equity Trust Fund. Such restrictions impose a systemic barrier on entrepreneurs of color and those from communities harmed by the war on drugs, denying this already disadvantaged population the opportunity to create generational wealth and new economic opportunities through the sale of their stores
- Applying the updated requirements to all HCAs approved after May 1, to ensure that no non-compliant HCAs are able to take advantage of a loophole created by current language applying to the new rules to HCAs submitted after May 1, enabling them to be grandfathered in for their first year if submitted after the regulations are filed by prior to May 1.
Conclusion
Let’s not pass up this opportunity to make meaningful strides towards a fully equitable industry in MA. We won’t get another crack at this for years, at which point the market will be saturated. This process is about repairing decades’ worth of harm done to specific communities.
After nearly seven years of municipalities, lawmakers, and the CCC prioritizing caution and expediency over equity and restoration, we cannot miss this chance. Please leave it all out on the field.
Equitable Opportunities Now Public Comments Regarding Municipal Equity & HCA Draft Regulations
September 8, 2023
Cannabis Control Commission
Union Station
2 Washington Square
Worcester, MA 01604
Delivered Electronically
RE: Public Comment on Draft Host Community Agreements and Municipal Equity Regulations
Dear Chair O’Brien, Commissioners Camargo, Concepcion, Roy, and Stebbins, and Commission staff:
Thank you again for attending our recent Regulatory Review Listening Session, as well as the many other listening sessions across the state that you have joined or hosted. Your eagerness to engage with the communities and individuals who live with our state’s cannabis policy every day is meaningful and important, and we see the results of this in many of the regulations included in your recent draft.
We also appreciate that the Cannabis Control Commission (CCC or Commission) invited residents and stakeholders to share their thoughts, ideas, and concerns with the Working Groups on Host Community Agreements, Municipal Equity, and Social Consumption. As you know, Equitable Opportunities Now submitted a letter to the Commission (dated April 28, 2023, and linked here for your convenience) outlining in great detail the equity-related history of the state’s regulated medical and adult-use industries, as well as concrete steps we can take to correct the errors of the past and ensure we live up to our statutory equity mandate. We stand by these recommendations, and we are encouraged to see many of them incorporated into your draft regulations regarding HCAs and Municipal Equity.
We write today to submit additional comments now that the draft regulations have been made public. We look forward to working with you throughout the process to ensure the final regulations help our industry continue on a path toward true equity and opportunity.
Host Community Agreements
Uprooting the deeply seeded inequity enabled over the last decade of agreements between cannabis businesses and municipalities is a significant undertaking, and we appreciate the CCC’s thoughtful approach to bringing in diverse voices to this process. As has been widely documented, the HCA process has been among the most challenging hurdles for entrepreneurs from previously harmed communities, and we are encouraged to see these regulations implement the many improvements from An Act Relative to Equity in the Cannabis Industry (Chapter 180 of the Acts of 2022, or Ch. 180), as well as some additional areas where the CCC has wisely applied its mandate to develop “procedures and policies to promote and encourage full participation in the regulated marijuana industry by people from communities that have previously been disproportionately harmed by marijuana prohibition and enforcement and to positively impact those communities”[1] and to implement similar policies and procedures with regard to HCAsand municipal licensing[2] as you implement new statutory requirements.
HCA Provisions to Retain
To facilitate your mandate to encourage equitable participation in the industry at the state and local level, we strongly urge you to retain the following provisions that you incorporated into your implementation of new statutory requirements:
● 500/501.180(2)(f): Protections against contracts of adhesion.
● 500/501.180(2)(i)(5): Prohibiting the use of inducements to negotiate or execute an HCA.
● 500/501.180(2)(j): The prohibitions on an HCA requiring up-front payments, escrow, a waiver of civil actions, and all other items included in Section 2(j).
● 500/501.180(4)(a)(5)(b): Waiver of the annual Community Impact Fee (CIF) if the municipality does not invoice the licensee within one month of annual license renewal.
● 500/501.180(4)(a)(7): The 8-month time period for the licensee to pay the CIF.
● 500/501.180(4)(b)(5): The prohibition on a municipality’s including in their CIF invoice legal fees from a lawsuit brought by a licensee.
These provisions provide critical safeguards that will foster more equitable competition, and we applaud the Commission for hearing the community’s concerns and taking steps to address them with these protections.
Suggested HCA Regulatory Enhancements & Clarifications
Reduce Real Estate Barriers for Equity Applicants
We appreciate that the Commission has sought to reduce barriers for equity applicants seeking partnerships with host communities through many of your proposed municipal regulations and the creation of a pre-certification application process for equity applicants.
However, real estate continues to create huge barriers to applicants seeking HCAs with municipalities and can be a huge drain on an applicant’s limited capital. To enable applicants to avoid the costly expenses of paying rent on buildings for months or years as they negotiate HCAs and navigate the state and local licensing process, we urge the Commission to establish a best practice for HCA negotiations that requires host communities to consider and negotiate in good faith with any applicant that is either pre-certified or has a letter of intent (LOI) in lieu of a lease from a landlord.
It appears that the current draft regulations for “Equity Standards for Host Communities to Promote and Encourage in the regulated Marijuana industry” (500.181(3)) has two subsections (b): the first starts, “Notwithstanding 935 CMR 500.181(3)(a), a Host Community shall adopt…” and the second starts with “A municipality or Host Community shall adhere to best practices for HCA negotiations.” We first encourage you to update the latter to be subsection (c) and amend that subsection to add a third best practice requiring good faith consideration of any applicant with pre-certification or an LOI.
Suggested language for 500.181(3)
Update the second 500.181(3)(b) to be (c), update subsequent numbering, and add:
“3. A Municipality or Host Community shall consider applications from and negotiate HCAs in good faith with any Social Equity Businesses, Economic Empowerment applicants or Social Equity Program participants that have been pre-certified by the CCC pursuant to 500.180(2) or that have either a signed letter of intent or lease from a landlord within the municipality.”
Protect Equity Applicants from Overly Burdensome HCA Restrictions
Host Community Agreements are intended to govern the “responsibilities between the host community and”[3] applicants/licensees, particularly issues related to operations that impact their community such as hours and signage. HCAs were not intended to empower cities and towns to create burdensome and unnecessary limitations on ownership and investors.
Unfortunately, equity applicants and licensees have reported receiving HCAs that impose limitations more restrictive than those required by law or CCC regulation on changes in ownership, investors, and/or management teams (e.g. setting excessively long time limits on the sales of licenses only for EE applicants and SEP participants in misdirected efforts at protecting equity). While potentially well-intentioned, this imposes a systemic barrier on entrepreneurs of color and those from communities harmed by the war on drugs, denying this already disadvantaged population the opportunity to create generational wealth and new economic opportunities through the sale of their stores, while others operate without such challenges.
We urge you to update your draft HCA regulations to safeguard against this practice in furtherance of the Commission’s mandate to create HCA regulations that promote equitable participation in the cannabis industry[4] and to “not … prohibit the operation of a marijuana establishment either expressly or through regulations that make operation of a marijuana establishment unreasonably impracticable.”[5]
Suggested language for 500/501.181(4)(d):
After 500/501.181(4)(d)(3) insert: “(4) No municipality or Host Community shall require a Social Equity Business, Pre-Certified Entity or Individual, Economic Empowerment applicant, or Social Equity Program participant to sign an HCA that limits the sale or transfer of a license or changes to ownership, investors, or management in a more restrictive manner than provided by 935 CMR 500.000 et seq. and 501.000 et seq.”
Review all HCAs Approved After May 1, 2024
Given the significant costs and time associated with CCC reviews and/or civil actions to address HCAs that may be out of compliance, the CCC’s plan to wait until May of 2024 to begin the HCA review will allow municipalities, licensees, and applicants time to digest the new requirements, review their agreements and fees, and voluntarily amend them to conform with the law. It would also be helpful to establish an automated process for regularly reminding applicants, licensees, and host communities of their legal rights and responsibilities regarding HCAs six and three months prior to application reviews or license renewals.
The current draft regulatory language applies only to those applications that are submitted after May 1, 2024[6], which leaves a large window for non-compliant HCAs to be grandfathered in for their first year if they are submitted after the regulations are filed but prior to May 1.
We urge you to update 935 CMR 500.180(3)(b)(1) and(c)(1) and their medical cannabis counterparts to require that the updated regulations apply to all HCAs that are approved after May 1, 2024, to ensure the CCC retains the most authority possible to weed out non-compliant HCAs from the outset.
Suggested language for 500/501.180(3)(b)(1) and 500/501.180(3)(c)(1):
“1. All applications for initial licensure approved by the Commission on or after May 1, 2024, must include an HCA that complies with 935 CMR 500.000 et seq. or a compliant HCA Waiver.”
Ensure Municipalities & Applicants Have Interpreter Resources
We applaud the Commission for requiring that potential host communities provide interpreter or translator services to non-English speakers during HCA negotiations but are concerned some smaller cities or towns may not have or know about the resources necessary to meet that mandate.
Given that 500/501.181(5)(c)(1) establishes a municipality’s obligation to reinvest a small portion of the CIF it receives toward restorative justice through a 3% donation to the Cannabis Social Equity Trust Fund, it would be both appropriate and prudent for the Commission to amend this section to allocate an additional small portion of CIFs to support these services and others to make the application process more accessible.
Additionally, we urge the Commission and staff to consider opportunities to support cities and towns by:
● Seeking interdepartmental partnerships to help connect both cities and towns and applicants to potential translator and interpreter services
● Developing a list of suggested solutions, partners, and services municipalities can try contacting for assistance (e.g. Mass. Commission for the Deaf & Hard of Hearing, Mass. Commission for the Blind, UMass Translation Center, state and local police and court interpreters, private investment, and other opportunities identified by the Commission)
● Exploring partnerships to provide translator and interpreter services to applicants and municipalities, creating a fund from the CCC’s budget (holding SEP harmless) to support municipalities and applicants seeking services, and/or urging legislators to fund a solution that holds harmless the Cannabis Social Equity Trust Fund if the Commission anticipates sufficient demand
We urge you to update your draft regulations in recognition of this potential challenge and in anticipation of potential solutions while clarifying that the expenses incurred for translators or interpreters shall not be passed on in any way to the applicant or included in a Community Impact Fee and urge Commissioners, staff, and legislators to consider how state interpreter resources could be strengthened and deployed to support municipalities in this regard.
Suggested language for 500/501.181(4)(c)(3):
“Promote language access by providing a certified interpreter or translator to assist an equity party who is a Non-English speaker during all negotiation discussions and conferences, provided, however, that the costs of such assistance shall not be assessed in any way upon the equity party whether as a fee, Community Impact Fee, or other means, and provided further that the Commission shall share resources and suggestions for host communities and applicants seeking such services in a form and manner determined by the Commission.”
Suggested language for 500/501.181(5)
Insert the following after 500/501.181(5)(a) and change current 500/501.181(5)(b) to 500/501.181(5)(c):
“A Host Community shall allocate, at minimum, 3% of each CIF it receives from a Licensee to fund interpreter and translator services; other services to make HCA negotiations, related public meetings, and the application process more accessible; technical assistance to equity applicants; and no- or low-interest loans and grants to equity applicants.”
Clarify HCA Dispute Resolution
Draft regulation 935 CMR 500/501.180(2)(d) permits HCAs to include a stipulated diversion to private mediation, while 500/501.180(2)(j)(1) prohibits “a provision that discourages any party from bringing a civil cause of action or other legal challenge …” To avoid any confusion for host communities or applicants, we urge the Commission to clarify that the the inclusion of a mediation clause in an HCA pursuant to 500/501.180(2)(d) shall not negate the right to bring a civil or other legal action by appending the text of 500/501.180(2)(j)(1) to that rule.
Suggested language for 500/501.180(2)(d):
At the end of 180(2)(d), insert the sentence:
“Nothing in this provision shall be construed as restricting the right of either party to bring a civil cause of action or other legal action relative to this section.”
Create an Equitable, Community-Driven Model HCA & Empower Municipalities with Updated Guidance
To encourage municipalities to craft HCAs with applicants that meet their community’s needs without overly onerous restrictions, we urge the CCC to craft a model HCA pursuant to Ch. 180 with the least restrictive requirements and fees possible and to include information within it about parties’ rights and responsibilities, best practices for municipal equity and equitable HCA negotiations, limits on terms, and sections where applicants and their host community can customize terms. Several specific suggestions were included in our April letter, and we encourage the CCC to incorporate them all into the model HCA when it is developed.
We further urge the Commission and staff to provide municipalities with an updated FAQ or other guidance clarifying what kinds of terms are prohibited from HCAs, how to support equity in negotiations and municipal procedures and policies, and municipal and licensee rights and responsibilities, and any other related information that may be helpful to host communities, applicants, and licensees.
Specify Additional Equitable Remedies Available from CCC
We appreciate that the Commission has sought to establish “equitable remedies” available to a Marijuana Establishment that has had its relationship with a host community discontinued. The options to extend a license without a prorated feed and/or to waive a change of location fee are positive options and we encourage the Commission to consider expanding its list of remedies to potentially include:
● Waiver of other Commission fees
● Refund of previous Commission fees
● Transfer of surrendered license and/or real property or access to bid on such at auction restricted to equity businesses
● Provision of technical assistance and/or grants to cover unanticipated costs of services needed to support a change of location
We further urge Commissioners and staff to continue to engage with stakeholders to learn about how best to meet their needs and develop creative solutions that support a thriving and equitable industry.
Suggested language for 500/501.180(3)(c)(5)(c):
“The Commission may exercise its discretion whether to grant one or more of the following equitable remedies to a Marijuana Establishment: (i) Extension of a License expiration date without incurring additional prorated fees; (ii) Waiver of a Change of Location fee; (iii) Waiver of other Commission fees; (iv) Refund of previous Commission fees; (v) Transfer of license and/or real property or access to an auction thereof limited to equity applicants; (vi) Technical assistance and/or grants to assist with costs of services related to change of location; (vii) Other equitable relief as determined by the Commission.”
Simplify Calculation of Gross Sales
While we appreciate the Commission’s efforts to consider all of the potential sources of sales data that could be used to calculate a licensee’s gross sales, we are concerned that the language as drafted is overly broad and could potentially invite confusion or efforts by licensees to reduce or by municipalities to inflate the value of actual gross sales.
For consistency and simplicity, we urge you to update 500.180(4)(c)(2) to include just sales via the seed-to-sales tracking system and gross revenue as reported on the business’s most recent tax returns; we see no apparent reason to retain items b-f on the currently drafted list.
Suggested language for 500/501.180(4)(c)(2):
The Commission may determine the Gross Annual Sales of a Marijuana Establishment using the following factors:
a. Consumer Sales and the value of services rendered, wholesaled or transferred Marijuana, Marijuana Products, Marijuana Accessories and Marijuana Establishment Branded Goods as as represented by the Commission Seed-to-Sale System of Record;
b.Gross revenue as reported on the Marijuana Establishment’s most recent state and federal business tax returns
Municipal Equity
The drafters of Question 4 envisioned, and voters approved, a regulatory framework and application process centered on restorative justice and equity at every level, and we’ve been grateful that the CCC has taken that mandate to heart over the years through its internal procedures and policies.
Passage of Ch. 180 and the advancement of these regulations represent a significant step forward to expanding that equitable vision to the local licensing process and we appreciate the opportunity to provide feedback and suggestions to further enhance these important regulations.
Municipal Regulations to Retain
We appreciate the many improvements proposed in the draft regulations relative to municipal equity. It is clear that you took to heart the spirit of Chapter 180 and the feedback you heard throughout your listening sessions.
We would like to especially thank you for expanding and codifying the pre-certification process, which we anticipate will empower equity applicants to more effectively navigate the local approval process. The requirements around transparency, scoring, concrete goal-setting, standardization, and negotiation will all dramatically improve upon the status quo. Provisions requiring data collection will yield valuable data to continue improving efforts.
Suggested Municipal Equity Regulatory Enhancements & Clarifications
Strengthen Equitable Municipal Licensing Ratio Policy
We were encouraged that you have established both incentives[7] and limited requirements[8] for municipalities to implement minimum required ratios for social equity businesses, as the City of Boston[9] has done in preserving a one-to-one ratio within its local licensing process but urge you to leverage the mandates and powers granted by the Legislature to take a meaningful step forward in advancing equity through municipal licensing.
As you heard at our listening session, licensing ratios are a straightforward and effective way to promote equitable access to the industry that has already shown promise in some municipalities and they are our most powerful tool to slowing the saturation of the market by the well-financed operators that have shut out equity businesses from the start. We are encouraged to see the required ratios for towns that are removing or increasing their local license caps in 500/501.181(3)(b)(2) [note: this is the second (b) subsection listed under 500/501.181(3)] but believe you have both the power and the imperative to be even bolder in expanding that rule to include municipalities that have not lifted, expanded, or even created a cap.
Suggested language for 500/501.181(3)(b)(2):
Renumber (b) to (c), update subsequent numbering, and change (2) to:
“If a Host Community decides to allow additional Marijuana Establishments or MTCs, at least 50 percent of those licenses, but no less than 1 license, beyond those that had received final license status prior to May 1, 2024, shall be reserved for Social Equity Businesses, License Applicants, or pre-verified individuals or entities that have been designated as Social Equity Participants or Economic Empowerment Priority Applicants.”
Clarify Priority and Expedited Review Regulations to Ensure Equitable Processing of Applications
While the prioritization of Medical Treatment Centers provided by Chapter 55 of the Acts of 2017 (Ch. 55)[10] may have helped consumers access cannabis more quickly and eased the initial regulation of this new industry, it came at an unacceptably high cost of choking off capital and opportunities from the Economic Empowerment and other disadvantaged applicants that this law sought to help. The first-mover advantage, ability to attract capital, and other systemic advantages granted to already-profitable existing medical operators included in Question 4 and Ch. 55 set the law’s noble goals for economic equity back irreparably.
The Legislature notably decided, when crafting new prioritization language through Ch. 180, to not include in this new language any reaffirmation of language prioritizing MTCs. It also granted the new equity prioritization language the durability of insertion into the MGL, a status MTC prioritization never enjoyed. We urge you to acknowledge the clear legislative intent that MTC prioritization was a one-time instruction not meant as an enduring policy and strike 500/501.101(4), to ensure that the Commission does not in the future prioritize any application or renewal solely on the basis that an applicant or licensee had a provisional or final license from DPH five or more years ago. Social Equity Business status has clearly been conferred higher priority by the Legislature, and we urge you to honor that. It’s time to close the books on this misguided and out-of-date section of law and strike MTC Prioritization.
Such a change is clearly within the allowable scope of the CCC’s regulatory revisions, specifically related to the implementation of Ch. 180 Section 14 updating the CCC’s mandate to “prioritize social equity program businesses and economic empowerment priority applicants and any other class of applicants the commission deems eligible for expedited review during an evaluation of applications and inspections.”[11]
However, in the event the Commission determines that it does not have the authority to remove MTC Prioritization from the books, we urge the Commission to use its aforementioned authority to implement Section 14 of Ch. 180, its mandate to create procedures and policies to foster equitable participation, and its understanding of this legislative history to clarify, revise, and (as needed) create definitions and regulatory guidance regarding priority applicants and expedited review to create a clear and equitable prioritization scheme that puts restorative justice first.
Suggested language for 500/501.101:
Strike 500/501.101(4) in its entirety, as well as the definition of MTC Priority Applicant and all other instances of the phrase in 500/501.002.
Update “Action on Applicants” Regulations to Reflect Equitable Prioritization Changes in Ch. 180 to Strengthen Equity in State Licensing
Section 14 of Ch. 180 grants the CCC “all the powers necessary or convenient to carry out and effectuate its purposes including, but not limited to, the power to… prioritize social equity program businesses and economic empowerment priority applicants and any other class of applicants the commission deems eligible for expedited review during an evaluation of applications and inspections.” However, neither Ch. 180, nor Ch. 94G, nor any previous session law (nor the CCC’s regulations) define either “expedited review” or “priority review.”
Now is the time for the Commission to act on the Legislature’s clear intent that the CCC prioritize applicants from communities most harmed by the war on drugs (e.g. Economic Empowerment applicants and Social Equity Program participants) using its new authority under Ch. 180 by clarifying that the Commission will prioritize and/or expedite review of Social Equity Businesses by ensuring that it review at least as many Priority / Expedited Applicants as it does General applicants.
We appreciate that the CCC has taken a “whole-of-regulations” approach to its mandate to implement Ch. 180 and foster equitable participation through state and municipal policies and procedures, such as its review of 500.101, “Application Requirements,” which included the creation of critical pre-certification language, updated HCA language, language about cannabis equity fund donations, and other changes.
Given both your mandate and the fact that the Commission has already begun updating this section of the regulations in accordance with Ch. 180, we urge the Commission to model the kind of leadership it asks of cities and towns by committing to licensing at least as many expedited review applicants as general applicants when amending section 500.101(2) Action on Applicants to ensure that the disadvantaged businesses that the Legislature seeks to empower have an opportunity to thrive before the market becomes saturated.
Suggested language for 500/501.102(2)(a):
“Priority application review will be granted to existing pre-certification applicants and licensees, Social Equity Program participants, and Economic Empowerment Priority Applicants. Beginning May 2, 2024, the Commission shall issue no more new licenses to applicants without priority status than it does to priority applicants.”
Strengthen Municipal Equity Data Collection
We appreciate the Commission’s commitment to supporting the continued improvement of initiatives through thoughtful data collection at the state and local levels. We request the following change to improve the data collection proposed:
Suggested language for 500/501.181(3)(b)(3):
“A Host Community shall publish data regarding its total applicant pool, which shall identify each Social Equity Business and License Applicant that has been designated as a Social Equity Program Participant or Economic Empowerment Priority Applicant, or who have been pre-verified pursuant to 935 CMR 500.101(7), including but not limited to the following: management diversity, workforce diversity, union status, available data regarding applicant purchasing and contracts with OSD-certified vendors, PIP and Diversity Plan goals and progress thereto, available data on CCC investigations of applicants, qualitative and quantitative documentation of efforts to attract applications for Social Equity Businesses, and grants and other forms of monetary or technical support provided, number of other licenses an applicant holds or has held, years in operation, and percent of managers and employees identifying as people of color, justice-involved, women, LGBTQ+, veterans, medical patients, or caregivers. The Commission may require the Host Community to report data to the Commission.”
Define Criteria for Donation to Cannabis Social Equity Trust Fund
Pursuant to Section 15 of Ch. 180, the CCC is required to develop “criteria for allowing marijuana establishments and medical marijuana treatment centers to satisfy their positive impact plan (PIP) requirement for licensure in part by donating a percentage of their revenue to the Cannabis Social Equity Trust Fund.”
The CCC has begun to address this statutory mandate by adding “The Marijuana Establishment may satisfy this requirement, in part, by donating to the Cannabis Social Equity Trust Fund established pursuant to M.G.L. c. 94G, § 14A…” to 500/501.101(1)(a)(11) and 500/501.101(2)(g)(9)(d) and including it in the new draft regulations on Equity Standards for Positively Impacting Communities that were Disproportionately harmed by Marijuana Prohibition and Enforcement in 500/501.181(5)(b).
While this language acknowledges the Legislature’s directive that a donation satisfy a PIP, in part, it should be strengthened to set specific “criteria” defining a minimum requirement for an establishment’s “percentage of revenue” to satisfy the full statutory language and ensure applicants and licensees make meaningful donations to that fund.
For guidance defining what the Commission might reasonably consider a standard for satisfying this requirement, we urge you to look to the CCC’s own existing regulations, which define a “Social Justice Leader” as accomplishing at least two of six criteria, including having “one percent of the Marijuana Establishment’s gross revenue is donated to the” equity fund.[12] (Please note that the section of current regulations governing leadership ratings appears to have been removed from the current draft redline and we encourage you to retain that language until such a time as the Commission can hear more feedback on that topic from the community.)
To ensure that licensees seeking to satisfy a part of their PIP through a donation to the Cannabis Social Equity Fund do so in a meaningful way, we urge the CCC to clarify in its regulations that said donation must be at least one percent of gross revenues and must be accompanied by other meaningful actions.
Suggested language for 500/501.101(1)(a)(11) and 500/501.101(2)(g)(9)(d):
“A plan by the Marijuana Establishment to positively impact Areas of Disproportionate Impact, as defined by the Commission, for the purposes established in M.G.L. c. 94G, § 4(a½)(iv). The Marijuana Establishment may satisfy this requirement, in part, by donating at least one percent of gross revenue to the Cannabis Social Equity Trust Fund established pursuant to M.G.L. c. 94G, § 14A , provided that the ME meets the criteria set forth in 935 CMR 500.181(5). The plan shall outline the goals, programs, and measurements the Marijuana Establishment will pursue once licensed…”
Suggested language for 500/501.181(5)(b):
“Licensees may satisfy their positive impact plan requirement, in part, by donating at least one percent of gross sales to the Cannabis Social Equity Trust Fund:
1. A Licensee must have authorization to commence operations to donate to the Cannabis Social Equity Trust Fund as part of their positive impact plan.
2. A Licensee shall satisfy the remainder of their PIP by meeting at least one additional criteria pursuant to 500/501.040(3)(a) or with a satisfactory plan that shall outline the goals, programs, and measurements the Marijuana Establishment will pursue once licensed to positively impact their community in addition to donating to the Cannabis Social Equity Trust Fund.
Encourage Municipalities to Take a Robust, Comprehensive Approach to Supporting Equity
While we recognize that the CCC is establishing minimum standards and that municipalities will establish the procedures and policies that work best for them, we urge the Commission – either through regulation or sub-regulatory guidance – to provide community leaders with a robust offering of solutions to consider and, further, to consider setting mandates, incentives, explicit recommendations, and resources to enable them to meet and exceed impactful minimum standards.
While not comprehensive, EON is pleased to share the following potential suggestions for inclusion in such guidance, most but not all of which have been included in current guidance from the CCC:
● Create local cannabis social equity grant and loan funds
o Dedicate cannabis tax revenue and make a significant early investment before cannabis revenue comes in to support equity businesses
● Fund technical assistance
● Waive community impact fees
● Waive licensing, inspection, and other municipal fees
● Property tax exemptions/credits for cannabis and other disadvantaged businesses
● Set equitable licensing ratios to ensure parity
● Create exclusivity periods for licensing to equity businesses
● Prioritize social equity businesses in the application review process
● Connect equity applicants with discounted or subsidized vacant or public property
● More flexibility with buffer zones and variances for social equity businesses
● Invest in staff to help businesses navigate licensing (and support other agencies working with these businesses)
● Negotiate HCAs in public meetings
● Connect applicants to other resources
o Cannabis Social Equity Fund
o CCC Economic Empowerment Program
o CCC Social Equity Program
o Directory of pro bono or discounted service providers
o Other municipal, state, and private resources
● Invest in recruiting and retaining diverse staff
● Invest in diverse media, trade groups, professional associations, and nonprofits when advertising jobs, public notices, and other municipal marketing efforts
● Allow virtual community meetings, and provide virtual options for public hearings and meetings whenever possible
● Offer live translators, interpreters, and other accommodations
o Offer childcare and meals at public meetings and hearings and in government buildings
o Translate websites and printed materials
o Offer scheduling flexibility and variety for public meetings to try to accommodate working parents
Conclusion
Thank you again to the full Commission and your dedicated staff for all of your efforts to foster an equitable cannabis industry, and for your accessibility and responsiveness to stakeholder and community feedback.
Please do not hesitate to contact us with any questions. We are happy to be a resource anytime and can be reached as follows:
● EON Co-Founder Shanel Lindsay: Shanel@masseon.com
● EON Policy Co-Chair Armani White: Armani@masseon.com
● EON Policy Co-Chair Kevin Gilnack: Kevin@masseon.com
Thank you again,
Shanel Lindsay
Co-Founder, Equitable Opportunities Now
Armani White
Policy Co-Chair, Equitable Opportunities Now
Kevin Gilnack
Policy Co-Chair, Equitable Opportunities Now
Appendix A: Table of EON’s Regulatory Recommendations
| EON Regulatory Recommendations | |||
| Description | Section | Current Draft Reg Language | EON Suggestion |
| Contracts of Adhesion | 500/501.180(2)(f) | “The Commission may also declare an HCA or a provision of an HCA voidable upon deeming the HCA as a contract of adhesion.” | Maintain |
| Prohibiting Inducements | 500/501.180(2)(i)(5) | “No License Applicant, Marijuana Establishment, or Host Community will use Inducements to negotiate or execute an HCA.” | Maintain |
| Several HCA Prohibitions | 500/501.180(2)(j) | Maintain whole section | |
| Clarify right to bring civil action | 500/501.180(2)(d) and 500/501.180(2)(j)(1) | 180(2)(d) permits a stipulated diversion to private mediation, while 180(2)(j)(1) prohibits “a provision that discourages any party from bringing a civil cause of action or other legal challenge …” | At the end of 180(2)(d): “Nothing in this provision shall be construed as restricting the right of either party to bring a civil cause of action or other legal action relative to this section.” |
| Equitable Relief | 500/501.180(3)(c)(5)(c) | “The Commission may exercise its discretion whether to grant one or more of the following equitable remedies to a Marijuana Establishment: (i) Extension of a License expiration date without incurring additional prorated fees; (ii) Waiver of a Change of Location fee; (iii) Other equitable relief as determined by the Commission.” | Update 500/501.180(3)(c)(5)(c) to read: “The Commission may exercise its discretion whether to grant one or more of the following equitable remedies to a Marijuana Establishment: (i) Extension of a License expiration date without incurring additional prorated fees; (ii) Waiver of a Change of Location fee; (iii) Waiver of other Commission fees; (iv) Refund of previous Commission fees; (v) Transfer of license and/or real property or access to an auction thereof limited to equity applicants; (vi) Technical assistance and/or grants to assist with costs of services related to change of location; (vii) Other equitable relief as determined by the Commission.” |
| Real Estate Barriers | 500/501.181(3) | N/A | Correct duplication of subsections (b). At end of the one that becomes subsection (c), please add: “3. A Municipality or Host Community shall consider applications from and negotiate HCAs in good faith with any Social Equity Businesses, Economic Empowerment applicants or Social Equity Program participants that have been pre-certified by the CCC pursuant to 500.180(2) or that have either a signed letter of intent or lease from a landlord within the municipality.” |
| Waiving CIF in case of late invoice | 500/501.180(4)(a)(5)(b) | “A Host Community’s failure to transmit the impact fee invoice to a Marijuana Establishment within the prescribed time shall result in a forfeiture of any CIF for the applicable year of operations.” | Maintain |
| 8-month time period for CIF payments | 500/501.180(4)(a)(7) | “A Marijuana Establishment that has agreed to pay a CIF under its HCA shall annually pay any undisputed CIF no later than eight months from the date of receiving a Host Community’s invoice of claimed impact fees.” | Maintain |
| Applicable date for new HCA requirements – new applications | 500/501.180(3)(b)(1) | “All applications for initial licensure submitted on or after May 1, 2024, must include an HCA that complies with 935 CMR 500.000 et seq. or a compliant HCA Waiver.” [emphasis added] | “All applications for initial licensure approved by the Commission on or after May 1, 2024, must include an HCA that complies with 935 CMR 500.000 et seq. or a compliant HCA Waiver.” [emphasis added] |
| Applicable date for new HCA requirements – renewal | 500/501.180(3)(c)(1) | “All renewal applications submitted on or after May 1, 2024, must include an HCA that complies with 935 CMR 500.000 et seq. or a compliant HCA Waiver.” [emphasis added] | “All renewal applications approved by the Commission on or after May 1, 2024, must include an HCA that complies with 935 CMR 500.000 et seq. or a compliant HCA Waiver.” [emphasis added] |
| Prohibiting legal fees within CIF invoice | 500/501.180(4)(b)(5) | “A Host Community shall not include any legal costs incurred by a Host Community to defend against a lawsuit brought by a Marijuana Establishment in its invoice of claimed impact fees.” | Maintain |
| Municipal limits on sale, license transfer, or management change | 500/501.181(4)(d) | N/A | “(4) No municipality or Host Community shall require a Social Equity Business, Pre-Certified Entity or Individual, Economic Empowerment applicant, or Social Equity Program participant to sign an HCA that limits the sale or transfer of a license or changes to ownership, investors, or management in a more restrictive manner than provided by 935 CMR 500.000 et seq. and 501.000 et seq.” |
| Gross Sales Calculation | 500/501.180(4)(c)(2) | Strike and replace 500/501.180(4)(c)(2) with: The Commission may determine the Gross Annual Sales of a Marijuana Establishment using the following factors: a. Consumer Sales and the value of services rendered, wholesaled or transferred Marijuana, Marijuana Products, Marijuana Accessories and Marijuana Establishment Branded Goods as as represented by the Commission Seed-to-Sale System of Record; b.Gross revenue as reported on the Marijuana Establishment’s most recent state and federal business tax returns | |
| Required 1:1 Ratio | 500/501.181(3)(b)(2) | N/A | “If a Host Community decides to allow additional Marijuana Establishments or MTCs, at least 50 percent of those licenses, but no less than 1 license, beyond those that had received final license status prior to May 1, 2024, shall be reserved for Social Equity Businesses, License Applicants, or pre-verified individuals or entities that have been designated as Social Equity Participants or Economic Empowerment Priority Applicants.” |
| Eliminate MTC Prioritization | New Provision | N/A | Strike 500.101(4). Also update 500.102(2)(a): “(a) Priority application review will be granted to existing pre-certification applicants and licensees, Social Equity Program participants, and Economic Empowerment Priority Applicants. The Commission shall issue no more new licenses to applicants without priority status than it does to priority applicants.” |
| Priority Application Review & Statewide License Ratio | 500/501.102(2)(a) | “(a) Priority application review will be granted to existing MTC Priority Applicants and Economic Empowerment Priority Applicants.” | Replace subsection (a) with: “(a) Priority application review will be granted to existing pre-certification applicants and licensees, Social Equity Program participants, and Economic Empowerment Priority Applicants. Beginning May 2, 2024, the Commission shall issue no more new licenses to applicants without priority status than it does to priority applicants.” |
| Language Interpreter Access | 500/501.181(4)(c)(3) | “Promote language access by providing a certified interpreter or translator to assist an equity party who is a Non-English speaker during all negotiation discussions and conferences;” | “Promote language access by providing a certified interpreter or translator to assist an equity party who is a Non-English speaker during all negotiation discussions and conferences, provided, however, that the costs of such assistance shall not be assessed in any way upon the equity party whether as a fee, Community Impact Fee, or other means, and provided further that the Commission shall share resources and suggestions for host communities and applicants seeking such services in a form and manner determined by the Commission.” |
| Language Interpreter Funding | 500/501.181(5) | New Provision | Insert after subsection (a), making current (b) into (c): “A Host Community shall allocate, at minimum, 3% of each CIF it receives from a Licensee to fund interpreter and translator services; other services to make HCA negotiations, related public meetings, and the application process more accessible; technical assistance to equity applicants; and no- or low-interest loans and grants to equity applicants.” |
| Data Collection | 500/501.181(3)(b)(3) | “3. A Host Community shall publish data regarding its total applicant pool, which shall identify each Social Equity Business and License Applicant that has been designated as a Social Equity Program Participant or Economic Empowerment Priority Applicant, or who have been pre-verified pursuant to 935 CMR 500.101(7), including but not limited to the following: The Commission may require the Host Community to report data to the Commission.” | “A Host Community shall publish data regarding its total applicant pool, which shall identify each Social Equity Business and License Applicant that has been designated as a Social Equity Program Participant or Economic Empowerment Priority Applicant, or who have been pre-verified pursuant to 935 CMR 500.101(7), including but not limited to the following: management diversity, workforce diversity, union status, available data regarding applicant purchasing and contracts with OSD-certified vendors, PIP and Diversity Plan goals and progress thereto, available data on CCC investigations of applicants, qualitative and quantitative documentation of efforts to attract applications for Social Equity Businesses, and grants and other forms of monetary or technical support provided, number of other licenses an applicant holds or has held, years in operation, and percent of managers and employees identifying as people of color, justice-involved, women, LGBTQ+, veterans, medical patients, or caregivers. The Commission may require the Host Community to report data to the Commission.” |
| PIP Donations | 500/501.101(1)(a)(11; 500/501.101(2)(g)(9)(d); 500/501.181(5)(b) | Multiple Sections | Suggested language for 500/501.181(4)(c)(3): “Promote language access by providing a certified interpreter or translator to assist an equity party who is a Non-English speaker during all negotiation discussions and conferences, provided, however, that the costs of such assistance shall not be assessed in any way upon the equity party whether as a fee, Community Impact Fee, or other means, and provided further that the Commission shall share resources and suggestions for host communities and applicants seeking such services in a form and manner determined by the Commission.” Suggested language for 500/501.181(5) Insert the following after 500/501.181(5)(a) and change current 500/501.181(5)(b) to 500/501.181(5)(c): “A Host Community shall allocate, at minimum, 3% of each CIF it receives from a Licensee to fund interpreter and translator services; other services to make HCA negotiations, related public meetings, and the application process more accessible; technical assistance to equity applicants; and no- or low-interest loans and grants to equity applicants.”. |
[2] MGL c94G §4(a1/2)(xxxvii); MGL c94G §4(a)(xxxi); MGL c94G §3(d)(5)
[4] MGL c94G §4(a)(xxxi); MGL c94G §3(d)(5)
[6] 500/501.180(3)(b)(1) and 500/501.180(3)(c)(1)
[7] Per 500/501.181(3)(a)(2), the CCC presumes a municipality has satisfied minimum acceptable equity standards by “Creating a Local Approval Process for equity applicants that is administered on a 1:1 basis.”
[8] “In circumstances where a Host Community imposes a cap on the number of Marijuana Establishments or MTCs that may obtain local approval to operate, if a Host Community later decides to allow additional Marijuana Establishments or MTCs, at least 50 percent of those licenses, but no less than 1 license, above the previously-established cap shall be reserved for Social Equity Businesses, License Applicants, or a pre-verified individual or entity that have been designated as Social Equity Participants or Economic Empowerment Priority Applicants.” (500/501.181(3)(b*)(2)) [*note this is the second subsection b in this section as currently drafted]
[9] City of Boston Ordinance 8-13.3
[10] An Act to Ensure Safe Access to Marijuana, Chapter 55 of the Acts of 2017, Section 56.