Report Data Makes Case for Strong Market Protections
- “The 14 largest publicly traded multi state operating cannabis companies combine to operate 977 cannabis retail facilities in the U.S.” (Approx 8% of the entire industry.)
- The 14 largest publicly traded multi state operating cannabis companies combine to operate nearly 10% (34) of MA’s 350 dispensaries.
- Based on projections from Whitney Economics, increasing the cap to 6 or 9 licenses could give the 14 largest companies an additional 14-28% of the market – giving just 14 companies control of at least a quarter of the entire market.
- Whitney Economics concluded that “average revenues will decline” with larger firms controlling a larger share of retail licenses, even if the CCC manages the impact appropriately.
- If not managed appropriately by the CCC, the report finds, the impact could threaten the viability of their businesses.
- At the time of Whitney Economics’ report, there were already 565 retail licenses issued by the CCC and they found an increase to “about the 620-650 range would threaten the viability of all licensees based on average revenue per license,” which leaves very little room for new market participants – especially equity businesses – if we allow MSOs to acquire more of those licenses.
- Eliminating caps doesn’t improve conditions for social equity businesses.
- Data from CO showed a decline in the number of diverse minority-owned businesses between 2020 and 2023
- Surveys from MI showed mixed results with one showing a drop in Black-owned licenses from 4.04% to 3.78% and another showing a slight increase from 3.47% to 5.62%
- Detailed data show lack of progress in advancing diverse participation in the industry in states without strong caps and social equity programs.
- AZ’s data “highlights significant underrepresentation of minority and women-owned businesses in Arizaon’s cannabis market, with a substantial predominance of Caucasian ownership.”
- CO data revealed “a significant concentration of licenses among Caucasian owners, indicating a disparity in license distribution among racial and ethnic groups.”
Social equity efforts combined with strict license caps make a difference
- MA efforts are showing modest progress over states with weaker protections and programs: “data indicates a clear trend of growth in the number of minority-owned, women-owned, and veteran-owned applicants and licensees from 2019 to 2024.”
- IL data “clearly illustrates Illinois’s progress in enhancing ownership diversity within its cannabis industry. Significant gains, particularly among Black, Asian, and minority coalition owners, underscore the effectiveness of Illinois’s social equity initiatives.”
- Report found that “Illinois has set caps on certain types of licenses, which has been effective in preventing market oversaturation.”
Report includes no representation of social equity businesses
- Report includes zero interviews with cannabis equity business owners from MA or the other markets highlighted (CO, IL, MI, & AZ) about their concerns and experiences.
Report ignores data on how changing ownership limits devalues equity licenses
- Report grossly misrepresents AZ, which it says “has implemented a limited number of licenses, specifically earmarking a portion of social equity applicants. This cap has been effective in ensuring that the market does not become overly saturated while still providing room for meaningful participation by social equity groups.”
- When AZ loosened its ownership limits, it had a devastating impact on social equity licenses.
- “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…” (Arizona Republic)
- “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.” (Arizona Center for Investigative Journalism)
- “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… It would also allow the state Attorney General’s Office to investigate and punish entities that exploited those individuals.” (Marijuana Moment)
- “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.” (Arizona Center for Investigative Journalism)
Faulty Reliance on MSOs for Equity Survival
- Report excessively relies on partnerships, joint ventures, mergers, and sales by social equity businesses and MSOs already at the license cap to enable social equity businesses to thrive or provide an exit strategy.
- Paydays for the few: While a few might get sweetheart deals from MSOs, this will ultimately make it harder for most equity businesses to raise capital or sell their licenses by making the market less attractive.
- Power Imbalances: MSOs, with substantial resources, may exert undue influence in partnerships, reducing social equity operators to token participants with little real control.
- Massachusetts MSOs have such a bad track record of taking advantage of people from communities harmed by the war on drugs that the CCC had to issue guidance on avoiding predatory financing offers.
- Ownership and Control: There’s little discussion of safeguards to ensure minority and social equity participants maintain ownership and revenue rights in joint ventures.
- Track Record of MSOs: The paper assumes MSOs will willingly mentor and support social equity licensees, but there is limited evidence of widespread success in similar initiatives elsewhere.
- Report relies heavily on MSOs supporting equity businesses and baseless assumptions to justify recommendations and projections.
- Examples:
- “Assume 60% survival rate of the first three years for independent social equity licenses… Projecting an 80% survival rate due to better financial stability and operations support from MSOs”
- “Projecting a 40% increase in available credit for business expansion due to MSO financial backing”
- “Projecting a 30% revenue increase due to better supply chain access, operational efficiencies, and expanded market reach”
- All of these are offered without evidence and ignore the fact that social equity businesses do not want to be dependent on MSOs for capital, supply chain, or exits.
- Examples:
Report Muddies the Water on “License Caps” Language
- Report repeatedly convolutes license ownership limits and market-wide license caps.
- Claim: “Massachusetts has a somewhat flexible approach to licensing caps, focusing more on ensuring diversity through its social equity program rather than strict caps.”
- Reality: In fact, MA has very strict limits capping how many licenses a person or entity can own, which enables the social equity program to have an impact.
- Claim: “Increasing the number of licenses [in MA] can broaden market access.”
- Reality: No caps prevent new entrants to the market – but changing the rules to allow those with the most market access to dominate more of it will restrict market access in the future based on the report’s data and concussions about oversaturation.
- Recommendation: “Determining an exact number of cannabis licenses for Massachusetts should be guided by a balance of market potential, social equity goals, and the sustainability of the industry… Allocate a portion [of all licenses] specifically for social equity. If the state currently has 246 licenses, ensuring that at least 20-25% are held by social equity applicants could promote inclusiveness. This could mean aiming to have around 50-60 additional licenses earmarked for social equity within the next few years…”
- Reality: Allowing MSOs to hold a greater percentage of licenses by acquiring existing equity licenses would run counter to this recommendation in their own report.
Lack of Funding Disclosure
- Report doesn’t disclose who paid for it despite being commissioned by and for Ascend & other MSOs.
Learn More
Click here to learn more about why Equitable Opportunities Now and the Mass. Cannabis Equity Council strongly oppose changing Massachusetts cannabis license ownership limits.
Read the original misleading MSO-funded Banks & Co. and Whitney Economics study: “A Rising Tide Lifts All Boats: Analysis and Recommendations for Increasing the Cannabis License Cap.”
Please contact Equitable Opportunities Now Policy Co-Chairs Armani White (armani@masseon.com) and Kevin Gilnack (kevin@masseon.com) with any questions or to connect with other social equity business operators to learn how changes in the license cap would jeopardize their business and workers.
SPEAK OUT NOW
- SIGN ON TO OUR LETTER to Gov. Healey and Legislative Leaders urging them to reject ownership limit changes to show our collective solidarity.
- EMAIL YOUR LEGISLATORS directly right now using our easy online form to remind your state Representative and Senator what’s at stake and how important this issue is to you.