Industry insiders are watching a new Massachusetts social equity effort with cautious optimism.
The state’s new REC delivery license system is one of several programs in the state and elsewhere designed to ensure the communities most damaged by cannabis prohibition benefit from legalization. In this case, only “equity” businesses — typically owned by Black or Latinx entrepreneurs — will be the only ones eligible to apply for the licenses for the first two years of the program.
The call for applications has attracted 19 businesses since opening late last month.
“We are cautiously optimistic,” said Imani Dawson, director of communications at the nonprofit Minorities for Medical Marijuana and executive director of the nonprofit Cannabis Education Advocacy Symposium and Expo.
Thus far equity programs have struggled to ensure diversity in the cannabis industry, which is dominated by white-owned businesses. Access to capital, is among the most significant challenges these businesses face. The industry’s lack of access to the banking system exacerbates the problem.
Massachusetts’ new delivery program comes after weeks of protest have drawn worldwide attention to systemic racism and police violence and sparked discussions about how “to make our society more equitable and just,” Dawson said.
She’s watching Massachusetts’ effort, knowing it may be adopted elsewhere in some form if it succeeds. “We wish them all the success in the world,” she said.
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Massachusetts’ Cannabis Control Commission had been planning to create delivery licenses for REC and to prioritize social equity in that effort. The state already allows MED delivery and 18 MED treatment centers offer the service.
“The time is right to do this,” commission chairman Steven Hoffman said.
For the first two years, only certified social equity program participants and economic empowerment applicants will be eligible to apply for the REC delivery licenses. As of May, more than 400 businesses had the clearance necessary to apply.
Those programs, both determined by the commission with similar goals, have a range of qualifications. For instance, the social equity program includes income limits and residency in certain locations. The empowerment criteria includes residency in certain locations, diversity and drug-related offenses.
Cannabis microbusinesses that meet those standards and already have a provisional license can also apply to augment their business with a delivery license.
In a webinar on drug policy last week, Commissioner Shaleen Title said the commission decided to set aside delivery licenses for equity businesses about a year ago, but wondered if they could be profitable.
“It turns out, with the timing, that the demand for delivery has never been higher because of COVID,” she said.
Title said equity cannabis businesses in Massachusetts have faced bias when they seek clearances from local governments, a key component of the state’s regulatory regime. The agency has developed a pre-certification process to address this issue.
The delivery application process calls for businesses to first get pre-certified from the commission to show they qualify and can obtain a license. That pre-certification then lets them secure necessary agreements with their local cities and towns. The effort aims to “get these people a leg up” with those cities and towns, Hoffman said.
A powerful tool?
Unlike most state cannabis agencies, the Massachusetts commission has a mandate to create a diverse industry and ensure those harmed by prohibition benefit from legalization, Hoffman said. Its efforts have included prioritizing some applications and eliminating some fees. But social equity programs have struggled. Massachusetts’ first equity REC shop opened this year and was soon opportunistically robbed during the protests.
Because of its lower start-up costs, delivery might be a more workable entry point into the industry. “To open a retail store is expensive,” Hoffman said, pointing to real estate and security requirements, among other expenses.
The REC delivery licenses will be exclusively available to social equity and economic empowerment applicants for two years.
That head start period begins when the commission issues its first license, likely in a few months. The commission has not set any targets or caps. But the two-year period could be extended. The commission does not have estimates on how many licenses it may issue. “We haven’t done a lot of forecasting,” Hoffman said.
In other states, delivery services are generally recognized among the industry’s winners from the pandemic. With only about 50 stores currently open in Massachusetts, delivery will also help meet consumers’ demands. “We’d like as many applications as possible,” he said.