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As eight bills in this legislative session seek to increase the number of dispensaries or cannabis establishments that any one individual or organization can own, the cannabis industry remains divided on whether the Legislature should maintain the current cap of three.
The state set the license cap in 2017 as a measure to keep large companies from monopolizing the cannabis industry and to protect small cannabis business owners – particularly those who come from communities harmed most by the war on drugs.
Now, some cannabis operators are saying that the cap restricts their ability to run their businesses. Some cannabis business owners have argued that the Legislature needs to increase the license cap to allow struggling business owners to attract desperately needed capital from large multistate operators and provide an opportunity for them to sell their companies.
The bills currently pending all seek to raise the license cap from three to either six or nine. One bill seeks to allow companies that have already reached a three-license limit to increase the amount of ownership stake they can have in four additional social equity businesses.
On Wednesday, at the Legislature’s first cannabis committee hearing of the session, cannabis business owners and leaders spoke in favor of the bills to increase the cap.
Payton Shubrick, the owner of 6 Bricks dispensary in Springfield, argued in favor of increasing the cap. She said that her business is family-owned and has faced headwinds with the falling price of marijuana since she opened the dispensary. Increasing the license cap will mean that larger companies will have more opportunities to buy up or invest in companies like hers, she testified.
“At this point in time, I’m sitting on an asset that’s losing value over time with oversaturation and oversupply creating a dynamic where I can’t create a successful exit,” said Shubrick.
The owner of Apex Noire – the first black-owned dispensary to open in Boston – and a former member of the Boston city council, Tito Jackson, also spoke in support of changing the license cap.
“Increasing the license cap should be seen as a tool – one that business owners can use if they are able to,” said Jackson. “It does not mean that … everyone has to sell. However, not giving those individuals the options to do so is problematic.”
Other cannabis business owners testified in opposition.
“I can guarantee you that raising the cap will do the exact opposite of what other people have mentioned here,” said Ruben Seyde, the owner of Delivered, Inc., a cannabis delivery company. “It is not going to help [social equity businesses like mine]. It is only going to put me in a worse position than the one I am in right now. I am already struggling in this market. If these entities are able to double their resources by partnering up with [multistate operators] and other larger entities, I have no future. I have no viable road from my current to take and to still reach some level of profitability.”
Ahead of the legislative hearing, nearly 60 business leaders and advocates in the cannabis industry signed a letter urging legislators to continue to cap the number of dispensaries any business can own at three.
“If the license cap is removed, we’re going to see [multi-state cannabis businesses] gobbling up equity businesses, consolidating the market and devaluing the value of licenses for those who are in the industry,” said Kevin Gilnack, Deputy Director of the cannabis advocacy group Equitable Opportunities Now, in a phone interview ahead of the hearing.
Kimberly Roy, a commissioner on the Cannabis Control Commission, submitted written testimony to the legislative committee in favor of maintaining the license cap.
“Current statutory ownership limits help to create a Massachusetts cannabis industry that encourages full participation, competition, locally owned and operated entrepreneurship … while fostering a diverse marketplace,” said Roy. “Current proposals to lift the current license cap threaten to undermine these goals, harm those we are mandated to help and as a by-product may create a ‘Walmart effect’ supply chain where market consolidation, buying power and price manipulation can be controlled by the wealthy few.”
The cannabis industry has been struggling with the falling price of marijuana and the lack of access to capital. Social equity business owners – who come from disadvantaged backgrounds and, by definition, have limited access to capital – have been particularly hit by debt and the challenges of the industry.
Two bills that would double cannabis purchase and possession limits and make it easier for those who work in the cannabis industry to get registered received widespread support at the hearing. Currently, every person who works at a cannabis business must get a separate registration for every different licensed establishment. One person may need multiple registrations, which is costly for business owners. The industry widely supports making the change to streamline the process.
Another bill would make it so that medical marijuana businesses no longer have to cultivate, process, and dispense cannabis to maintain their licenses. In addition to removing that requirement, the bill would also decrease the licensing fee for medical dispensaries and allow people from other states to use their medical marijuana cards at Massachusetts medical dispensaries.
“We need to reinvest in the future of the program, and that means streamlining it, modernizing it, and removing the shackles that limit patient access and prevent equity [owners] from participating in the medical industry,” said Jeremiah MacKinnon, the president of the Massachusetts Patient Advocacy Alliance. “We brought these issues to the [Cannabis Control] Commission’s attention, but after six years of advocacy, nothing’s changed. It has not been on their list of priorities.”
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