Aug 11, 2022 - News

Baker signs cannabis equity bill

Massachusetts regulators have approved more than 1,000 adult-use cannabis licenses. Data: Cannabis Control Commission; Chart: Simran Parwani/Axios

Kobie Evans and his business partner spend tens of thousands of dollars every quarter on marketing, staff salaries and inventory for Pure Oasis, a cannabis dispensary in Dorchester.

  • Unlike neighboring businesses, though, he can't write them off as tax-exempt expenses.

What's happening: That will soon change for Evans and cannabis retailers across Massachusetts with the equity proposal Gov. Charlie Baker signed into law Thursday.

  • The new law alters the state tax code — which mirrored a federal tax code that was created in the 1980s to penalize cocaine traffickers — so cannabis retailers can write off business expenses like companies in other industries.
  • The new law also creates a trust fund to help entrepreneurs from disadvantaged communities break into the industry.
  • And it limits what fees and perks communities can squeeze out of prospective cannabis businesses in their contracts, known as host community agreements.

Why it matters: The law aims to level the playing field between large cannabis corporations and mom-and-pop shops.

  • At a glance, Massachusetts appears to have one of the most progressive cannabis industries, with licenses set aside for certain minority- and veteran-owned businesses.
  • Yes, but: The process for getting a license and opening a business can take years and cost millions, typically making it easier for large, wealthier and often white-owned corporations to set up shop.

What they're saying: "It's a game-changer," says Evans, a Black Boston native who faced hurdles trying to open a dispensary in Medford before opening the Dorchester store.

Cannabis retailers tell Axios they hope they'll no longer lose as much money to taxable business expenses and fees set by municipalities.

  • "We're punished on every corner, it feels like, and so chipping away at these things … moves us further toward normalcy," says Sieh Samura, a Black veteran from Boston and co-owner of Cambridge's first dispensary, Yamba Market.

Details: The law reduces how much control individual towns have over host community agreements, giving the state Cannabis Control Commission greater authority to oversee these deals.

  • The CCC will not only be able to review new contracts, but existing ones going back to Dec. 15, 2016.
  • Communities can impose a limited-time "impact fee," for the perceived costs of having a dispensary in town, but that fee is limited to 3% of the business' total sales.

The other side: Massachusetts Municipal Association CEO Geoffrey C. Beckwith argued in a letter to legislative leaders this spring that the cannabis proposal would "usurp the established authority of local government, likely invoke legal challenges and create a more burdensome process for all parties involved with the cannabis industry in Massachusetts."

The bottom line: Samura of Yamba Market says he's cautiously hopeful that cannabis companies will have access to some of the same opportunities that other businesses do.

  • "We'll keep winning and pushing for our industry and pushing for profitability and letting people know that we're like other businesses," Sieh says.
  • "It's really just this decades-long stigma that kind of follows us like an albatross, but we're getting better and more effective at fighting back against it."

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