Mass Cannabis Control Commission begins regulatory revision process
The CCC proposes changes to financial hardship for medical patients, equity guidelines, whistle-blower protection policies, and more
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By GRANT SMITH
The Massachusetts Cannabis Control Commission held a regulatory policy discussion today related to topics that may be included during the Commission's coming round of regulatory changes (a review period that will take place, including a public comment period, over the coming 2-3 months).
The major areas of discussion touched on by the Commission were related to the social equity program, the economic empowerment program, and mandated internal whistle-blower/code of ethics policies for cannabis companies.
Related to the social equity program, the Commission discussed the potential that their new regulations will require a 51% ownership mandate for those applicants who wish to benefit from their social equity status while obtaining an adult use cannabis license. Currently, those applicants in the economic empowerment program have to maintain 51% ownership of their companies to benefit from that status, while social equity applicants need only maintain 10% ownership (although, confusingly, both EE and SE applicants must maintain 51% ownership to obtain a delivery license (or a delivery endorsement) during the priority period for such licenses).
As a result of their discussion, the Commission seemed to indicate a consensus that 51% control for social equity program participants would be required going forward for those applicants to obtain the benefits of their social equity status (including expedited review of their applications, fee waivers and application fee discounts).
The Commissioners also discussed potentially expanding the social equity program to explicitly include veterans, but their guidance to staff on that issue is to await the incoming study being done by researchers related to which groups fall under the auspices of disproportionate impact before making a formal decision as to including veterans.
The discussion regarding potential changes to the economic empowerment program was slightly more nuanced; for those who follow Midnight Mass and The Young Jurks, the Commission's meeting on May 7th, 2020 related to the 51% ownership requirement for EE applicants will be fresh in the memory.
That vote, in short, instructed the Executive Director of the CCC to reissue guidance to equity applicants regarding the required ownership percentage for an EE applicant to take advantage of equity priority in the licensing queue.
As a result, there is now a requirement that all economic empowerment applicants must maintain 51% ownership in their companies to benefit from their status during the licensing process (such benefits for EE applicants include prioritized review of applications, waived license application feed, reduced annual license feed, waived METRC fees and the ability to apply for delivery and social consumption licenses during the period of exclusivity).
However, as discussed by the Commission today, there is currently a way for individuals to have qualified for the economic empowerment program without being owned by a member of what the Commission called a "Target Community" (those being the communities that were most harmed by the racist drug war).
In turn, the first potential change the Commission discussed related to EE applicants was a requirement that all EE applicants can only maintain their priority status if they meet 1 of the 3 "equity-based" criteria (rather than allowing individuals to qualify for EE status based on who they plan to hire).
The Commission, during the course of their discussion, did seem to favor requiring EE applicants to meet at least 1 of the 3 "equity-based criterion" to benefit from their EE status (although a final vote on that proposed change will not occur until next month or so).
In other discussions related to economic empowerment applicants, the commission also discussed potentially reducing the ownership requirement for EE applicants to 33% ownership by those from a targeted community (although, as when the Commission last attempted to reduce the ownership requirement below 51%, there will certainly be push-back towards such a proposal).
Initially, two Commissioners (Chairman Hoffman and Commissioner Title) favored reducing the ownership below 51% (to 33%) if the EE in question had to maintain majority control, however two Commissioners (Commissioner Flanagan and Commissioner McBride) wanted to ensure the equity threshold would continue to remain at 51% ownership for EE status. As a result, Commissioner Title said she felt comfortable with the 51% ownership threshold remaining in place for now (and thus the Commission committed to further discussions going forward while retaining the 51% ownership requirement for the time being).
Reacting to the seeming consensus on the part of the Commission to both require EE applicants to maintain at least 1 equity-based criteria and retain 51% ownership of their companies, EE applicant Chauncy Spencer said;
“For[Chairman] Hoffman, there seems to be an laissez-faire appeal to reducing the [ownership] threshold to 33%, and I can only guess that Commissioner Title is hearing from a minority of EE applicants that find themselves unable to attract investors that do not want a massive share of equity. Luckily, it seems the other commissioners are unmoved by those positions and attitudes for a lower threshold, and they understand the importance of having EE applicants like myself maintain true ownership after all we have fought through. I look forward to having my voice heard along with others at the public hearings.”
Further to that issue, the Commission also took up a policy discussion to determine how the agency would approach an EE applicant who loses their priority status; in that context, the Commission voted to enable Commission staff to provide an updated public monthly list of EE applicants who have lost their priority status.
Interestingly, the Commission also took up a discussion surrounding what would happen in the case that an EE applicant loses their priority status (as to if those applicants would lose all of their priority benefits, mentioned above, or retain some of those benefits if they lose their status). The consensus of the Commission seemed to be that the applicant, if they lose EE status, would lose all of their EE priority benefits (as a reminder; those include prioritized review of applications, waived license application feed, reduced annual license feed, waived oth METRC fees and the ability to apply for delivery and social consumption licenses during the period of exclusivity).
Along with that commitment to transparency, the Commission also discussed a proposal to ensure EE applicants disclose all ownership changes (even if those ownership changes are for below 10% of their company) to the Commission. The consensus of the Commission supported making that proposal into a regulatory change (along with a complimentary pending change to the regulations to require a yearly certification form EE applicants that they exercise control and retain the requisite ownership over their companies to maintain their EE status).
The Commission then took up a discussion related to financial hardship documents that medical cannabis patients must provide before obtaining income-based discounts at brick and mortar medical dispensaries. Joanna Varner, a prominent patient activist who supports the proposed change in the regulations being discussed by the commission, said, “[c]urrently patients are suffering due to the fact that we do not have a standardized way to apply for hardship meaning each one of dispensaries are able to ask for whatever they want as proof . Most of the big cannabis Corporations are asking for letters that are nearly impossible to obtain. This conversation has been needed for a long time.”
As the Commission noted in its discussion, patient community leaders (such as Joanna and otherwise) have been asking the Commission for action on a universal standard for quite some time. In turn, having ensured this topic was brought up at today’s meeting is a clear indication that patient voices like Joanna’s are something the Commission takes quite seriously.
Interestingly, the Commission closed its policy discussion at today’s meeting by contemplating a requirement for cannabis businesses in the Commonwealth to maintain and provide internal ethics and whistle-blower protection policies. While the Commission did not indicate any specific reason for this policy proposal, one imagines it might be in response to the recent reporting (in Midnight Mass and elsewhere) related to defects in employment protections for cannabis sector employees. Commissioner Title noted during the meeting that the Commission should be clear that industry employees should feel welcome at any time to bring concerns to the CCC directly -and that those employees would be protected should they bring such concerns to the CCC. Commissioner Title notes that workers may not be clear that they are protected from retaliation in the case of a whistle-blower complaint.
Commissioners McBride, Title and Hoffmann all expressed support for that proposed change related to those code of ethics and whistle-blower protection policy.
Commissioner Shaleen Title, speaking to Midnight Mass about today’s hearing in general, said this as to her thoughts on the state of the industry and how the updated draft regulations will be designed to engender equity going forward;
“So far we are making changes in real time to provide assistance to economic empowerment applicants and taking steps to expand the allowable activities for delivery businesses, under the leadership of the other commissioners which makes me particularly optimistic. And I think our vaping regulations changes are sensible and warranted. One thing I remain concerned about is the financial feasibility of delivery licenses in particular.
“There are many more changes that will be addressed in the draft regulations. I look forward to the public comment and I hope everyone who may be impacted by these policies will take advantage of the opportunity to shape them.”
While today’s discussions is only the first step on a long road to an updated set of regulatory guidelines for adult and medical use of cannabis in the Commonwealth, and while there are many more topics left to be introduced and discussed over the coming months, the Commission's commitment to the industry was once again on full display.