On Friday, January 28, the Joint Committee on Cannabis Policy moved forward a sweeping bill to promote social equity in the cannabis industry. An Act Relative to Social Equity and Host Community Agreements in the Cannabis Industry, which would reform the Host Community Agreement process and establish a social equity trust fund, was advanced out of committee with no votes in opposition.
In 2016, Massachusetts became the first state in the country to include an equity mandate in its adult-use cannabis law. After decades of failed, costly drug policies, the mandate aimed to repair some of the harms caused by the War on Drugs and provide a pathway into the now-legal industry for members of communities disproportionately hurt by marijuana prohibition and enforcement. However, in the years since, fewer than 6% of Massachusetts cannabis licenses have gone to social equity or economic empowerment entrepreneurs.
“The gap between the law’s stated commitment to equity and the on-the-ground reality of the industry shows just how much work we have left to do,” said Senator Sonia Chang-Díaz, Co-Chair of the Joint Committee on Cannabis Policy. “There’s universal agreement about the problems: high costs of entry and lack of access to capital create a near-impossible barrier for many talented entrepreneurs. This bill addresses both sides of that coin. I’m thrilled we’re finally advancing it.”
The bill includes a number of reforms to the Host Community Agreement process that will bring down prohibitively high entry costs and increase transparency. These provisions include clarifying that all financial payments and charitable contributions negotiated with the host community count toward the cannabis business’s community impact fees and granting the Cannabis Control Commission the authority to review and regulate HCAs. The bill also establishes a “safe harbor period” for towns and businesses to renegotiate any existing HCAs found to be out of compliance.
Meanwhile, the Cannabis Social Equity Trust Fund established by the bill will provide a new avenue to capital for social equity and economic empowerment applicants. The fund, which will make no-interest loans, forgivable loans, and grants, will be seeded by an initial $10 million transfer from the General Fund and receive 20% of future revenues collected through the marijuana state excise tax. Establishment of the Trust Fund is responsive to advocacy by the Cannabis Control Commission, whose commissioners voted unanimously to endorse the idea earlier this legislative session. Similar funds have already been established, or are in the process of being established, in Connecticut, New York, Illinois, and Virginia.
“When we passed the cannabis reform law, we wanted the industry profits to benefit people and communities who were harmed by the war on drugs,” said Senator Pat Jehlen. “We have learned about the barriers that prevent this. This bill is a giant step toward taking down those barriers and building equity.”
“I am proud to support the advancement of this legislation. Thank you to Senator Chang-Díaz for her leadership on social equity in cannabis,” said Senator Nick Collins. “We can and must do more to ensure communities that have been disproportionately impacted can fully participate in this sector of the economy.”
The bill will also:
• Incentivize municipalities to prioritize equity by transferring one percent of the excise tax from the state’s share to the municipality’s share for all social equity businesses within the municipality
• Require communities hosting cannabis businesses to establish policies to promote equity or, if they fail to do so, to transfer all revenue collected from community impact fees to the Cannabis Social Equity Trust Fund
• Corrects technical errors in the existing law that provided a local option for municipalities to permit on-site cannabis consumption businesses in their city or town. Currently, many residents, particularly renters and those who live in public housing, do not have a location where they may legally consume cannabis products, despite 9 years passing since voters approved medical marijuana and 5 since the approval of adult use.
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“This is a once-in-a-lifetime opportunity for Massachusetts to take a quantum leap or two on some of the things that voters have been telling Beacon Hill for a long time that they want to see us do,” Chang-Díaz said.