Big Changes Coming to Massachusetts Cannabis Laws

by | Sep 7, 2023 | Massachusetts, Medical Marijuana

Big Changes Coming to Massachusetts Cannabis Laws

Massachusetts Governor Charlie Baker signed S. 3096, “An Act Relative to Equity in the Cannabis Industry,” on August 11, 2022. When the law was passed, the Massachusetts Cannabis Control Commission had one year to issue new or amended regulations.

There are many positive and big changes coming to Massachusetts cannabis laws that will benefit all cannabis-related-businesses and remove barriers for entrepreneurs and people who wish to pursue job opportunities in the cannabis sector.

What are Host community Agreements in Massachusetts?

Massachusetts municipalities can decide to approve or disapprove the operation of Medical Marijuana Treatment Centers or Marijuana Establishments in their jurisdiction. This is pursuant to General Laws, Chapter 94G, Section 3(d) of the Massachusetts Legislature.

Part of the laws outline the community impact fees that are intended to recoup the costs of law enforcement and other services required by the operation of marijuana establishments in the municipality. A 3% maximum of gross sales excise tax can be charged, which is provided per host community agreements.

The Changes Under 2022 Reform Laws

Per the new 2022 reform laws, host communities will only be allowed to collect the 3% community impact fees for the first eight years after a marijuana business is established. The maximum excise tax that host community agreements will allow to be collected is 3% and remains unchanged. However, communities will have to prove that the taxes collected are “reasonably related” to actual costs incurred due to the operation of licensed cannabis businesses.

What that means is that every host community will not be able to charge a 3% excise tax if they are unable to prove the additional expenditures. Municipalities will be required to show records and consolidate expenses directly related to cannabis business operations.

This reform helps reduce the tax burden of cannabis-related businesses (CRBs) and will also make prices more affordable for patients and recreational users, resulting in a tax break on products sold after eight years. Any Host community agreement (HCA) would be amended so that municipalities would be prohibited from charging upfront payments in escrow, bond, or another account.

Cannabis Consumption Lounges May Be Coming Soon

The new proposed reforms may also pave the way to licensing cannabis consumption lounges. This would resemble cannabis cafes where adults could consume cannabis products in a social environment. The proposal suggests limiting sites to no more than twelve (12) municipalities in the states.

Host community agreements would also determine where the social consumption establishments are located. Communities would have the option to opt in or decline licensed establishments. As cannabis consumption in public is illegal in Massachusetts, this would give consumers and patients locations outside of their homes where they could legally consume medical or recreational marijuana.

Cannabis cafes are also less expensive to start than other types of marijuana establishments. This would allow more residents to explore business opportunities and eliminate some of the barriers to entry into the fast-growing cannabis industry in Massachusetts.

Opening the Cannabis Job Market By Removing Restrictions

The new cannabis regulations in Massachusetts would eliminate obstacles to employment for residents who have had certain criminal charges in the past. Currently, any individual with a history of one or more criminal offenses cannot work in the cannabis industry.

This move would help open doors to economic empowerment priority applicants. Any marijuana establishment could still deny employment to individuals charged with cannabis-related violent crimes or distributing drugs to minors.

Applicants with a previous charge for personal consumption marijuana possession, for example, would have the opportunity to be employed by dispensaries, processing or cultivation businesses, independent testing laboratories, quality assurance, and other roles under his new state law.

The updated regulations will also make it easier for residents of Massachusetts to expunge past criminal charges relating to some cannabis offenses.

New Qualified Social Equity Businesses Will Be Licensed

The new legislation will help ease barriers to entry for black and brown Americans with stronger social equity provisions. Massachusetts Governor Charlie Baker has signed a new law that will set up an equity trust fund in the state, created by 15% of tax revenue generated by recreational (adult-use) sales.

The law has an incentive for municipalities to approve cannabis-related businesses run by individuals from disenfranchised communities. Any community that has at least one recreational cannabis dispensary identified as a “social equity business” will receive a quarterly payment of 1% of total sales in their jurisdiction. Qualified social equity businesses must have at least 51% majority ownership by individuals who are qualified as an Economic Empowerment Priority Applicant.

Tax breaks are also coming in the new legislation. For all cannabis business owners in Massachusetts, the state tax code will also be modified to increase tax write-off benefits, similar to other non-cannabis businesses.

From marijuana prohibition to legalization of adult-use marijuana in Massachusetts, the new laws will benefit business owners, communities, and residents. The laws will also ensure that the Massachusetts cannabis industry can continue to experience high growth.

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