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It’s time to put it all on the line. After nearly running the table with my predictions for 2019, I’m feeling the pressure to flex with some aggressively specific projections for the year ahead.
So, assuming we don’t all get drafted into World War III, and after consulting with a diverse Brain Trust of trusted experts and sources, here’s what I see going down in Massachusetts cannabis in 2020:
1. Frustrations over the lack of equity will boil over
There’s just no other way to say it: Despite a lot of talk, well-crafted policies on paper, and good intentions, Massachusetts has very little to show so far for its efforts to create an equitable cannabis industry that reflects the racist reality of the War on Drugs.
As of mid-November, just six of 227 licenses granted by the Cannabis Control Commission had gone to entrepreneurs in the state’s social equity and economic empowerment programs. The rest of the sector is dominated by larger, multi-state operators.
There are perfectly reasonable explanations for this, of course. The meandering local approval process, onerous regulations mandated in state law, and the difficulty of accessing capital (especially after this year’s marijuana market crash) continue to screen heavily for wealthier operators with the ability to source cash and connections to political power-players. And unless the Legislature steps in, those aren’t issues the commission can solve with a simple wave of its policy wand.
Other issues outside the commission’s control are also contributing to the feeling that this whole thing is rigged against the little guy, including the crushing decision by state agricultural officials last summer to ban hemp farmers from making and selling edible CBD products.
And to be fair, the commission has implemented concrete policies to address the equity issue that go far beyond those in most states with legal pot, including reserving forthcoming delivery licenses for economic empowerment applicants, social equity program participants, and microbusinesses that grow and process small quantities of their own flower. Moving ahead, I expect the commission will continue to make what tweaks it can to reduce the aggravation, perhaps by beefing up its licensing staff to cut down on growing processing times and by giving applicants a better window into the progress of their applications (and any issues holding them up).
Still, delivery operations will take a lot of time to get off the ground. Applications for the permits aren’t even available yet, and there are already serious questions about the viability of the business model. Only a relatively small number of companies will be eligible, and even fewer will be interested.
When asked about equity, commission chairman Steve Hoffman for years has responded with some version of this boilerplate quote: “We’re making progress but this is a really hard issue and we know we have more work to do and we won’t rest until we get there.”
I have no reason to doubt Hoffman means what he says. But man, he needs a new line. As the interruption of the most recent Cannabis Control Commission meeting showed, we’re now at a point where nothing short of real results will quell the palpable rage building among smaller applicants. Their patience has simply run out. Frustration will boil over at every new bump in the road, desperation litigation will be filed by businesses whose owners feel they have nothing to lose, and advocates and applicants will put heavy pressure on the commission and Legislature to act more decisively to solve the underlying structural problems blocking any realistic pathway into the market for those who aren’t already privileged.
2. Big pot companies will engage in alcohol industry-style “pay-to-play” tactics
In 2019, Big Cannabis’s favorite scam-bam in Massachusetts was trying to control seemingly independent retailers through onerous loans and management agreements — unsuccessful attempts to bypass the state’s three-retail-license cap.
In 2020, I predict we’ll see many attempts by larger players to arrive at the same end (retail domination) by different means: Specifically, supply agreements with so-called “pay-to-play” clauses.
Imagine this: You own an independent marijuana retail shop that doesn’t grow or manufacture its own products. A grower comes to you and says, “hey, I’ll wholesale you a bunch of flower at a steep discount — if you dump those products you stocked from our competitor.” Or else, “hey, if you guarantee that half of your flower selection will be comprised of our strains, I’ll pay for your family to spend a week at a resort in the Bahamas.” Or, “hey, if you buy all your vape cartridges from us, we’ll pay for an upgrade of your website or a renovation of your store or let you work with our wired-in lobbyist for free in that city where you’re trying to open a second location.”
Such deals may not give the larger company control over the smaller retailer, per se, at least not to the extent that it would trigger the commission’s legal definition of control.
However, they do threaten to short-circuit a consumer-driven market and replace it with one in which the products on the shelves of many stores are not there because shoppers love them but because their manufacturers effectively paid for them to be there. The arrangements also threaten to pit smaller, artisan producers against one another — or freeze them out of the market entirely — by locking up a significant proportion of the state’s available shelf and menu space or putting a steep price tag on that shelf space. And they will contribute to overall inequity, giving ever-more leverage to the biggest players as they force everyone else to play by their rules.
This isn’t an abstract concern. I watched it happen firsthand at a truly gobsmacking scale when I was covering the alcohol industry a few years back. Giant players like Budweiser and its distributors routinely showered bars and liquor stores with perks like free refrigerators, free beer, vacations, phantom credit card swipes in which sales reps “bought” products from retailers without actually taking possession of them, and even donations to charities in the name of the retailers. Craft brewers, meanwhile, found there were fewer and fewer tap handles in play when they tried to convince bar managers to stock their beer on the merits of its quality alone.
Nearly all state alcohol agencies ban such arrangements. But the practice was ubiquitous in the alcohol industry anyway. That’s a testament to poor enforcement, sure — but even more so, it’s a warning to cannabis regulators that the market forces motivating this behavior are so darn seductive that they might easily override the general desire of most licensees to remain compliant with the regulations.
And in the Massachusetts cannabis industry, there’s an additional pressure in this direction: Some of the state’s longstanding, vertically-integrated medical marijuana firms that are transitioning into recreational have built massive growing and production facilities, yet are struggling to open their own retail shops because of local control problems.
Operators with big grows and no or few recreational shops will soon badly need access to what little retail shelf space there is in the nascent, slow-growing Massachusetts market. And there’s just no reason to think they won’t try to solve that problem with money, just like they tried to buy their way out of an equity ordinance in Cambridge that will keep them out of the recreational sector for two years.
What really concerns me is that, while the commission already had pretty strong rules around shadow control of its licensees (and strengthened them even further in 2019), the agency has few if any controls on pay-to-play incentives. As the market in Massachusetts matures in 2020 and more and more suppliers come online, the commission would do well to get ahead of this anti-consumer, anti-small-business practice. The Alcoholic Beverages Control Commission already has regulations on pay-to-play scams, and it shouldn’t be a heavy lift to adapt the same principles to cannabis.
One obstacle may be Hoffman’s well-known and oft-stated love of free markets. Fair enough. But there are practical implications for equity and fairness if these deals are allowed to proliferate.
3. Anti-stoned driving legislation will pass, but the state Legislature won’t do much else on marijuana
As the marijuana market gets bigger and the advent of delivery and social consumption businesses inches closer, proponents of tough anti-stoned-driving measures like the one proposed by Gov. Charlie Baker will continue to accumulate ammo and momentum. Helping their cause, despite a lack of evidence that there’s a big stoned driving problem in the first place: new, better science on the link between heavy marijuana consumption and poor driving. The state Senate will insert some modest revisions aimed at placating civil rights groups, but Baker will more or less get his bill through and call it a win for public safety.
Meanwhile, the Legislature will advance but ultimately fail to pass other proposed cannabis reforms, thanks to Beacon Hill’s relatively cautious and conservative leadership.
Even with US Attorney Andrew Lelling sifting through piles of legally questionable host community agreements, and despite analyses showing cities and towns spending fees on cannabis operators on unrelated expenses, lawmakers won’t pass any of the various bills that would reform the much-criticized local approval process for fear of clashing with the state’s powerful municipal lobby.
Similarly, I predict proposals to block employers from firing workers simply for failing a marijuana test will go down amid opposition from industry groups. The fix that would let social consumption venues open in a handful of municipalities under a commission pilot program will also be deemed too politically risky, even though failing to act will continue to leave tourists, renters, and residents of public housing with no legal place to consume a legal product.
There is one other area where you might see some meaningful action, though: I predict a pressure campaign by progressive legislators and activists to put more of the state’s growing marijuana tax revenues toward equity and restorative justice efforts will produce at least modest results, maybe in the form of a watered-down budget amendment that will fall short of advocates’ dreams but nonetheless mark a step forward.
4. Commissioner Shaleen Title won’t serve a second term
Title, who holds the commission’s social justice seat, was jointly appointed in 2017 by the governor, attorney general, and treasurer. Her term, along with that of fellow commissioner Kay Doyle, comes to an end on August 31.
But Title doesn’t exactly appear to be auditioning for a reappointment: She has repeatedly sided against Gov. Baker’s administration on cannabis policy, especially over its vape ban, which she slammed as dangerous in various interviews and op-eds.
So while Title has gotten more politically savvy and strategic about picking her spots within the commission, she seems less and less inclined to compromise her values when it comes to Baker and friends. Meanwhile, the lifelong drug policy advocate and attorney has been tapped to advise various political campaigns, states, and countries, and has started speaking publicly about her support for the legalization of other drugs. With equity programs underway in Massachusetts and other opportunities calling, I predict Title will let someone else take a turn in the hot seat — assuming Baker even gives her the chance to stay.
It’s harder to read Doyle, a relentlessly detail-oriented attorney whose public profile is lower but whose influence on policy — especially local issues such as host community agreements — can’t be overstated.
I predict Doyle will get a chance to stay, but it seems equally likely that she would remain at the commission to see through her work or make a fresh start elsewhere. No prediction on that one.
5. The commission will continue to tighten its regulations on vapes and other new products
The commission is known for its extremely thorough (or, depending on your perspective, unnecessarily onerous) regulations. But the agency was caught off-guard last summer by the explosion of vaping-related illnesses, and the embarrassing revelation that its rules did not at all address additives in vapes nor the set standards around the devices’ hardware.
In December, commission tests showed numerous vape cartridges that had sat around during the vape ban were badly contaminated with lead, which presumably leached into the product from the cartridge itself.
The commission has already tightened its regulations to require that vape manufacturers disclose more information about the ingredients in their cartridges, but I predict the agency will move to put in place more comprehensive rules around these devices, and to block other novel products from entering the market without more scientific scrutiny.
6. The lab backlog will become a serious problem
Operators are already grumbling about growing wait times at the state’s only two labs that are licensed to test recreational products. If more aren’t approved soon, and additional suppliers continue to get licenses, the problem will only get worse, and consumers will start to take notice when their favorite shops start openly blaming the lab shortage for the lack of products on the shelf. The resulting pressure will force the commission to closely examine why more labs aren’t jumping into the game and perhaps tweak its rules to make the license more attractive or easier to obtain.
7. CBD will remain a muddle
The state and federal governments will continue to drag their feet in developing regulations for edibles containing hemp-derived CBD, much to the consternation of licensed local hemp farmers who are watching their crops rot while unregulated products proliferate at gas stations (see prediction #1).
While I can’t see Massachusetts agricultural officials authorizing such products to be widely sold in defiance of federal rules, I could see the state moving to at least allow hemp-derived CBD supplements and foods to be sold in regulated cannabis stores under the same legal framework as THC-containing marijuana edibles, which by law are not technically considered food.
8. Marijuana will become a meaningful, if relatively minor, campaign issue
A candidate’s stance on marijuana legalization can sometimes be a useful proxy for his or her views on criminal justice reform and other progressive issues in general. While I’m certainly not predicting weed will decide the 2020 election, I do believe the eventual Democratic nominee will make legalization an issue. Even if Joe Biden, an once-ardent drug warrior who has since come around to support decriminalization, is the nominee, he’ll eventually read a poll and back legalization.
Locally, meanwhile, I predict marijuana will become an issue in Boston as the 2021 mayoral race heats up. It’s a vulnerable spot for incumbent Martin J. Walsh, who strongly opposed legalization in 2016 and whose city still has no marijuana shops. It could also crop up in Cambridge and Somerville.
9. A major operator will go kablooeey
A well-known Massachusetts marijuana firm will go belly-up. This could happen a couple ways. One possibility: it accepts an investment or agrees to an acquisition without first receiving the state’s approval, triggering a new commission regulation that immediately renders any involved licenses void. Another possibility is that a company will simply run into some business turbulence, such as a delay in local approval, and struggle to raise enough capital to ride it out. With cannabis still illegal on the federal level, there are no bankruptcy protections available to such firms, meaning the chances of emerging alive and reorganized are slim.
10. There will be 100 retailers statewide by the end of 2020; prices will drop, but not to West Coast levels
This one speaks for itself. The commission will up its licensing pace enough to green-light another 65 or so cannabis shops. As a result, prices will come down somewhat, but we still won’t be seeing $20 eighths anytime soon.