Marijuana trade group drops lawsuit against state after backlash

Key companies quit dispensary association amid boycott by equity activists

A Massachusetts dispensary employee holds a container of marijuana flower.Michael Swensen for The Boston Globe/file

The largest marijuana business association in Massachusetts has dropped a lawsuit against the state after more than a dozen key members of the group quit or renounced the litigation in the face of a fierce backlash from advocates.

The Commonwealth Dispensary Association, which represents dozens of established brick-and-mortar marijuana companies, sued the state Cannabis Control Commission earlier this month to overturn recently implemented regulations that created a new, competing class of online pot-delivery retailers — and that reserve the licenses exclusively for disenfranchised entrepreneurs for three years.

Marijuana activists and customers quickly responded with threats of an organized boycott, saying the legal challenge was protectionist and struck at a program meant to benefit Black and brown communities disproportionately targeted by police for marijuana arrests.

That criticism apparently stung. Beginning late Friday, a number of CDA member companies — nearly all of which had previously agreed to file and help fund the litigation — suddenly began announcing they were leaving in protest. By Sunday, at least 10 companies had quit, including New England Treatment Access, the state’s largest marijuana operator and the first to renounce the association.

With the group splintering and support for the lawsuit crumbling among remaining members, CDA’s leaders appeared to have little choice but to withdraw the lawsuit. Still, it was a stunning turnaround from just days earlier, when the group charged publicly that the commission had “overstepped its authority and disregarded state law, radically upending the established rules,” and sought to present a united front of large and small pot retailers.

“The CDA has determined it is in the best interest of the industry and our members to drop the lawsuit against the Cannabis Control Commission,” the association said in a statement provided to the Globe on Sunday. “We all need to be working together on achieving our many shared objectives, including increasing the participation of a diverse set of entrepreneurs in the industry.”

The commission declined to comment, saying it does not discuss litigation.

It is unclear whether the companies that left the CDA will now rejoin the association, or if any of the remaining firms will file a similar lawsuit on their own.

The state’s other primary marijuana business group, the Massachusetts Cannabis Business Association, had supported the new delivery licenses, saying they were critical to achieving equity in an industry that so far has little diversity. The group issued a statement Monday “applaud[ing] the focused, tenacious and downright effective work of advocates to hold the emerging cannabis industry accountable” and pledged to advocate for the removal of barriers keeping smaller players out of the business.

Cannabis organizers also celebrated the CDA’s retreat from court, though they gave little credit to the companies that backed out, noting that most initially backed the litigation.

“This is a victory for conscientious consumers, equity delivery companies, and authentic grass-roots activism,” said Grant Ellis, an advocate and medical marijuana patient who helped organize the pressure campaign. “But the fact remains that, until they were forced to do otherwise by public pressure, CDA members were happy to sabotage the roll out of delivery licenses with a lawsuit that was clearly meant to protect their own profits at the expense of equity and a fair market.”

The new permits at issue will allow delivery companies to operate essentially like existing retailers, buying bulk quantities of marijuana products from suppliers and reselling that inventory to consumers — except they can bring orders directly to consumers’ doorsteps in unmarked vans, with no need for the kind of physical storefronts that often garner neighborhood opposition.

The established brick-and-mortar cannabis shops represented by the CDA lobbied stridently against the creation of the licenses last year, saying such delivery operators would unfairly undermine their businesses and represented a sharp departure from the commission’s earlier vision, under which Uber Eats-style couriers would pick up all delivery orders from traditional marijuana stores.

But advocates successfully pressed the agency to stand by the proposal, which gives entrepreneurs in the commission’s social equity and economic empowerment programs — largely Black and brown entrepreneurs affected by the war on drugs — exclusive access to both types of delivery licenses for three years (beginning when the first such operator opens for business).

The dispensary association’s lawsuit was somewhat narrowly tailored along administrative and procedural grounds: Rather than assaulting the commission’s authority to create such an exclusivity period at all, the complaint argued that state law defines marijuana retailers as having the ability to deliver marijuana. It also challenged the validity of the 3-1 vote in favor of creating the licenses, claiming that former commissioner Shaleen Title was improperly serving beyond the end of her term at the time.

That caution didn’t appease the broad coalition of local advocates, national cannabis justice groups, ordinary consumers, and even public officials who confronted CDA members on social media last week with accusations of racism and demands to explain their participation in the challenge. The industry association responded at first by removing the website listing its members, but it was too late: Activists had already saved the information and began circulating a list of dispensaries to boycott.