Five years after Massachusetts residents legalized marijuana for recreational use, the state is still struggling to realize the lofty goals of that effort, according to a recent Globe investigation. From the consumer standpoint, legalization has worked just fine: Long lines at dispensaries quickly subsided as more businesses sprouted and soaked up demand; the steep price of legal weed in Massachusetts has been dropping, albeit slowly; and, arguably most important, fewer people — though still disproportionately Black and brown people — are getting unnecessarily tangled up in the criminal justice system for possession.
From the business side, however, the laws that legalized marijuana in the state have yet to fulfill their promise. Though the industry has delivered thousands of jobs and billions of dollars in revenue to Massachusetts, its current regulation has been plagued with corruption and has created barriers to entry for small businesses. And though the state established a social equity program that aims to help people of color — who were most negatively impacted by the criminalization of marijuana and the war on drugs — start businesses in the industry, just about 8 percent of companies that have opened marijuana facilities are owned by people who participated in the state’s social equity program.
Much of the industry’s woes are a result of inaction from the Legislature. After the state rewrote the ballot measure that voters passed, lawmakers have not updated the rules and regulations that govern the marijuana economy, in spite of local corruption over licensing and new evidence that shows the state moving toward market domination by big companies rather than a competitive environment. (Though one bill did pass the House, none have reached the governor’s desk since 2017.) If Massachusetts wants to ensure that it protects consumers from predatory business practices, fosters a competitive environment for small businesses, and roots out corruption, then it has to be more proactive in passing regulatory measures that allow the market to grow responsibly.
To start, the state should overhaul its local approval process, which has given cities and towns too much control over which businesses can or can’t open. Not only has this been a recipe for petty corruption — as was the case with the former Fall River mayor who was sentenced to prison for extortion and bribery — but it has also made opening up marijuana businesses a much more expensive endeavor than it has to be. Arbitrary zoning requirements in many locales have dramatically limited the number of places marijuana shops can open, effectively leaving big businesses as the only ones that can afford retail space.
Municipalities are also able to raise millions of dollars in revenues from marijuana businesses — not just from local taxes on the product, but also from what are called “community impact fees.” Though these fees are capped at 3 percent and are supposed to be based on costs that are incurred by the other businesses operating in the area, few municipalities actually charge a reasonably justified fee while most automatically charge the full 3 percent. (Others have managed to charge even more than that.) Even if the fees were somehow related to actual costs — and there’s little evidence that they ever are — no other legal business is treated that way. These kinds of steep costs for businesses to open and operate are not creating a competitive environment in which small businesses can start with an equal footing, and are why the Legislature should pass a measure to better enforce how municipalities calculate these fees.
While the high cost of starting a venture in this industry hinders the ability of small minority-owned businesses to enter the market — a group that was supposed to benefit from the legalization law — that’s not the only reason the market has been difficult to penetrate. As a result of municipalities’ power over the approval process, equity has been, for the most part, left out of the equation. And that’s because, unlike the state, municipalities are not required to consider equity when awarding licenses.
Nor has the state heeded calls to create a loan program to help equity applicants. As if the barriers to entry weren’t high enough already, getting financing for a marijuana business is difficult because of its murky legal status.
That’s compounded the unjustified head start that medical marijuana businesses have had in the recreational license approval process, which has ultimately paved the way for the bigger medical companies to dominate the market. So the state has to double down on its social equity program and prioritize licensing for minority applicants.
There are a host of other problems with legal weed in Massachusetts. Employers, for example, can still fire workers for consuming marijuana off the clock, despite the fact that doing so is now perfectly legal. As this budding industry continues to grow, the Legislature’s inaction will only make these problems — particularly those on the competition front — worse. If the state wants to prevent a Big Tobacco-like takeover that exploits consumers and shuts out small and minority-owned businesses, then it has to act now.
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