Mass. House approves sweeping marijuana reforms on 153-2 vote

Bill would crack down on local fees, boost equity applicants, and pave way for pot cafés

Massachusetts House Speaker Ron Mariano has thrown his support behind a package of reforms to the state's marijuana laws.Suzanne Kreiter/Globe Staff

The Massachusetts House voted overwhelmingly on Wednesday to approve major reforms to the state’s marijuana laws, with legislative leaders saying they were implementing changes long demanded by cannabis businesses, activists, and consumers.

The 153-2 vote in favor of the bill, which largely mirrors legislation approved by the state Senate in April, came on the same day regulators announced that total recreational pot sales in Massachusetts have surpassed $3 billion — underscoring the high stakes of any tweaks to the rules governing the industry.

Among other provisions, the changes would allow cities and towns to opt in to hosting marijuana cafés, steer a significant chunk of state pot tax revenue to so-called equity applicants trying to get their small cannabis businesses off the ground, crack down on controversial local fees charged to marijuana operators while easing their state tax burden, and make it easier for former defendants to wipe away old marijuana charges.

After the vote, House Speaker Ron Mariano issued a statement saying the bill aims " . . . to create a fair and successful cannabis industry, fostering equitable opportunities to those disproportionately impacted by the systemic racism of historic drug policy.”

The next stop for the House and Senate bills will be a conference committee charged with reconciling any differences between the two versions, followed by another round of votes in each chamber that would likely send a final draft to Governor Charlie Baker this summer.

One difference to be hammered out is the proportion of revenue from the state’s 10.75 percent marijuana excise tax that will be set aside in a fund for equity applicants — essentially, those from communities hit hardest by drug arrests. The new House version of the bill bumps that number up to 20 percent compared to the Senate’s 10.

Citing decades of marijuana arrests carried out along highly racially disproportionate lines, advocates and progressive lawmakers argue the state has an obligation to invest a slice of its pot tax windfall into businesses owned by those swept up in the war on drugs.

So far, despite various licensing policies giving a leg up to such entrepreneurs, only 23 of the 253 different marijuana companies currently open for business in Massachusetts are owned by members of the Cannabis Control Commission’s economic empowerment and social equity programs.

Shanel Lindsay, the cofounder of advocacy group Equitable Opportunities Now, praised lawmakers for approving an amendment by state Rep. Chynah Tyler of Boston that increased the 15 percent set-aside in an earlier House draft to 20 percent. She urged the forthcoming conference committee to stick with the higher figure.

“Without this funding, our equity goals are just hollow promises,” Lindsay said.

Through April, Massachusetts had collected about $124.5 million in recreational excise taxes since the start of the fiscal year that began last July, according to preliminary Department of Revenue statistics. With marijuana sales increasing, that means a 20 percent cut would amount to over $25 million — a significant sum, though not an extravagant one in the marijuana business, where a single large growing facility can easily cost $15 million or more to build out.

The House and Senate versions of the legislation also differ slightly in how they would reform host community agreements, the contracts marijuana operators must sign with a municipality in order to win a state license. The House bill gives the state Cannabis Control Commission 45 days instead of 120 to review the deals, and adds a provision that bans local fees once a marijuana business has been open for five years.

Applicants and operators have complained for years that most municipalities impose large “impact” fees in the contracts that far exceed any actual negative effects of their businesses on the local community. Both versions of the bill would sharply curtail that practice by requiring cities and towns to document any impacts and tailor their fees accordingly, with the cannabis commission empowered to reject deals that call for excessive payments.

“The municipality literally has the upper hand in these negotiations, and many have used it to a fault,” said state Rep. Daniel Donahue of Worcester. He added that the legislation would help bring about a “legal, fair, and honest” industry.

The Massachusetts Municipal Association has lobbied against the change, calling it an industry-driven attempt to maximize profits for incumbent pot operators that would weaken community oversight of marijuana businesses and cause legal chaos.

“The key issues for cities and towns include making certain that the final version of legislation doesn’t interfere with existing host community agreements, and making sure that communities can collect adequate community impact fees going forward,” Geoff Beckwith, the association’s executive director, said in a statement to the Globe.

Reducing or eliminating fees, he added, “could be a disincentive for additional communities to accept cannabis establishments.”

The pending legislation would also require municipal authorities to take equity into consideration when awarding local marijuana permits, as the state must, closing a loophole that advocates say has prevented many equity applicants from ever making it to the commission review process.

The House bill further adds a provision making it easier for people saddled with old marijuana possession convictions and arrests to permanently clear their records, a process known as expungement.

A Globe analysis published last year found that state probation officials could account for just 17 marijuana-related expungements since 2019, despite tens of thousands of such arrests and a 2018 law that was intended to give former defendants a clean start.

The new provision would allow more marijuana charges to be expunged and remove the discretion state judges have to deny expungement petitions without explanation, instead directing them to approve all eligible requests.

“We mean it when we say our residents have the right to keep these records from following them around for life,” said state Rep. Michael Day of Stoneham, who also upbraided the administration of Governor Charlie Baker for failing to conduct a required public outreach campaign about expungements.

Another significant addition by the House would allow licensed cannabis businesses to deduct expenses from their state tax bill that cannot be deducted on federal returns — a byproduct of the national prohibition on marijuana that can sometimes lead to pot firms paying effective tax rates of more than 50 percent.

One reform noticeably absent from the bill was a ban on employers firing (or declining to hire) workers solely on the basis of a flunked marijuana test. Current technology can detect recent cannabis use but not active impairment, and calls have grown for Massachusetts to follow other states in restricting the use of such tests to safety-critical positions, a move employers oppose.

One the whole, advocates and businesses said the bill approved Wednesday is overdue.

“By providing start-up capital, empowering the [cannabis commission] with proper oversight of greedy municipalities, and allowing cannabis operators to deduct normal business expenses, entrepreneurs now will be able to pursue their dreams of starting a small business with fewer barriers in their way,” said Massachusetts Cannabis Business Association president David O’Brien.