When the Department of Public Health was setting up the state’s medical marijuana program in 2013, it established a rule that was intended as a safeguard: Whoever sells the marijuana should be fully responsible for it. That meant vertical integration, where any licensed medical marijuana company must grow the crop, manufacture products, and sell it.
A decade later, the recreational marijuana market is booming, and the vertical integration requirement — which applies solely to medical dispensaries — is an outdated relic that should be eliminated. The rule no longer has any compelling public safety rationale. All it does is limit competition in the medical market and keep small businesses out. That means less access for patients.
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Take Provincetown. There are five recreational marijuana dispensaries in the Cape community, but the closest medical dispensaries are over an hour away. Only at a medical dispensary can patients buy marijuana tax-free and with higher concentrations of THC.
Although one company, Green Harbor Dispensary, is working on opening a Provincetown medical dispensary, it didn’t have to take this long. Trish Faass, CEO of Heal Cannabis, started her business in 2015 intending to open medical stores in Provincetown and Sturbridge. She obtained medical licenses, which the company has been holding at an annual renewal cost of $50,000. Faass planned to build a cultivation and manufacturing center in Warren, but the company ran out of money. Now, Heal operates recreational dispensaries but can’t sell medical products, though Faass would like to, because of the vertical integration requirement.
“There are a lot of local people in Provincetown that are medically compromised. They need medical cannabis with higher dosages,” Faass said. “I can’t tell you how many locals ask me, ‘When are you opening medical?’ ”
Even if there were originally a safety or quality control reason for requiring one company to control products from seed to sale, that logic no longer exists since the recreational market is filled with companies that do only cultivation or manufacturing or retail. Regulators handle safety concerns by requiring seed-to-sale tracking through software.
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Another rationale for the rule was to ensure that when there were few licenses, every license would result in product reaching consumers. But today, there is plenty of cannabis, and concerns about supply and demand have largely fallen to the market to sort out.
Practically, requiring vertical integration limits dispensaries because of how expensive it is to build cultivation, manufacturing, and retail. Estimates vary but industry experts, in interviews, placed the cost at around $10 million. According to the Cannabis Control Commission, there were 264 recreational dispensaries licensed to open as of Jan. 12 but only 100 medical marijuana businesses.
Because medical cultivators are bigger companies with bigger grows, that also limits the availability of specialized, craft products. Daniel Delaney, CEO of the Delaney Policy Group, a lobbying group that represents cannabis companies, said there are medical products with low levels of THC and higher amounts of other compounds that are hard to find because they attract little interest among recreational consumers, who are the bulk of the market. “If you could have a medical-only cultivation or product manufacturer, you’d get a broader variety of products,” Delaney predicted.
Kristen Mara co-owns Pioneer Valley Extracts, a small manufacturing company in Northampton that touts small-batch gummies and vapes. It sells to companies that have recreational and medical sales in the same store — but only consumers shopping for recreational use can buy its products. “At this point … it seems a little silly to keep them separate,” Mara said.
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According to a 2022 report from the Minority Cannabis Business Association, 13 states, including Massachusetts, require medical marijuana companies to be vertically integrated, and none require it for recreational companies. Five states prohibit vertical integration for recreational cannabis companies and one, Louisiana, prohibits it for medical sellers.
While there is some ambiguity about whether the Cannabis Control Commission can eliminate the vertical integration requirement, commissioners have said they believe it is up to the Legislature. Commissioners have publicly discussed the possibility of changing the requirement but have not voted to formally endorse that policy and lobby lawmakers.
State Representative Dave Rogers, a Cambridge Democrat and former chair of the cannabis policy committee, reintroduced a bill this session to eliminate the requirement. Rogers notes that there is little business sense in requiring someone with retail expertise to grow pot.
The issue was not included in a bill aimed at diversifying the cannabis industry that was signed into law last summer. But equity-focused advocates are now reexamining vertical integration because of the barriers it poses to smaller operators.
“We’ve just learned from experience over the last several years in the adult-use realm that it’s not necessary, and it’s a huge barrier to entry,” said Sonia Chang-Díaz, a former state senator and cannabis policy committee cochair.
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Multistate medical marijuana companies seeking to protect their turf have historically opposed changing the law. But today, that stance is increasingly unpopular. David O’Brien, president and CEO of the Massachusetts Cannabis Business Association, said most businesses agree the requirement is unnecessary.
Brandon Pollock, CEO and cofounder of Theory Wellness, which sells medical and recreational cannabis and operates in five states, said he suspects he would lose some customers if more stores were allowed to sell medical products, but the impact would be small. “We want our patients to have the best access possible,” Pollock said. “The medical world is designed to focus on patient care, and anything that helps that, everyone should be aligned on.”
Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.
