BOSTON — While recreational marijuana sales have soared in 2021 as Massachusetts emerges from the pandemic, business complications and governmental actions have slowed the pace of the industry’s growth, cannabis advocates say.
Massachusetts legalized marijuana in 2016, becoming the seventh state to do so, but only licensed sales in 2018.
“Right out of the gate, the Legislature delayed everything by six months to rewrite the initiatives,” said Jim Borghesani, the communications director of “Yes on 4” in 2016. Massachusetts was the only state to rewrite the law passed by voters on marijuana legalization.
“There’s just been a slower licensing process by the CCC (Cannabis Control Commission) than in other states and for no good reason,” said Borghesani.
The industry then hit major setbacks during the pandemic, such as the inclusion of cannabis retailers in Gov. Charlie Baker’s list of non-essential business closures in 2020. This upset many in the industry who were angry that they were forced to close when liquor stores were not.
The closure of these establishments gave the illicit market a lifeline in the state when the main goal of the CCC and marijuana legalization has been to close down these markets and create legal consumers.
Marijuana on Cape Cod
The industry had a sluggish start on Cape Cod, too. The first medical marijuana dispensary opened in 2018 in Mashpee, and the first recreational shop opened in 2020 in Provincetown.
The pace of openings quickened in 2021 when three recreational stores opened in Provincetown, two in Wellfleet and one in Eastham, for example, and a medical dispensary opened in Sandwich.
All told, Barnstable County has 21 licensing applications, including for retail, manufacturing and cultivating, according to the Cannabis Control Commission. Thirteen of those applications are for retail licenses.
Dukes County has seven license applications, three for retail, and Nantucket has six, and two are for retail.
While some Cape towns have embraced adult-use marijuana retailers, others have banned them, including Bourne, Yarmouth, Falmouth, Sandwich, Harwich, Chatham and Dennis. The town of Barnstable prohibited retail sales in 2018 but allows cultivators, research facilities and testing laboratories.
In Orleans, two retail applicants were approved by the select board last summer and are in the municipal host-agreement stage of the process.
Zoning and cost hurdles
Zoning issues also can be a challenge for marijuana license applicants in the state. For instance, there cannot be a dispensary within 500 feet of a school. The intended location must also comply with municipal ordinances on marijuana establishments in their community, and establishments must abide by host community agreements, which can include a community impact fee of up to 3% of sales.
“They have to either spend a fortune to buy a place to begin with or spend a fortune to lease it,” said Smith.
Once an applicant has found a location, they can start applying for permits. The process must go through the city or town and then they must adhere to the host community agreement with the local select board or city council.
Once the host community agreement is set up, applicants can go to the Cannabis Control Commission to officially start the process of becoming a licensed establishment. According to both Borghesani and Smith some applicants have to wait up to 18 months before they are able to obtain their license, meaning applicants may be paying rent during that time before starting to make a profit.
“At this point, you would have to spend anywhere from $1.5 million to $2 million just to open a simple retail store without a cultivation license,” said Smith.
The Social Equity Program (SEP), created by the CCC in 2018, is one initiative to combat these issues. The program aims to create “sustainable pathways into the cannabis industry for individuals most impacted by the War on Drugs, marijuana prohibition, disproportionate arrest, and incarceration.”
“It all comes down to access to capital. There are carrying costs, consultant costs. You can’t go to a bank and get a loan for any of this,” says Borghesani, who’s seen first-hand how SEP applicants struggle.
Many applicants are still making their way through the process as the CCC continues to review more applicants.
Massachusetts marijuana industry projected to grow exponentially
With sales already up, the state’s marijuana sales projections are looking exponential over the next few years. Despite the pandemic negatively affecting other businesses around the state, the cannabis industry has still grown during the pandemic.
According to the Marijuana Policy Project, retail cannabis sales in the state have exceeded $1 billion so far this year. This is notable since total sales in 2020 were $696 million.
The sales prove that the demand is here in Massachusetts for legal marijuana, but meeting that demand has been a long road. There also is a limit on how much product consumers can purchase at legal establishments, due to the lack of supply.
“Supply is just finally starting to meet demand,” said Borghesani.
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