What Are the Business Regulations for Cannabis in Massachusetts?

The rules you need to prepare in the marijuana, hemp, and CBD space

Massachusetts has joined many other U.S. states in legalizing the recreational use of marijuana. As described by the Marijuana Policy Project (MPP), Massachusetts residents voted decisively in favor of Ballot Question 4 in 2016—putting the state on a path towards taxing and regulating the adult use of marijuana and related cannabis products.

In November 2018, the first adult use marijuana retail stores opened in Northampton. Since then, many other businesses have opened all around the state. The Massachusetts Cannabis Control Commission (CCC) has put a set of business regulations in place that companies must comply with if they are entering the marijuana/cannabis industry.

“A lot of people think, ‘How hard can it be selling pot?’” says Andrew D. Myers, an attorney with Davis, Malm & D’Agostine in Boston who advises cannabis businesses. “But it’s complicated and requires a lot of work.”

Here are four important items to have in place when you’re hoping to open a facility:

  1. Comply With the Real Estate Requirements

“The thing people need to think about first is their location,” Myers says. “Each town has different local ordinances that must be complied with. Some have banned it, so you have to find one that hasn’t. Second, some have limits on the number of recreational retail stores, so you have to check that. And third, you have to check the areas that are zoned for cannabis. Then you need to find a space that is reasonable within all those things.”

Finally, you need a host community agreement with the town. “That often involves a bit of negotiation with the mayor or town council or selectmen,” Myers says, adding that some municipalities also require a permitting process.

“It’s a bit of a chicken-and-egg problem,” he adds, “because before you file your application, you are supposed to have a commitment for a facility. You don’t want to make a commitment before you know you’re getting a license, and it can sometimes take a year or longer because they’re so inundated at the CCC. You’d like to have some wiggle room, but that can be a challenge.”

  1. Set Up Your Cannabis Business Corporate Structure

As a starting point, companies in the marijuana industry need to set up the proper corporate structure. Similar to other businesses, a company will simply not be able to thrive without the proper legal foundation. This is especially important in the marijuana industry due to the strict regulatory requirements. If your company lacks the appropriate corporate structure, Massachusetts authorities may deny a license.

  1. Create a Viable Business Plan

You cannot apply for a cannabis business license in the Commonwealth of Massachusetts without a business plan. The CCC wants to see carefully documented evidence that your company has a viable (and legal) plan to operate in a manner that considers and protects public safety. Without a proper business plan and sufficient evidence of financial capital, you will not be permitted to obtain any type of marijuana license in Massachusetts. Business planning is essential for all cannabis industry companies.

  1. Acquire the Appropriate Massachusetts Marijuana License

In Massachusetts, marijuana businesses must obtain the appropriate state license. Once a business plan is in place, a company can apply for a provisional marijuana license. The specific license that your firm needs to get will depend on the nature of your operation. For example, there are licenses available for cultivators, manufacturers, transporters, and retailers. In some cases, cannabis business operations are required to get more than one marijuana license.

How much capital you have access to will depend largely on your operation and what tier your fall into, Myers says. “One retail location is a completely different world from a cultivation facility or a processing or production facility. It varies, and if you use your capital wisely it can be less, but it’s still into six figures.”

The CCC’s policies and areas of interest sometimes evolve, Myers notes, but there is a comment process after applications are submitted where each business can address those areas of concern and resubmit for consideration.

“I think it’s important to have legal counsel review your application and help you file it, but it’s not absolutely necessary,” he adds. “Some people have business consultants who are willing to roll up their sleeves and dedicate a lot of time to getting it done and done properly, but you probably want one who has done this before.”

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