Massachusetts House Passes Legislation to Foster Greater Fairness and Equity in Cannabis Industry

The Massachusetts House of Representatives today passed legislation that encourages and facilitates participation in the cannabis industry from communities disproportionally harmed by marijuana criminalization by creating a Social Equity Trust Fund. The bill also strengthens the host community agreement process and clarifies procedures for permitting social consumption sites.

“This legislation builds upon the House’s multi-session efforts to create a fair and successful cannabis industry, fostering equitable opportunities to those disproportionately impacted by the systemic racism of historic drug policy,” said Speaker of the House Ronald J. Mariano (D-Quincy). “With this legislation, the House addresses ongoing concerns that have only become more pronounced with the growth of the cannabis industry, such as the host community agreement process and systemic barriers for minority-owned business to enter the cannabis market.”

“This legislation continues to build on the strives we have made in the cannabis industry to ensure equitable access for all Massachusetts residents, particularly those who have been disadvantaged by marijuana prohibition and enforcement,” said Representative Daniel M. Donahue (D-Worcester), House Chairman of the Joint Committee on Cannabis Policy. “I want to thank Speaker Mariano for his steadfast commitment to ensure social equity applicants have access to the capital they need to be successful, while also removing barriers to their entry into the market. This bill lays out a clear and fair approach to expungement for prior marijuana convictions that ensures the best interest of justice is served by providing a real and effective avenue for many to put their past behind them.”

“Over the last several years we have taken a deliberative and thoughtful approach to legalizing cannabis. From the outset, we have been consistent and clear as a House that one of the central tenets of our cannabis policy is to ensure that individuals have the ability to expunge their records of offenses that are now no longer a crime,” said Representative Michael S. Day (D- Stoneham), House Chairman of the Joint Committee on the Judiciary. “Today the House once again affirms that our residents have the right to have records for non-criminal activity expunged, and to keep those records from following them around for life.”

“If we want to bring social equity to the cannabis industry, we must invest real dollars directed toward the people who aspire to be in this industry,” said Representative Chynah Tyler (D-Boston), Chair of the Massachusetts Black and Latino Legislative Caucus. “The passing of this bill, particularly the significant financial investments in the Cannabis Social Equity Trust Fund, will be instrumental to achieving our shared goals.”

“An Act relative to equity in the cannabis industry” (H. 4791):

Establishes the Cannabis Social Equity Trust Fund

This legislation creates a trust fund to make grants and loans to social equity program participants and economic empowerment priority applicants, filling the gap left by the unavailability of banking services in the industry and facilitating participation in the cannabis industry of entrepreneurs from communities that have been disproportionately harmed by marijuana prohibition and enforcement. Social equity business are marijuana establishments primarily owned by individuals eligible for the social equity program or whose ownership qualifies it as an economic empowerment priority applicant.

Twenty percent of the revenue collected from the sale of marijuana and marijuana products must be transferred to the Cannabis Social Equity Trust Fund which will be administered by the Executive Office of Housing and Economic Development, in consultation with a newly created Cannabis Social Equity Advisory Board.

Clarifies the Host Community Agreements process

Since the passage of the cannabis legalization law in 2017, the Cannabis Control Commission has asked the Legislature for further clarity on the agency’s authority to review host community agreements, which are executed between a marijuana establishment and their hosting municipality.

This legislation authorizes the Commission to review host community agreements, and if determined lawful, to approve them. The legislation also authorizes the Commission to prioritize social equity program businesses and economic empowerment priority applicants for expedited review.

The legislation also clarifies the scope of host community agreements and adds new criteria, such as:

  • No host community agreement can include a community impact fee that is beyond the businesses fifth year of operation.
  • Provides further guidance on how to calculate the maximum community impact fee allowed of 3 percent of the gross sales.
  • The community impact fee must encompass all payments and obligations between the host community and the establishment or treatment center.
  • No host community agreement can include a promise to make a future monetary payment, in-kind contribution or charitable contribution.
    • If the licensee believes the cost information is not reasonably related to the actual costs in the preceding year it may petition the CCC for review.
    • The CCC may also consider the reasonableness of past community impact fees paid under the same host community agreement.
  • The CCC must review and approve each host community agreement as part of the license application and renewal process.
  • All host communities must establish procedures and policies to promote and encourage full participation in the regulated marijuana industry by people from communities that have previously been disproportionately harmed by marijuana prohibition and enforcement. The CCC must establish minimum acceptable standards for these procedures and policies

Clarifies the local social consumption approval process

The social consumption policy, which would allow the sale of marijuana and marijuana products for consumption on the premises where sold, is authorized by existing law. However, this legislation amends it to ensure proper procedures are taken regarding local initiative petitions. Under this legislation, as an alternative to local initiative petitions, a city or town may also allow for social consumption sites through the passage of a by-law or ordinance.

Expedites the expungement process

For individuals seeking to expunge a record for previous offenses that are now decriminalized, this legislation requires the court to order the expungement of the record within 30 days of the request and expunge records for possession of marijuana or distribution of marijuana based on the now-legal amount.

“An Act relative to equity in the cannabis industry” (H. 4791) passed the House of Representatives 153-2 after a similar version of this legislation passed in the Massachusetts State Senate. The legislation moves back to the Senate for further consideration.