Cannabusiness Advisory

On Tuesday, October 20, 2020, the Cannabis Control Commission (the “Commission”) approved several policy changes with respect to its draft regulations; the most significant change being the re-categorization of two Marijuana Establishment types which, if enacted, would authorize licensees to provide limited delivery services to adult-use cannabis consumers in the Commonwealth. The approval comes after a public comment period which ended on October 15. A final vote on all policy changes to both the adult-use and medical marijuana regulations is scheduled to be held at a public meeting on October 29.

In its press release, the Commission states that the newly categorized Marijuana Courier and Marijuana Delivery Operator license types – which were previously referred to as the Limited Delivery License and the Wholesale Delivery License – will further the Commission’s mission to enable meaningful participation in the legal cannabis industry by communities that have been disproportionately harmed by marijuana prohibition. Further, the Commission asserts that such policy changes are necessary in order to satisfy consumer demand which is currently being met by the illicit cannabis market. In light of the Commission’s stated motivation behind the policy change, the draft delivery regulations currently specify that both newly categorized license types will be exclusively available to Certified Economic Empowerment Priority Applicants (EEAs) and Social Equity Program (SEP) Participants for at least three years, with the exclusivity period commencing when the first Marijuana Delivery Operator begins operations.

In addition to the changes to delivery licensing, the Commission also approved changes relating to operations restrictions, caps on ownership and control, and limits to financial relationships with third-party technology platform providers. Additional changes include:

• Preventing a single entity from holding direct or indirect control over more than two Marijuana Delivery Operator or Marijuana Courier licenses, under the Commission’s three Marijuana Retailer or Delivery License cap, and restricting a single Marijuana Delivery Operator to maintaining one warehouse as their principal place of business or operations;
• Requiring that marijuana products out for distribution by a delivery licensee will be associated with a specific, individual order to prevent entities from operating as mobile warehouses or retail stores;
• Revisiting the provisions for Marijuana Delivery Operators two years after the first entity commences operations in the Commonwealth to study the competitiveness and concentration of the license type, and if necessary, responding with further regulatory changes or guidance;
• Deeming a third-party technology platform provider with any financial interest, including but not limited to, a delivery agreement or other agreement for services, in a delivery license as a person or entity having direct control over that license, and limiting such control by those providers to one delivery license; and
• Reemphasizing that the Commission shall maintain on its website its publicly available and searchable source of information about all operating licensees and include delivery licensees.

This Thursday, October 29^th, Burns & Levinson will hold its Fourth Annual State of the Cannabis Industry Conference. Each year, the conference convenes national experts and industry professionals to share their unique strategic legal and financial perspectives on the state of the industry and capital markets, M&A and investments, secured lending, workouts and restructurings, and developments in the hemp and CBD market. For 2020, we have redesigned the event to be an interactive virtual experience, enabling attendees to make connections, develop partnerships, and learn from industry leaders. This year our conference kicks off with a conversation between Burns’ Frank A. Segall and Cannabis Control Commission Chairman Steve Hoffman.