Massachusetts’ looming recreational marijuana market has the potential to be one of the most prosperous in the nation.
Under rules finalized this month, cannabis entrepreneurs face no license caps for an assortment of business categories, edibles and myriad other goods are permitted, and there are opportunities to build a brand.
But applicants seeking to set up shop when the Bay State’s adult-use industry opens this summer will face a gauntlet of requirements that have already derailed scores of aspiring medical marijuana businesses.
Of the roughly 275 businesses that have applied for MMJ licenses since Massachusetts voters approved medical cannabis in 2012, only 22 have opened. At least 50 applications have expired.
Recreational license applicants can expect more of the same, observers said, though these same hurdles could benefit entrepreneurs who can cross the finish line.
“If you’re able to get open here, you’re going to see a more protected environment,” said Scott Moskol, an attorney who heads the cannabis practice at Boston law firm Burns & Levinson.
“We’re not going to see the downward pricing pressures as … Keep reading
A 92-year-old landlord who leased a storefront to a marijuana dispensary will receive a new hearing after a court dismissed her bankruptcy case on the grounds that acceptance of rent payments from the dispensary disqualified her from bankruptcy relief. Last month, a Bankruptcy Appellate Panel for the 9th Circuit remanded the Chapter 13 case after finding that the Court did not adequately detail a bad faith finding and, therefore, did not support its conclusion that the debtor violated federal law (namely, the Controlled Substances Act).
The landlord, Patricia Olson, owned a shopping center in Lake Tahoe, California, and, in 2013, began leasing space to Tahoe Wellness Cooperative, a state-licensed dispensary. However, the CSA makes it illegal to knowingly lease a property for the purpose of distributing marijuana. At the initial hearing to authorize the sale of the shopping center, the Bankruptcy Court for the District of Nevada took issue with the fact that Ms. Olson had continued to accept rent payments from the dispensary during her bankruptcy proceedings. The Court went so far as to say that Ms. Olson committed a crime by leasing to a business operation deemed illegal under the CSA. Accordingly, the Court concluded that … Keep reading
When it comes to the cannabis industry, banks and other financial institutions can find themselves in particularly murky legal waters (see Banking & Cannabis: Where Do Things Stand?). Federal rules dictate that banks and financial institutions that accept deposits from cannabis-related businesses may be liable for penalties, which has led to cannabis-related business in many states being conducted almost entirely in cash. Not only does this result in operational hurdles, particularly when it comes to paying taxes and compensating employees, it can also result in large amounts of cash being stored onsite, which, in turn, can lead to increased crime and an unsafe work environment. As California Senator Robert Hertzberg pointed out, “these business handle significant economic activity, yet they are forced to operate under the table and with little government oversight, as if they’re a black-market operation.”
Historically, under the Cole Memo, the consensus seems to have been that financial institutions would not be penalized in states that have legalized cannabis, unless those financial institutions were willfully ignorant to customer activities that could lend themselves to criminal financial transactions (e.g., the concealment of funds derived from other illegal activity, or the use of marijuana proceeds to support … Keep reading
Massachusetts’ Cannabis Control Commission landed firmly in the middle of the road when it voted on February 26, 2018, to postpone granting licenses to marijuana home-delivery services and “social consumption” operations. In justifying the delay, the CCC claimed that it needs additional time to craft rules that address public health and safety concerns, such as impaired driving and underage sales. Despite the postponement, it’s important to note that these limitations in no way impact retail marijuana dispensaries and their suppliers, which remain scheduled to open for business in July 2018.
While the decision is a setback for those in favor of an immediate roll-out, the CCC did agree to initially grant delivery and social consumption licenses to individuals affected by the War on Drugs, meaning that they will not be boxed out of the market when those licenses become available in 2019. This policy is meant to preserve a place in the market for lower-cost marijuana businesses, like delivery services.
While Governor Baker applauded the CCC’s action as part of establishing a “safe and responsible retail” market, others may view it as an opportunity that will appeal to entrepreneurs lacking investment capital, as the types of businesses affected will … Keep reading
I recently attended the New England Real Estate Journal’s “Cannabis: The Next Phase in Commercial Real Estate” summit, which brought together a number of local players for networking and a high-level discussion of where the industry stands in Massachusetts. In addition to being fantastic networking opportunities, events such as this allow attendees to get a sense of where the conversation on cannabis is heading, and for us, can be invaluable in terms of helping to anticipate concerns that clients will have and issues they’ll face.
Some of my takeaways:
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