Legislature Poised to Open Up Medical Marijuana Licensing to For-Profits

Last week, the Massachusetts House voted 126-28 to make major revisions to Chapter 334 of the Acts of 2016.  That’s the law allowing recreational use of marijuana, which was enacted via an initiative petition on the November, 2016, statewide ballot.

The measure containing those revisions is House Bill 3773, An Act to Ensure the Public Health and Safety of Patient and Consumer Access to Medical and Adult Use of Marijuana in the Commonwealth.

On a parallel track, the Massachusetts Senate voted 30-5 to add a bunch of its own amendments to H.B. 3773. 

A six-member House-Senate conference committee is now at work on a compromise, final version of the recreational marijuana law.  Its goal is to have a reworked bill before Governor Charlie Baker by the end of this week and signed into law as soon as possible after that.

If that timetable is met, Massachusetts will begin the process of regulating the sale of marijuana for adult consumption next week, with recreational marijuana stores set to open in July, 2018.

The media covered last week’s action on recreational marijuana in the House and Senate extensively – not surprising when you consider it is truly a groundbreaking piece of legislation that will have wide ramifications in our society, economy and culture.

We heard and read a lot, for example, about the percentage of the tax to be imposed on recreational marijuana.  The House wants it to be 28%, while the Senate favors something much less onerous, 12%, the same percentage as in last November’s initiative petition.

There was, however, at least one significant aspect of this exercise in lawmaking that generally escaped notice beyond the confines of the State House: How the House and Senate have agreed on the need to reshape the five-year-old law allowing state-licensed dispensaries to sell marijuana products for medicinal use, Chapter 369 of the Acts of 2012, An Act for the Humanitarian Medical Use of Marijuana.

A significant change to Chapter 369, on which both the House and Senate agree, is to allow medical marijuana dispensaries to be for-profit businesses.  Chapter 369 called for dispensaries to be not-for-profit companies.  This made it difficult to raise funds to open dispensaries and accompanying cultivation facilities, as profit-driven investors could not hold a stake in those companies.

If the governor goes along with this change, we could see dispensaries opening everywhere they’re needed throughout the state.

During the Senate debate last week, Senator Patricia Jehlen emphasized that House Bill 3773 “will preserve and protect the medical marijuana program.”

The bill, she noted, will “protect the ability of the medical program and reduce bureaucracy” by transferring state oversight of medical marijuana to the C.C.C. (Cannabis Control Commission) "carefully over 18 months." 

The bill “institutes privacy protections for patients and helps current medical facilities to compete by allowing them to convert to a for-profit entity to allow them access to capital,” she said.

A trustworthy person I know, who has kept tab for years on all-things-marijuana, says the limitation of medical marijuana dispensary licenses to non-profits was “a major flaw” in the 2012 law, and “a defect that had become increasingly apparent.”

It is “extremely difficult,” he asserts, for the entities with dispensary licenses or applying for those licenses “to raise funds or borrow money from investors when the operations they’re investing in have to operate as non-profits.”

The Commonwealth, as my friend rightly puts it, imposes “a regulatory scheme” on marijuana use solely to protect “the health, welfare and safety of Massachusetts residents.”

He asks, “What does being a non-profit or a for-profit have to do with this extremely important governmental obligation and objective?” 

Answering, he says: “Nothing!  It is more in the interest of the Commonwealth to ensure that we have well-capitalized operations dispensing marijuana for either medicinal or recreational use. Dependable, long-term financing is directly connected to managerial expertise, sound management practices, operational efficiency, and customer satisfaction.”

My friend adds, “I’m glad the legislature now agrees with me on this.”

NOTE: Members of the conference committee on House Bill 3773 are, from the House: Majority Leader Ron Mariano of Quincy, Mark Cusack of Braintree and Hannah Kane of Shrewsbury; and, from the  Senate: Jehlen of Somerville, William Brownsberger of Belmont and Richard Ross of Wrentham. Rep. Kane and Senator Ross are Republicans; all other conferees are Democrats.  Rep. Cusack and Senator Jehlen also serve as co-chairs of the special legislative committee on marijuana policy.