Why Recreational Cannabis Markets are Slow-to-Start

Understand the three reasons recreational cannabis sales aren't happening yet in Massachusetts and what it takes for local governments to oversee them -- or prevent them entirely.

After Massachusetts passed a referendum legalizing recreational marijuana in 2016, the state delayed on implementation of a recreational cannabis marketplace to develop both the legal structure and system that would process licenses on the state level -- once certain local requirements are met.

While the anticipated July 1, 2018, recreational cannabis marketplace launch passed, shops aren't open and making sales yet, for a few reasons.

First, state legislators wanted to study the issue, which resulted in an eight-month delay overall, according to Steve Hoffman, chairman of the state's Cannabis Control Commission (CCC) in his recent interview on WBUR Radio Boston.

Second, under the state law, local governments that want to ban recreational marijuana sales must put out the question to voters. Also, if a town or city applies for and is granted a moratorium from the Massachusetts Attorney General's office, the municipality could have up to a one-year delay on recreational marijuana sales without needing residential approval for it. Because the town of Mansfield, for example, received a moratorium, the CCC cannot grant any licenses to potential recreational cannabis operators in that jurisdiction, Hoffman said.

However, many of the upwards of 200 moratoriums granted will expire later this year, according to the Boston Globe. About 60 local governments have indefinite bans in place.

For potential host cities to this new burgeoning industry, "moratoriums are planning tools," Hoffman said, noting that Massachusetts finalized regulations on March 15, 2018. Many cities and towns waited to review those before proceeding with how they would confront the new recreational cannabis market, he said.

Third, independent testing laboratories must apply to the CCC for a license. In Massachusetts, no recreational marijuana can be sold that hasn't been independently tested in order to demonstrate compliance with public health and other standards. Tests include potency analysis, moisture content, foreign matter inspection, microbial screening, pesticide and other chemical residue screening and residual solvents levels, according to Viewpoint's Local Government Guide to Successful Marijuana Regulation & Licensing.

There is currently just one independent lab applicant in the process, Hoffman said, noting that he expected three labs that currently service the state's medical marijuana business are likely to apply. If others apply before August 1, he said they would move to the front of the CCC's overall licensing queue (which in late May had 205 applicants).

Recreational Cannabis Has Got to Work for Cities

Hoffman said to develop a recreational cannabis marketplace:

  • Cultivators need to get started.
  • Manufacturing needs to be in place.
  • Retail stores and labs need to be licensed by the CCC.
  • Cities and towns have to reach agreements with recreational marijuana licensees and inform the state (within 60 days) that local zoning requirements are met before the CCC can issue the business a license.

Although recreational marijuana is legalized on a state level, its local governments that define how local cannabis businesses can operate. Implementation, according to the Viewpoint guide, may involve multiple municipal departments including licensing, community development, finance, public safety, health and code enforcement.

Local governments ultimately specify which zones allow specific types of marijuana-related business operations and density of establishments in a given area. New recreational cannabis businesses usually will mean new codes and inspections for the local government to manage.

Seed-to-Sale Tracking Systems

Viewpoint indicates that knowing the stages of marijuana moving from production to consumption and having a centralized database with all permitting and licensing information are critical parts of effective regulation.

Inspectors can record results and notes from the field, and others can review information, and such systems can also help with overseeing that taxes and fees generated by recreational cannabis sales are collected.

In Massachusetts, the CCC has required use of Metrc the Marijuana Enforcement Tracking Reporting Compliance system by Franwell, to track the cultivation, manufacturing, transportation, inventory and sale of adult-use cannabis. According to the company, industry uses Metrc to report while all regulators use it for enforcement and compliance monitoring.

Review the CCC's Guidance for Municipalities:

FINAL Guidance for Municipalities 040218 by Ed Praetorian on Scribd

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