On Nov. 8, 2016, Massachusetts voters legalized marijuana, closing a door on more than a century of prohibition and opening one to an uncertain new era.
In doing so, they brushed past gloomy prophecies from opponents — a spike in youth consumption, a rash of stoned driving accidents, ultra-conspicuous pot shops next to toy stores — and heeded arguments from legalization advocates that a tightly regulated cannabis market would be safer, fairer, and more lucrative for government coffers than the sprawling illicit one.
Five years later, that judgment call by voters has in many ways been vindicated. The public health catastrophe foreseen by opponents never materialized. Meanwhile, the recreational marijuana industry today employs over 18,000 Massachusetts workers and has generated $2.2 billion in revenue, with municipalities and the state together netting a healthy 20 percent cut of the action (plus fees).
Still, legalization here is falling short of its potential in several ways, according to interviews with dozens of experts. Since rewriting the voter-approved ballot initiative in 2017, the Legislature has failed to update state laws governing local control and equity so they reflect the reality — and not just the idea — of legal cannabis.
Two areas in particular have drawn the loudest calls for reform: the blurry limits on how much power municipalities have over new marijuana businesses, and the struggles of Black and brown entrepreneurs to win licenses promised them in the law.
As these and other problems fester — including the persistence of a large illicit market — a new batch of states pondering legalization increasingly see Massachusetts as a cautionary tale instead of a model.
“These no-brainer fixes die without a vote year after year,” said Shaleen Title, an attorney who served on the state’s oversight body, the Cannabis Control Commission, and founded a drug policy think tank. “After a while it’s just sad, because you know the public could be getting better results across the board” from legalization.
A single, stark scene from 2019 probably defines, for some, the story of legalization in Massachusetts: then-Fall River Mayor Jasiel F. Correia II shuffling into federal court in shackles, accused of extorting local marijuana applicants for hundreds of thousands of dollars in exchange for city approval.
The kind of overt corruption that netted Correia a federal prison sentence is rare. But US prosecutors and an array of other experts point to it as a symptom of the problematic approval system, in which municipal officials have extensive power to pick which prospective marijuana operators get what’s called a “host community agreement.” With that approval, they can move on to the state licensing process. Without it, they must start over in another town. That make-or-break latitude can give local authorities enormous clout — and, in the case of Correia, corrupt opportunity.
“Implementing the framework governing the new recreational marijuana industry has revealed gaps that the Legislature and commission likely did not anticipate,” Supreme Judicial Court Chief Justice Kimberly Budd wrote in a July ruling on a lawsuit challenging Salem’s licensing process. “Closing those gaps would provide much-needed clarity.”
The system has allowed municipalities to rake in millions of dollars in “community impact fees” from marijuana firms. The payments are called for in host community agreements and come on top of a 3 percent local tax on recreational sales.
State law caps impact fees at 3 percent of a marijuana facility’s revenue and says the money must go toward offsetting costs “reasonably related” to its operation. However, only a handful of cities and towns tailor their fees to a company’s local side-effects, with most simply charging all local operators the maximum 3 percent — and some tacking on further charges beyond that.
An industry-funded review of 460 host community agreements earlier this year by the University of Massachusetts Amherst found the deals together called for at least $2.46 million in excessive fees, a total that doesn’t include millions more spent on police details some consider unnecessary.
“Collecting impact fees on top of the 3 percent [local] tax is indefensible,” said Caroline Pineau, owner of the Stem marijuana store in Haverhill, who is trying in an ongoing lawsuit to force her host city to justify its steep fees. “It’s clear now that we have no impact on public safety, and it’s time cannabis businesses stop being held to a double standard.”
Two localities, Northampton and Lee, have dropped their fees, saying the negligible costs of hosting marijuana businesses don’t merit charging them more than liquor stores or other companies to operate locally.
Municipal attorneys argue all the payments were agreed to voluntarily by marijuana companies and represent good-faith efforts by local leaders to maximize the benefit their constituents receive from businesses whose effect remains uncertain.
While municipal lobbyists have said they’re willing to negotiate clearer limits on fees, they oppose legislation that would give the cannabis commission authority to review host agreements.
“The pending legislation would interfere with over 1,000 existing contracts,” said Geoff Beckwith, the executive director of the Massachusetts Municipal Association. “These bills are not only overreaches, they would create widespread confusion, disruption, and litigation.”
It’s not clear how much sway such considerations hold on Beacon Hill, but so far, lawmakers haven’t sent a reform measure to Governor Charlie Baker: The state Senate did not take up a local control bill passed by the House of Representatives in February 2020.
Asked whether the House would address the issue in the current legislative session, Speaker Ronald Mariano noted that, while the Senate didn’t vote on the previous bill, the House looks “forward to working on host community agreements and other cannabis reforms this session.”
In a statement, Senate president Karen Spilka pushed back on the notion that her chamber has moved too slowly, saying the first stores opened “just three years ago.”
“As with any new law — especially one that legalizes a new industry — there is a need to take a careful look at what is working and what can be improved,” she said.
Spilka said the Senate “will be taking a close look at host community agreements, social equity, and automatic expungement of eligible offenses related to cannabis.”
Those additional priorities should please advocates, who say the state must do more to ensure people from Black and brown communities hit hardest by past marijuana arrests end up with a meaningful slice of the legal marijuana market.
To date, just 16 of the 194 companies that have successfully opened a marijuana facility are owned by participants in the commission’s equity and economic empowerment programs, which provide education and technical assistance.
Those entrepreneurs say their biggest obstacle is accessing sufficient funding, thanks to banking restrictions driven by the federal prohibition on marijuana. Municipal gatekeeping is also an impediment: Unlike the state, cities and towns aren’t obligated to consider equity when awarding pot licenses, and only a small handful do. That means many such applicants never get a shot at cannabis commission review and approval.
Bills that would steer a portion of marijuana tax revenue into a loan fund for equity applicants and require municipalities to at least consider equity have yet to pass. In the meantime, the industry continues to be dominated by operators from the preexisting medical marijuana sector, which had no equity mandate and imposed even higher up-front costs on companies trying to enter it.