Massachusetts cannabis regulators warn licensees about selling products “far below market price”
Just when some people might have thought the Massachusetts Cannabis Control Commission was getting down to the important stuff and listening to industry stakeholders, today the agency’s investigations and enforcement department sent a memo to all licensees—retailers, manufacturers, etc., but mostly directed at retailers—warning them about “‘Pennying Out’ Marijuana.”
It read: The CCC “is aware that some Licensees are distributing Marijuana and Marijuana Products in its inventory to Registered Agents, Consumers, and other Licensees far below market price, for example a penny, five cents, or a dollar (herein referred to as ‘Pennying Out’).
“Oftentimes these distributions are falsely attributed to a Vendor/Quality Control Sample or Employment Discount Program and used by Licensees to provide free samples at trade shows, other industry events, or to Consumers; this practice is incompatible with Commission law and in certain circumstances may be considered diversion.”
In other words, no more easy markdown promos. Though there are still avenues for “Vendor Samples” and “Trade Samples.” The bulletin continues:
To the extent that Licensees make distributions of Marijuana to Registered Agents or other Licensees through a Vendor Sample program, Licensees should be following the process outlined in the Support Bulletin on Trade Samples (the “Trade Sample Bulletin”), dated August 4, 2022, issued by the Commission’s Seed-to-Sale System of Record vendor Metrc, LLC (“Metrc”). Trade Samples are samples of Marijuana or Marijuana Product developed by a Cultivator or a Product Manufacturer provided to an adult-use Licensee to promote product awareness.
Currently, Commission regulations do not contemplate a Vendor or Quality Control Sample program for Medical Marijuana Treatment Centers. … As stated in the Trade Sample Bulletin, “Trade Samples are not to be sold for any dollar amount and are for the strict purpose of allowing other licensees to test new products.” (emphasis added). Cultivators and Product Manufacturers with a Quality Control Sample program should follow the guidance provided on Page 16 of the Commission’s Seed-to-Sale Guidance, dated May 17, 2021.
Furthermore: “If the Commission discovers that a Licensee uses a Vendor/Quality Control Sample or Employee Discount program for any purpose other than what is intended or distributes Marijuana through those programs that end up with Consumers or Patients it will take enforcement action up to and including the issuance of fines, and/or the suspension or revocation of a License.”
We will follow up with business owners and sales reps to see how this will impact operations. In the meantime, you can read the details here.
