The Massachusetts Cannabis Social Equity Trust Fund is a day late and a dollar short, but the check’s in the mail and this round of grants could really help
Santa came a few days early for Social Equity operators in Massachusetts.
In August 2022, the Massachusetts Cannabis Social Equity Trust Fund was established via An Act Relative to Equity in the Cannabis Industry. This legislation created a grant program to assist SEs funded by a portion of the marijuana sales tax receipts. The fund is administered by the Executive Office of Economic Development (EOED). Due to legislative errors, the fund was off to a delayed start and in early 2024 provided small grants to cannabis licensees as the EOED awaited their promised funding.
On Monday, Dec. 23, the EOED notified 180 SEs that they will receive a slice of an upcoming $26 million disbursement from the fund, broken into two general grant groups—small dollar (pre-licensure) up to $25,000, and those for licensed operators, which start at $50,000. To help applicants, it will provide small-dollar grants to 111 pre-license SEs to help them with planning and deposits for things like real estate, with 108 of those 111 pre-license SEs receiving the full $25,000 and the other three received $13,000, $17,000, and $20,000, respectively.
This all comes after a number of setbacks for the fund, followed by an initial round of assistance in April—50 grants to cannabis social equity businesses in 28 communities, totaling $2,350,000, through the Cannabis Social Equity Trust Fund.
The challenges faced by Social Equity Program participants in Massachusetts
The Bay State cannabis industry has continually failed to live up to its lofty goals for businesses owned by those adversely impacted by the war on drugs. The state’s two programs designed for these constituencies are the Social Equity (SE) Program (over 1,000 participants) and a more limited Economic Empowerment (EE) program that had a very short (a few weeks) sign-up window in 2018 (122 participants). The Social Equity Program provides training and support to participants, a fast lane for state licensing application reviews, and some reduced costs on licensing fees.
Many vendors servicing the industry with dedicated services such as software, point-of-sale systems, or marketing platforms offer discounts to SEs. Beyond that, it’s a struggle. The obstacles faced by SEs are many and well-reviewed over the past several years. They fall into several categories: lack of seed capital to get organized enough to attract investors, inexperience managing a business in a new industry with exceptionally complex regulations, predatory financiers, inability to raise capital sufficient to launch the business, falling prey to shrewd landlords, and many other miscellaneous challenges.
The number of Massachusetts cannabis licensees with Social Equity status
As of Dec. 11, 2024, the Massachusetts Cannabis Control Commission’s open data platform listed 700 licensees that had achieved commence operations status, with 37 licenses expiring prior to Nov. 15. Of the remaining licensees, only 44, or 6.64% are in the hands of SEs while 29, or 4.37% are in the hands of Economic Empowerment applicants.
While the media often boasts of Massachusetts’ $7 billion cannabis industry, that figure is misleading. The state collects a 20% retail sales tax with 3% allocated for the host municipality (4% if the retail licensee is Social Equity). In 2023, the state generated approximately $1.5 billion in retail adult-use cannabis sales. In 2024, that figure could reach $1.645 billion. The $7 billion figure represents aggregate recreational sales (adult-use) since program inception in November 2018 through to the present and not for a single year.
Those sales figures are still impressive when one considers that in January 2019, a gram of cannabis had an average retail cost of $14.29. By Oct. 31, 2024, that price had dropped to $4.56, which appears to be a 68% price decrease. But that calculation fails to consider inflation; $14.29 with inflation equates to $17.92, indicating prices have actually dropped by 74.5%. When prices drop by 75% but revenues increase, that means the number of grams sold has increased dramatically. Yet with all this growth and activity, SEs still struggle to get through the licensing maze and become operational.
How the latest grants break down geographically
Twenty-four licensees were awarded $500,000, 31 were awarded $250,000, with 14 others receiving $50,000 to $490,000.
Licensees have locations (many applicants do not) and therefore we were interested in which communities hosted the greatest awards.
- Boston leads the pack with 16 licensees sharing $4.6 million (for those diving into the data set, the Ann Arbor (Michigan) listed recipients are actually Boston stores)
- Holyoke is second with six licensees sharing $2.24 million
- Worcester enjoys the third highest awards with 4 licensees sharing $1.7 million
- Taunton rounds out the million-dollar club with 3 licensees sharing $1 million
- Cambridge has 4 licensees sharing $790,000
- Natick has 2 licensees sharing $750,000
- Brockton has 2 licensees sharing $550,000
- Springfield has 2 licensees sharing $500,000
- 13 communities each have 1 license awarded $500,000 (each)
- 12 communities each have 1 license awarded $250,000 (each)
Understanding the funding tiers and awards by license classes
We also compared the operator awards (licensed establishments) with the open data platform awarded license list and were able to identify the license class of those who received awards. Marijuana retailers led the pack with 30 licensees sharing nearly $9 million.
Funding awards are allocated into tiers as follows:
What this round of Social Equity grants could mean for licensees
This round of grants may actually have an impact on struggling home delivery licensees. Couriers, who deliver cannabis to consumers for retailers—akin to Under Eats or Door Dash—shared $4.2 million amongst 13 SEs. Marijuana delivery operators, meanwhile, who operate a delivery-only retail business—akin to a mini Amazon of cannabis—shared $4.6 million amongst 11 SEs.
Funds should be available for disbursement in early 2025. For those concerned about how the funds can be deployed, the EOED required a budget as part of the application process and it appears the EOED will require submission of invoices and the EOED may be issuing payments directly to the payees.
This is a big step for the social equity fund and could jumpstart many SE applicants and struggling operators.
The author’s company, Firebrand Cannabis in Boston, is set to receive $400,000 from the latest trust fund disbursement.