Strengthening the safety net for social equity entrepreneurs as the state battles to make cannabis delivery a viable business model
Massachusetts Cannabis Control Commission members voted last week to extend the current delivery license exclusivity period for three more years while delivery businesses continue to work toward becoming profitable.
“It’s 36 months, but we have the ability to extend it to four years,” CCC Chair Shannon O’Brien said during the commission’s March 4 meeting. “If we do our job monitoring this on a regular basis, I would also hope that after two years, we take a look at this or after one year we take a look at this. The [Social Equity Trust] fund is there now, and the two-driver rule has been changed.”
Over the last few years, Massachusetts has made it easier for delivery operators to survive. Aside from changing the burdensome two-driver rule at the behest of owners, the state also finally initiated the trust which enables qualified operators to access capital, which remains extremely difficult for the cannabis industry.
The current Massachusetts cannabis delivery landscape
As of Feb. 12, there were 18 delivery operators, nine couriers, and one microbusiness with a delivery endorsement operating in Massachusetts. Additionally, there are 22 delivery operators and 15 couriers with provisional licenses representing the pipeline of potential new licensees in the category.
Delivery licenses are reserved exclusively for Social Equity and Economic Empowerment applicants, for what had been set as three years following the commence operation orders of the first delivery business, which took place April 1, 2022. Originally, that period was set for three years with an option for an additional year.
During that designated period, most delivery businesses struggled to build a profitable enterprise, in part because the state required two drivers per vehicle, and deliveries were prohibited in towns that voted to ban cannabis establishments. Since then, the two driver rule has been repealed, but businesses are still limited to where they can bring products.
“I have heard feedback from some people that are concerned that while some people are still working on becoming established and profitable, there are other people that are looking to sell and there may be some limitations to that,” Chair O’Brien said.
Extending the exclusivity period
Commissioner Carrie Benedon argued in favor of a longer extension, based on requirements of accepting money from the Social Equity Trust Fund.
“I propose five years,” Benedon said. “One thing I learned was that when licensees accept trust fund money, that includes a limitation on selling their business for five years. For many of these businesses, the only way they are getting started is they are taking that money. They still need capital. If they cannot sell for five years, only having this certainty for three years could put them in a bind.”
Benedon ultimately voted in favor of the three-year extension with the hope that the commission could extend it further down the line if needed.
“I believe extending exclusivity for five more years would have provided more security and opportunity for licensees, but I am hopeful that if three years is not enough, future commissioners will extend the period beyond 2029,” she said.
After a six-and-a-half hour meeting on March 4, the CCC decided to continue discussion on the exclusivity period two days later, on March 6. At that later meeting, the body voted unanimously to update the state’s regulations to extend the exclusivity period to April 2029.
