Recent regulation changes increased competition over business-to-business deliveries. Now, some operators seek further rule adjustments.
For several years, Massachusetts Marijuana Delivery Operators fought and made compelling arguments for the removal of the so-called “two-driver rule.” The requirement mandated a pair of licensed employees be on the road for every delivery, and made it tough for companies in this license class to turn a profit.
Following much urging by delivery advocates and hard work by Cannabis Control Commission members and support staff, last November new reforms took effect “relative to delivery and testing transportation.”
“For adult-use cannabis delivery licensees and Medical Marijuana Treatment Centers, which previously required two employees to be present for every delivery,” the changes included: “Modifying the requirements to allow the option of delivering to consumers and patients with one agent in a vehicle at a time when all marijuana and marijuana products in the vehicle have a retail value of up to $5,000.”
Competition in the cannabis transfer business
Per the modifications, delivery companies are now also allowed the “option of delivering wholesale products with one agent in the vehicle when marijuana and marijuana products have a wholesale value of up to $5,000.” The adjustment was intended to lift the prospects of delivery companies, which are by statute are all primarily owned by Social Equity designees, but has led to some pushback from those advocating for another license type.
Third-party Transporters, which are entities that are allowed to deliver products between businesses (but not directly to customers), argue that the changes give delivery companies an unfair advantage when competing on the wholesale front. For loads under $5,000, Marijuana Delivery Operators can send one driver out, while Third-party Transporters have to send two.
“When transporting marijuana products with a retail value exceeding $5,000 and up to the $10,000 delivery maximum,” delivery companies “will be required to staff vehicles with two agents,” per the new regulations. But while that appears to be similar to the requirement for dedicated transport operations, at a hearing on this subject at the CCC office in Worcester today, Third-party Transporters said that the playing field is also uneven in other ways.
Raphael Richter of Eagle Eyes Transport, which was the first licensed Third-party Transporter in Mass, said his fleet has had zero security incidents in five years. He added that business-to-business cannabis transportation is “often misunderstood,” and exists in “a section of the cannabis industry that has many challenges.” For starters, they are prohibited from operating other cannabis license types; so while a cultivator or manufacturer can make and distribute its own products, Third-party Transporters can only transfer goods.
The uniqueness of the Third-party Transporter designation
Unlike Independent Testing Laboratories, which the CCC requires product-makers to hire, there is no requirement for cultivators or manufacturers to use Third-party Transporters. Many cultivators, for example, have an additional Existing Licensee Transporter license, which allows them to drive their own shipments to retailers across the state.
Since the removal of the “two-driver rule” for delivery companies, some Third-party Transporters and Existing Licensee Transporters have made noise about also wanting to put just one worker on the road. At Thursday’s hearing, they offered input on the record.
All recent adjustments considered, Richter of Eagle Eyes Transport told commissioners that allowing Existing Licensee Transporters—for example, a grow op that drives its own finished prerolls to dispensaries—to have just one driver would put transport-only licenses in jeopardy. “It is worth noting that home-delivery licensees for which you granted the ‘one-driver rule’ change can now also enter the business-to-business transportation space,” Richter said, “but qualified Third-party Transporters cannot do the inverse and perform home delivery.”
Matthew Knox, the CEO of Eagle Eyes Transport, spoke about killswitches and other safety precautions that his firm has put in place at a significant expense. “We don’t believe that the two-driver security aspect is doing anything,” Knox said. No matter how many drivers there are, he said, in the event of a robbery their standard operating procedure “is to deescalate.” In other words, they’re not going to engage thieves over weed products.
“Our overall suggested change is simple and fair,” Richter said. “Allow Third-party Transporters to have one staff agent in transport vehicles.”
Manufacturers that do their own deliveries speak up
Angela Brown is the co-founder and CEO of T. Bear. The East-Wareham-based company makes Coast gummies and chocolates, among other products, and delivers its own stuff to stores. Speaking at the hearing on Thursday, she said that T. Bear has two vans that are fully-equipped with cameras to see cargo, plus traffic in front and from behind. Also noting the high security precautions at T. Bear and at the dispensaries they are delivering to, she called the application of the “two-driver rule” to Existing Licensee Transporters “outdated and inefficient,” saying oversight “technologies eliminate the need for the second driver in the vehicle.”
Brown added that her team and others fought for licensee transporter permissions to avoid the nightmare faced by Massachusetts craft brewers, which are prevented from distributing beer on their own. In a cannabis market that Brown observed is “crumbling” in many ways, she said the “two-driver rule” as it applies to them “creates unnecessary costs without any benefit.”
At least one company with similar interests disagrees. Manny Westphal, the chief operations officer at Blossom Flower, testified in favor of keeping the “two-driver rule” in place for Existing Licensee Transporters moving more than $5,000 worth of product. Though Blossom Flower also has a regular delivery license, for which it supports the change from two to one driver, Westphal argued that allowing one person to drive large shipments from a grow or manufacturing plant around the whole state can lead to fatigue and fatalities, and “presents a higher risk for criminal activity.”
Far from unanimous agreement on extension of “two-drIver rule” to all license classes
In his testimony on Thursday, Max D’Ambrosio testified that his Northampton-based MMM Transport started with one van in 2021, and now has 18 vans doing upwards of 200 transfers a day. On average, his employees are responsible for $150,000 or more on the road. He did significant research into the safety issue in preparation for the hearing, and emerged with the position that for the kind of hauls MMM carries, it is necessary to have two drivers working together.
D’Ambrosio said that when you analyze all safety incidents in cannabis across the country, nine out of 10 insurance claims stem from what turn out to be inside jobs. Therefore, it’s worth it for his company to have two people out there, watching one another. Perhaps even more important, D’Ambrosio said that unlike Existing Licensee Transporters, since Third-party Transporters don’t own the cargo they are carrying, they are required to carry special cargo insurance per state regulations. Among the stipulations D’Ambrosio read aloud from that $100,000-plus premium policy: “If the van does not have two drivers, there is no coverage for the claim.”
Others who testified offered supporting, contradicting, or adjacent ideas. Ryan Dominguez, the executive director of the Massachusetts Cannabis Coalition trade group and a member of the Cannabis Social Equity Advisory Board, said that his members support changing the rule across the board to require just one driver, though he recognized that some of them would likely still use two employees for certain transfers.
Chris Fevry’s Natick-based Dris Brands services a large area, MetroWest and Greater Boston, and he was part of the coalition that pushed for the removal of the “two-driver rule” for delivery operators. He testified that Third-party Transport companies and manufacturers doing their own drops “can afford the second driver.” Dan Berger of Grassp Ventures, meanwhile, expressed interest in “trying to streamline and consolidate” the different classifications and regulations, potentially making the delivery license type “just [for] delivery,” though he recognized that could also open up another “can of worms.”
For their part, commissioners were mostly there just to ask questions and take notes. At the beginning of the hearing, Commissioner Nurys Camargo said she wanted to hear about more than “just two agents in a car,” and she definitely did. Moving forward, Commissioner Kimberly Roy said she will consider voting in favor of scrapping the “two-driver rule” across the board “if it doesn’t jeopardize public health or safety,” noting that the issue raises the question of, “How do we deregulate?”
“For me,” Commissioner and acting CCC Chair Bruce Stebbins said, “it’s not about deregulation, but modernizing.”
Ed. note: An earlier version of this article misquoted Commissioner Stebbins as saying “modifying” instead of “modernizing.”