Agency is studying moratoriums in other states and scheduling a public hearing
As the Massachusetts cannabis industry grows but experiences growing pains, one potential tool considered by regulators and stakeholders alike is the moratorium. Even as Beacon Hill lawmakers debate legislation that could raise the number of licenses that individual owners are allowed to control, there are persistent thoughts that someone needs to pump the brakes.
“As we confront a mature adult-use market, now in its seventh year, the data is compelling—unchecked canopy expansion has created structural oversupply.” Cannabis Control Commission member Kimberly Roy read a statement at Thursday’s meeting to introduce a discussion on “licensing freeze considerations.” She continued: “Without swift intervention we continue to risk widespread economic harm to licensees and the communities that host them.” The commissioner then made her case in numbers:
“Massachusetts is home to nearly 3 million square feet of active canopy with an additional 700,000 ft. of canopy currently in the queue. In recent months, the commission has taken an initial step to address this crisis through the enforcement of tier relegation. Despite this progress, severe price compression persists and is one of our most urgent challenges, with wholesale flower prices crashing 60 to 70% since market launch. … Far from fostering healthy competition, this dynamic fuels a race to the bottom.”
Addressing the problem
Before opening the floor up for discussion, Commissioner Roy noted that the license oversaturation problem is beyond simple economics, and has “broader social and community factors [that] compound the case.” Giving the example of Holyoke, she said, “The canopy boom has been concentrated in vulnerable areas, where closures could devastate employment, commercial real estate, and municipal budgets.”
“Implementing a moratorium,” Roy added, “would give existing businesses a more predictable market and avert further price erosion from excess production.” The goal would be to “stabilize the sector of the market, shift competition towards product quality and compliance over raw volume, and safeguard consumer access, public health, and safety.”
An accompanying slide outlined a policy rationale for acting on this matter:
- Wholesale and retail price compression has driven flower prices down more than 60–70% since market launch, eroding margins for existing cultivators and threatening widespread business failures among compliant operators.
- Continued expansion of cultivation capacity during sustained price compression risks deepening oversupply, pushing wholesale prices below sustainable levels and undermining the long-term viability of the regulated market.
- A temporary licensing pause would create space for the Commission to evaluate market health indicators (prices, utilization, bankruptcies, employment) and align supply with realistic demand, rather than locking in structural overcapacity.
- Stabilizing the cultivation sector is necessary to preserve jobs, tax revenues, and consumer access in rural and Gateway City communities that disproportionately host large cultivation facilities and are most exposed to sudden closures.
- By reducing pressure to compete solely on ever-lower prices, a freeze can refocus competition toward product quality, safety, and equity participation, preventing a race to the bottom that advantages only the most over-capitalized firms.
What the commission can and can’t do to stabilize the market
According to Thursday’s meeting materials, the Commission may: “Prospectively pause acceptance of new license applications”; “Apply a pause to specified license types”; “Continue accepting other license categories during a pause”; “Adopt a short-term or long-term freeze.” “Short-term pauses may be adopted by Commission vote,” while “Long-term freezes should be implemented [in accordance with state law].”
The commission, however, may not: “Apply a licensing freeze retroactively”; “Halt processing of completed applications”; “Extend the 90-day statutory review period”; “Limit intake exclusively to equity applicants”; “Rely on residency-based or proxy criteria.”
At Thursday’s meeting, commissioners said that if some kind of freeze or moratorium moves forward, they would still allow those applicants who are in queue already to proceed, and also possibly provide a short window for others to get in that line before the doors close.
How other states handle moratoriums
In order to “share with Commissioners information regarding state-imposed moratoria on Cannabis Licenses and the implications it has on states’ cannabis industry,” as requested by Commissioner Roy at a previous meeting, CCC Director of Government Affairs and Policy Matt Giancola researched the topic with his team. This week, they shared the report.
“As the cannabis industry continues to grow, various states have enacted moratoria on issuing certain types of cannabis business licenses to manage market stability, address regulatory challenges, or respond to community concerns,” Giancola wrote. “While some states initially targeted cultivation licenses, several have extended moratoria to other license categories, such as retail, processing, and wholesale licenses.”
Examples include:
- Oregon, where the “cannabis market faced significant challenges from overproduction, which led to a market saturated with excess cannabis products and unsustainably low prices.” “In response, the Oregon Liquor and Cannabis Commission (OLCC) implemented a moratorium on various license types, including cultivation, processor, wholesaler, and retailer licenses.” According to Giancola, “The comprehensive moratorium has helped reduce market saturation and maintain price levels, but it has also restricted the entry of new businesses across multiple sectors of the cannabis industry.”
- Oklahoma, where “the rapid expansion of the medical marijuana market has led to regulatory and compliance challenges.” “To address these, Oklahoma implemented a two-year moratorium in August 2022 on new grower, processor, and dispensary licenses.” Per CCC research, “The extended moratorium aims to stabilize Oklahoma’s medical marijuana market by prioritizing compliance among current license holders and deterring unregulated activity. However, the pause on new licenses limits growth opportunities, which some industry stakeholders argue could slow the economic potential of Oklahoma’s cannabis sector.”
- Minnesota, where the “legalization of adult-use cannabis in 2023 included provisions allowing municipalities to enact local moratoria on various cannabis business licenses, such as retail and cultivation licenses.”
Upcoming hearing in the works
In his analysis, the director of government affairs and policy concluded: “State-imposed moratoria on various cannabis license types reflect a cautious approach to managing market stability, regulatory compliance, and community impact. While these pauses have benefits, such as stabilizing prices and addressing regulatory challenges, they also introduce barriers to entry for new businesses, including those supported by social equity initiatives.”
In order to consider all of that plus other factors, Commissioner Roy introduced a motion which her colleagues passed unanimously. It read:
Move to direct staff to schedule a public hearing within 30 days to receive public testimony on a proposed moratorium on new cultivation licenses including consideration of a temporary freeze on additional canopy capacity approvals.
The public hearing shall also accept testimony on the potential extension of such a moratorium or freeze measures on other license types including craft marijuana cooperatives, product manufacturing, and micro businesses as informed by current market data on top of supply, pricing, and operator viability.
Staff shall provide at least 14 days of public notice via the commission’s website, email, and standard regulatory channels to promote in-person access options to ensure broad stakeholder participation including from equity applicants, rural cultivators, and affected municipalities.
To be continued …
