This month marks one year since legal adult-use marijuana sales began in Massachusetts and made the Bay State the first state on the East Coast to implement legal, recreational sales of cannabis. Since then, the Cannabis Control Commission has approved dozens of new adult-use dispensaries on a rolling basis. As the Massachusetts cannabis industry continues to mature, business leaders, regulators, and advocates alike are already shaping the industry’s next frontier.
One potential next step in the continued socialization of marijuana is the establishment of social consumption businesses, such as cannabis cafés, where adults ages 21 and older can consume cannabis. Similar to a bar serving alcohol, these businesses would provide a safe, legal place to consume cannabis. Social consumption businesses would be particularly important because they would allow individuals who reside in housing where smoking is prohibited, or in federally-subsidized housing (which implicates the federal prohibition on cannabis), to legally consume cannabis. Advocates also hope cannabis cafés will reduce the number of people consuming cannabis in public areas.
Massachusetts can look to other states like California and Colorado, where social consumption businesses have already opened, for inspiration and lessons learned. However, there is likely to be a long road ahead before cannabis cafés become a reality at scale in Massachusetts. Below are three key issues that business leaders, regulators, and advocates will need to resolve before cannabis cafés get the green light.
Navigating the Limited Pilot Program
Earlier this year, the Cannabis Control Commission proposed a social consumption pilot program, which would allow up to 12 Massachusetts communities to host a social consumption business.
During the pilot program, the Commission says it will only award café licenses to “licensed businesses controlled by and with majority ownership comprised of Microbusinesses, Craft Marijuana Cooperatives, certified Economic Empowerment Priority Applicants, and Social Equity Program Participants for an initial period of two years.” The Commission sees this licensing process as an occasion to bolster its social equity programs, which are designed to leverage the emerging cannabis industry to extend economic opportunities to those individuals and communities most impacted by the war on drugs.
This process means that only a very limited group of businesses will have an opportunity to apply for a social consumption license during the initial two-year period. Whether such businesses will have the patience, capital, and other resources to endure lengthy state and local approval processes, construct their facilities, and address the panoply of other needs of start-up businesses, remains to be seen. After two years, the Commission will collect data to determine whether its goals for the exclusivity period were met. At that point, it will also decide whether to extend exclusivity for an additional year or opt to make the license type generally available to others.
Selecting Host Communities
The state’s pilot program cannot begin without a change in state law that would allow cities and towns to authorize social consumption in their communities.
Currently, municipalities must opt in to allowing social consumption businesses. That process is arduous: proponents must collect signatures from 10 percent of their municipality’s voters, prompting a communitywide referendum during the next biennial state election (in November 2020), and the referendum must be approved at the election. A sustained and expensive public campaign in the host municipality would be necessary to successfully achieve an opt in. However, a state-level legislative fix could allow municipalities to opt into the pilot program without resorting to a municipal vote. Whether, and when, this state legislative fix will be made is unknown.
There are other aspects of Massachusetts law that add complexity to the prospect of opening a cannabis café. Massachusetts, like many other states, has banned indoor smoking. Vaping likely would be allowed indoors, provided proper ventilation is installed, although the sale of vaping products is currently banned in Massachusetts. For outdoor smoking, cannabis café owners will need to employ potentially expensive solutions for containing smoking-related odors to avoid complaints from neighbors.
Establishing Rules of the Road
Before cannabis cafés can open, lawmakers and regulators will also need to address important public safety questions related to protecting the public against impaired driving and marijuana-related traffic accidents. Driving while under the influence of marijuana is illegal and punishable under the same OUI laws that prohibit drunk driving. However, law enforcement officials do not have a reliable device for gauging marijuana impairment. Additionally, there is currently no law in Massachusetts that requires drivers suspected of driving under the influence of marijuana to submit to any such test, or face penalties for failing to do so.
Preparing for What’s Next
The Commonwealth’s legal adult-use cannabis sales first commenced more than two years after voters approved legalization in 2016. It’s too early to know exactly when cannabis cafés will open in Massachusetts, but with history as a guide, residents should not expect that social consumption businesses will open at scale anytime soon. However, as we watch the Massachusetts cannabis industry evolve, there are a few things we can expect.
First, given the lack of precedent, there will be an opportunity for business leaders to join in shaping the future of the local cannabis industry. Second, Massachusetts will look to adopt best practices, and be mindful of lessons learned, from jurisdictions in which cannabis cafés have already opened. Third, industry participants should be prepared for a process that is likely to be slow and rife with speedbumps. For these reasons, business owners considering entering this new market should consult with experienced legal counsel to ensure they are aware of the business and legal risks involved, to best position themselves to capitalize on these new opportunities.
For more information, or to discuss the implications of these issues on your business, please contact Hinckley Allen’s Cannabis attorneys.