Start a Cannabis Business in Massachusetts
Updated: Jan 14, 2019
In 2012, Massachusetts became the 18th state to legalize medical marijuana, and just a few years later recreational cannabis was legalized. On July 28, 2017, Massachusetts’ Governor Charles D. Baker signed into law Chapter 55 of the Acts of 2017, an act to ensure safe access to cannabis. The Massachusetts Legislature enacted this new law as an amendment to Chapter 334 of the Acts of 2016, The Regulation of Marijuana Act, which was approved by Massachusetts voters on November 8, 2016. Additionally, the law created a regulatory body responsible for implementing and administering access to medical and recreational cannabis, known as the Cannabis Control Commission.
Each state has their own set of unique rules and regulations that govern the cannabis industry. Massachusetts, however, has taken a different approach when it comes to regulating the commercialization of recreational cannabis in an effort to empower local farmers and entrepreneurs, and reduce the systemic barriers to entry. With the various types and tiers of cannabis business licenses, alongside the professional and technical services offered by the Cannabis Control Commission, one could say Massachusetts is encouraging the mom and pop “pot” shops.
AVAILABLE LICENSE TYPES
In an effort to create an equitable industry, the Massachusetts Cannabis Control Commission created a wide variety of commercial cannabis business license types and tiers to encourage the participation of businesses of all sizes and empower local farmers and entrepreneurs. The available licenses are as follows:
Cultivation: licensed to cultivate, process and package cannabis and to transfer marijuana to other marijuana establishments, but not to consumers. Cannabis cultivators are limited to three (3) licenses that are each tied to one (1) location. A licensee may have no more than 100,000 square feet of canopy. Limit of 100,000 square feet of canopy max.
Tier 1: up to 5,000 sq. ft.
Tier 2: 5,001 to 10,000 sq. ft.
Tier 3: 10,001 to 20,000 sq. ft.
Tier 4: 20,001 to 30,000 sq. ft.
Tier 5: 30,001 to 40,000 sq. ft.
Tier 6: 40, 0001 to 50,000 sq. ft.
Tier 7: 50,001 to 60,000 sq. ft.
Tier 8: 60,001 to 70,000 sq. ft.
Tier 9: 70,001 to 80,000 sq. ft.
Tier 10: 80,001 to 90,000 sq. ft.
Tier 11: 90,001 to 100,000 sq. ft.
Craft Marijuana Cooperative*: a type of marijuana cultivator comprised of residents of the commonwealth and organized as a limited liability company, limited liability partnership, or cooperative corporation under the laws of the commonwealth. A Craft Marijuana Cooperative is licensed to cultivate, obtain, manufacture, process, package and brand cannabis or cannabis products to transport marijuana to marijuana establishments, but not to consumers. A Craft Marijuana Cooperative is limited to one (1) license with which it may cultivate up to 100,000 square feet of canopy.
The Craft Marijuana Cooperative must operate consistently with the Seven Cooperative Principles established by the International Cooperative Alliance in 1995.
*Local farming groups successfully lobbied the Massachusetts legislature to classify marijuana as an agricultural crop, which means it may be grown anywhere other agriculture is allowed. While many of the companies currently growing medical marijuana in Massachusetts are large corporations, these local farmers were hoping to break into the nascent recreational cannabis market. As a result, a Craft Marijuana Cooperative was established. This model allows farmers to band together to cultivate a limited amount of cannabis under the umbrella of a craft cooperative, wherein they may cultivate their own crop (either in their own field or greenhouse), split the costs and profits, and collectively market their cannabis products.
Product Manufacturer: an entity licensed to obtain, manufacture, process, and package cannabis or marijuana products and to transfer these products to other Marijuana Establishments, but not to consumers.
Retail (Dispensary): an entity licensed to purchase and transport cannabis or marijuana product from Marijuana Establishments and to sell or otherwise transfer this product to Marijuana Establishments and to consumers. Retailers are prohibited from delivering cannabis or marijuana products to consumers; and from offering cannabis or marijuana products for the purposes of onsite social consumption on the premises of a Marijuana Establishment.
Research Facility: an academic institution, non-profit corporation, domestic corporation or entity authorized to cultivate, purchase or otherwise acquire cannabis for the purpose of conducting research regarding cannabis and cannabis products.
Independent Test Laboratory: an entity that is properly accredited to perform tests in compliance with the stringent requirements of the Department of Public Health protocols for testing cannabis and cannabis products.
Standards Testing Laboratory: an entity that qualifies as an Independent Laboratory but instead performs blind tests to verify the results of an Independent Testing Laboratory.
Transporter: an entity that may only transport cannabis or cannabis products when such transportation is not already authorized under a Marijuana Establishment license.
Microbusiness: a co-located marijuana establishment that can be either a Tier 1 Marijuana cultivator or product manufacturer or both, in compliance with the operating procedures for each license. A microbusiness that is a marijuana product manufacturer may purchase no more than 2,000 pounds of marijuana per year from other marijuana establishments. Majority of the executives or members must be residents of Massachusetts for no less than 12 months prior to the application.
APPLICATION COSTS + LICENSING FEES
The application fees range from $100 to $600 based on the type and tier of the cannabis business license. Similarly, the annual business license fees vary from $625 to $25,00 based on the type and tier of the cannabis business license. Additionally, the fee for an annual business license for outdoor cultivation facilities is reduced by 50%. A full breakdown of the application cost and licensing fees may be found here.
All marijuana establishments must track cannabis from seed to sale using an interoperable database, as well as plant and package RFID tags. There is also a monthly program fee for the software of $40 per month for each marijuana establishment. The fee is waived for Economic Empowerment Applicants, Craft Marijuana Cooperative and Microbusinesses.
HOW TO APPLY
Whether you want to open a dispensary, production, cultivation, craft marijuana cooperative or any of the various types of cannabis businesses in Massachusetts, securing a license is your first hurdle. The contents of a commercial cannabis business application tend to be complex and requires a great deal of intricate data, such as standard operating procedures, community and environmental impact planning, community outreach meeting, citations and references to state statutes, amongst other information that must be carefully crafted, presented and explained.
The best way to set yourself up for long-term success is to be thoughtful and thorough in collecting and submitting the information needed to apply for a commercial cannabis business license. The information required as part of this application is an indicator that you and your business understand the legal requirements, including the Commission’s regulations, and are able to operate in a lawful manner.
The application process is broken into three packets (or sections) and may be filed in any order. However, the application will not be deemed complete until all three packets have been filed and each packet is determined complete by the Commission. Each of the packets requires different pieces of information relating to the applicant(s) and the thought process in which you plan to operate a cannabis business.
The three packets include:
Application of Intent
Management and Operations Profile
1. APPLICATION OF INTENT
The Application of Intent packet encompasses information about the proposed Marijuana Establishment, including:
A Massachusetts business license for the proposed establishment, a certificate of good standing, and a list of all business names, including “doing business as” identifiers
A list of all executives, managers, persons or entities having direct or indirect authority over the management, policies, security operations or cultivation operations
A list of all individuals or entities that are contributing 10% or more of the initial capital
Documentation demonstrating the amount and sources of capital funding for the marijuana establishment
Demonstrate adequate funding to dismantle and wind down the proposed establishment in the form of a financial bond or an escrow account
The location of the proposed establishment including proof of legal interest in the property
A plan for areas of disproportionate impact
Proof of Massachusetts residency for Microbusinesses and Craft Marijuana Cooperatives for a period of 12 consecutive months prior to the application
2. BACKGROUND CHECK
As part of the application process, individuals associated with an application are required to submit to a background check. For each individual executive, manager, and person who will have direct or indirect authority over management, policies, security operations or cultivation operations, close associates, and individuals contributing 10% or more in capital are required to:
Submit a notarized Criminal Offender Record Information (CORI) Acknowledgement Form
Submit a Fingerprint Authorization Form
Include the dates and descriptions of past or pending criminal actions; past or pending civil or administrative actions; past disciplinary actions, and denials of licensure pertaining to a marijuana or other business
The basic background check fee is $400 per individual. For some individuals associated with the establishment, there will be an additional fee for a fingerprint-based background check of $35.
3. MANAGEMENT AND OPERATIONS PROFILE
The Management and Operations Profile packet is a detailed summary of your approach to operating a cannabis business. You must carefully craft your business proposal and demonstrate your thorough understanding of the legal requirements, including the Commission’s regulations, and that you are willing and able to operate in a lawful manner. The contents of the packet must include:
A copy of the articles of organization and bylaws; certificate of good standing from the Corporations Division of the Secretary of the Commonwealth’s office; a certificate of good standing or certificate of tax compliance from the Department of Revenue
A business plan including staffing and training plans, and a timeline for opening the proposed establishment
Standard Operating Procedures
Security plans and procedures
Plans to prevent diversion of cannabis products
Plan to store marijuana products
Quality control and contaminant testing procedures
Policies and procedures for maintaining financial records
Diversity plans to promote equity among women, minorities, veterans, people with disabilities, and people of all gender identities and sexual orientations
In addition to the three packets, you must conduct a community outreach meeting in the proposed area 6 months prior to submitting the Application of Intent. Essentially you need the approval of the host community in which you plan to operate. During this meeting, you will educate and provide information to the neighborhood and community as a whole about the potential impacts of your cannabis business, and how you plan to positively impact the community.
To start the cannabis business application process, you may register here. The Commission is currently accepting cannabis business licenses applications on a rolling basis. At this time there is no deadline to submit a completed application and there is no limit to the number of licenses issued. However, all three packets must be completed and submitted within one year of starting the application process.
Commercial cannabis business applications are assessed in great detail. State officials will evaluate every aspect, every minute detail of your plan, your team and your ability to create an exceptional case for your dispensary, production or cultivation business license. In order to create the best possible impression, it is vitally important that your application shows the best work you can achieve; advisement and proofreading by industry experts will help you do this. At The J. Whitney Group, our Application Consultants are here to help you winnow these complexities, providing you with the expertise and guidance to ensure your business is off to a great start.
If you are looking to break into the Massachusetts cannabis industry, The J. Whitney Group is here to help you succeed. Whether you are in need of a final proofreading with valuable feedback and improvements to strengthen your application, or need application assistance from start to finish, we have a team of dedicated professionals to help you each step of the way. Our Application Advising + Review will give you the confidence and peace of mind knowing you submitted the best possible cannabis business application. Contact us today to request a free consultation and see how we will help you overcome the first hurdle, and more, to create a winning application and successful, thriving cannabis business.