The Cannabis Control Commission should take quick action to freeze new licenses for cannabis cultivation and come up with a plan to set up the industry for stable, sustainable growth.
After a hearing on the idea of holding back new cultivation licences earlier this month — at which many business owners spoke in support of a freeze — CCC Chair Shannon O’Brien said in a statement that the commission would take the comments into consideration. She also mentioned other potential ways to ease the pain, such as removing costly regulations, but no vote on the issue has been scheduled.
The commission should move swiftly.
At the start of this year, the price of cannabis flower was lower than it had ever been before, with cannabis cultivators in a “race to the bottom,” according to an industry group. As the Business Journal has previously reported, cannabis license surrenders have surged as entrepreneurs are unable to make the math work. There are millions of square feet of cultivation space in the state.
It would not be an “earth-shattering” move, according to David O’Brien of the Massachusetts Cannabis Business Association. Other states, facing similar price trends, have taken similar steps to freeze licenses and conduct a market analysis to help prices recover.
Cannabis sales since legalization in 2016 have generated close to $2 billion in state and local tax revenue, according to the Mass Budget and Policy Center. The industry collapsing would hurt the state and especially would hurt small towns that embraced the promise of cannabis businesses as major taxpayers.
Just look at what happened in Holliston. Three cultivators closed, costing the 15,000-person town about $250,000 in tax revenue, according to Kevin Rudden, the town’s assessor. The spaces those businesses have left behind sit empty and are hard to rent out, Rudden said in testimony supporting a license freeze.
Additionally, the legal cannabis industry in Massachusetts was set up to help disadvantaged entrepreneurs and social-equity applicants. Letting businesses continue to struggle when a possible fix is at hand means the state will be letting this group down yet again.
To be clear, freezing new cultivation licenses is not a magic bullet that can fix the $1.5-billion-a-year industry overnight. The proposed freeze would enable cultivators in the process of getting a license to proceed, meaning more cultivators could still join the market, adding to the oversupply.
But the commission should not let more businesses being the expensive and time-consuming licensing process if such a freeze is a possibility. In this oversaturated market, regulators should focus on stabilizing the industry for the future, and doing so quickly, so businesses can plan their futures accordingly.
