Slow pot industry rollout shrinks tax estimate
Photo | State House News Service
James Borghesani, who worked on the ballot question to legalize adult-use marijuana, said Gov. Charlie Baker has "provided no leadership whatsoever" on the rollout of legal pot.
Saying Massachusetts has missed out on $16 million in marijuana taxes, officials behind the 2016 legal marijuana ballot question on Monday pointed to staffing levels and bureaucracy at the Cannabis Control Commission as potential reasons for the slow rollout of retail sales in Massachusetts.
"The Cannabis Control Commission needs to pick up the pace," Will Luzier, who managed the 2016 ballot campaign in Massachusetts, said at a press conference outside the State House. "We're not here for cannabis operators, we're here for the consumers and voters of the commonwealth that don't understand why this is taking so long."
Nevada and California voters approved non-medical marijuana laws in November 2016, at the same time the ballot question passed in Massachusetts. Retail shops opened in Nevada in July 2017 and in California in January 2018, Luzier said.
Blake Mensing, an attorney working with cannabis businesses in Massachusetts, said the cannabis commission, perhaps unintentionally, failed to prioritize the licensing of marijuana testing labs earlier in the process, ensuring some of the current delays.
Commission officials have said they are prioritizing rolling out the industry correctly, rather than meeting any specific timeframe for retail sales. After missing a now three-month-old July 1 target date for retail sales, commission officials have declined to offer a new target for the start of retail sales.
The fiscal 2019 state budget, assembled when regulators were targeting July 1 as the beginning of retail marijuana sales, counts on $63 million in marijuana tax revenues and while many businesses have applied for the retail licenses to open shops, the Cannabis Control Commission has yet to grant any final approvals.
A law signed by Gov. Charlie Baker in December 2016 delayed the effective date of the new tax, and legislation signed by Baker in July 2017 increased the maximum combined state and local tax rate on recreational marijuana from 12 percent to 20 percent.
The Department of Revenue in late 2017 estimated fiscal 2019 state marijuana taxes of $44 million to $82 million, but officials are rethinking that.
"Due to delays in licensing, actual collections of marijuana tax revenues may be lower than originally projected," officials wrote in recent financial disclosures.
Former Yes on 4 communications director James Borghesani, who now works with Luzier at a marijuana business consulting company, said the medical marijuana program encountered a troubled rollout due to state bureaucracy, indifference from state officials, and the tactics of "prohibitionists" at the local level.
"I'm seeing this structure starting to repeat itself now and I think it's very troubling," Borghesani said.
While the commission is an independent body run by appointees of the treasurer, governor and attorney general, Borghesani targeted Gov. Charlie Baker with criticism, saying he has "provided no leadership whatsoever." Borghesani said, "He doesn't even mention it. I don't think he cares if there's no rollout."
The commission should have informed lawmakers that it needed more staff, Borghesani said, "if that is an issue." He questioned the long timeline businesses are facing when applying for licenses, when compared to other industries, and whether the commission is being too strict.
"I'm not inside the Cannabis Control Commission, so none of us can say this is what they're doing on a daily basis or this is not what they are doing on a daily basis but one thing we're worried about is an overly bureaucratic agency that just moves too slow and moves slower than the voters of Massachusetts desire," Borghesani said.
The commission has issued 38 provisional licenses for marijuana businesses, including 15 retail stores, but none of the businesses can open to customers until the CCC inspects the property, certifies the business is in compliance with the law and state regulations, and then votes to issue a final license.
Commission officials said last week that at least one final inspection of a retail marijuana shop had been completed and more are scheduled.
The commission is also struggling with its powers over statutorily-required agreements between marijuana businesses and their host towns. The Legislature should consider passing a bill putting a timeline on host community agreements to prevent towns from choosing not to negotiate with marijuana businesses, Borghesani said.
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