Under Massachusetts law, both medical and recreational marijuana are legal. The state is currently rolling out its recreational delivery program, as well as its social consumption establishment program. The state regulatory body, the Cannabis Control Commission (“CCC”), has published comprehensive guidance on its website regarding all aspects of licensure, renewals, application processes, and more.

License Types

Medical Marijuana Treatment Center (“MTC”)

An MTC acquires, cultivates, possesses, processes, transports, sells, distributes, delivers, dispenses, or administers marijuana, products containing cannabis or marijuana, related supplies, or educational materials to registered qualifying patients or their personal caregivers for medical use.

MTCs may deliver marijuana and marijuana products directly to patients and caregivers after receiving CCC permission. Fee for application is $3,500, annual fee is $50,000.

Marijuana Cultivator

A Marijuana Cultivator may cultivate, process, and package marijuana to transfer marijuana to other Marijuana Establishments (“ME”) but not directly to consumers.

Cultivators must operate under a specific tier level based on the total canopy they will cultivate. Applications are required to change tiers, and the CCC will evaluate if a Cultivator is in the correct tier based on cultivation and production history, transfer, sales, and excise tax payment history, and existing inventory and inventory history, among other factors.

Fees for the initial application and annual license are based on tier with a tier 1 indoor operation starting at $200 application fee and $1,250 for the annual license fee and ending with a tier 11 indoor operation costing $2,000 for the application fee and $50,000 for the annual license fee.

Craft Marijuana Cooperative

This is a type of Marijuana Cultivator that may cultivate, obtain, manufacture, process, package, and brand marijuana and marijuana products to transport marijuana to MEs, but not consumers.

Craft Marijuana Cooperatives are not limited to a particular number of cultivation locations but is limited to a total canopy of 100,000 square feet and three locations for activities authorized for Marijuana Product Manufacturers.

This type of ME must operate according to the seven cooperative principles published by the International Cooperative Alliance in 1995 found here. Fees are paid in relation to canopy size. If there are more than six locations, then there are additional fees.

Marijuana Product Manufacturer

This ME type is authorized to obtain, manufacture, process, and package marijuana and marijuana products, to transport marijuana and marijuana products to MEs, and to transfer marijuana and marijuana products to other MEs, but not to consumers.

Fee for application is $1,500, annual fee is $10,000.

Marijuana Retailer

A Marijuana Retailer is an entity authorized to purchase and transport marijuana and marijuana products from other MEs, and to sell or otherwise transfer marijuana and marijuana products to other MEs and to consumers.

This ME must provide a retail location for recreational patients, or if collocated with an MTC, by individuals who are also registered qualifying patients or caregivers. Fee for application is $1,500, annual fee is $10,000.

Existing Licensee Transporter

An ME that is otherwise licensed by the CCC and also licensed to purchase, obtain, and possess marijuana or marijuana products solely for the purpose of transporting, temporary storage, sale, and distribution on behalf of other MEs or MTCs to other establishments, but not to consumers.

Fee for application is $1,000, the annual fee is $5,000.

Third-Party Transporter

This license is for an entity that does not hold another ME license and is not licensed as an MTC. A Third-Party Transporter may only transport marijuana or marijuana products to consumers or between MEs and MTCs.

Fee for application is $1,500, annual fee is $5,000.

Microbusiness

A Microbusiness is a collocated Tier 1 Marijuana Cultivator and/or Marijuana Product Manufacturer limited to purchase 2,000 pounds of marijuana from other MEs in one year.

A Microbusiness license shall not be a person or entity having direct or indirect control for any other ME except a Social Consumption Establishment. This license type may apply for a Delivery Endorsement from the CCC which would allow the licensee to deliver marijuana or marijuana products produced at the licensed location directly to consumers.

Fee for application is $1,000, annual fee is 50% of all applicable license fees.

Delivery-Only Licensee

A Delivery-Only Licensee may deliver marijuana or marijuana products directly to consumers at a residential address provided by a licensed Marijuana Retailer with which the Delivery-Only Licensee has a delivery agreement.

The delivery agreement sets forth the business terms of their agreement, as well as pre-verification procedures for consumers receiving deliveries. These licensees may not have a retail location accessible to the public.

There are specific requirements for where and when this type of license can be operated, and it would be most beneficial to contact our firm to evaluate eligibility requirements. Fee for application is $1,500, annual fee is $10,000.

Social Consumption Establishment

A Social Consumption Establishment means an entity licensed to sell marijuana or marijuana products and allow consumers to consume marijuana or marijuana products solely on its premises.

The application for this license will be made available only after six communities have been selected to participate in the CCC’s Social Consumption Pilot Program. Fee for application is $1,500, annual fee is $10,000.

Delivery Endorsement

In addition to the license types discussed, the CCC may grant delivery endorsements to qualifying MEs. This endorsement allows the licensee to perform deliveries direct from the licensee’s ME to consumers.

This endorsement is only available to MEs licensed as Microbusinesses and controlled by and with majority ownership comprised of Economic Empowerment Priority Applicants or Social Equity Program Participants. Fee for application is $1,500, annual fee is $10,000.

There are a number of other license types including laboratory licenses and research facilities. Please contact the firm for further information about establishing one of these types of facilities.

Fees

Fees vary based on the license type and are indicated above in correspondence with the license.

Certain fees are waived for Economic Empowerment applicants, Social Equity Program participants, and Craft Marijuana Cooperatives and Microbusinesses.

There are other fees associated with the licenses for changing the name, location, building structure, ownership, and architectural aspects of the building, among other things.

Residency Requirement

Microbusinesses require that a majority of the Microbusiness’ executives or members must have been residents of Massachusetts for no less than 12 months prior to submitting the application.

This is the only residency requirement for licensure in Massachusetts.

Social Equity Program

Massachusetts has a fairly robust number of social equity initiatives. Applicants for a ME or MTC must submit a diversity plan as part of its management or operations profile.

These plans shall be designed to promote equity among minorities, women, veterans, people with disabilities, and LGBTQ+ individuals in the operation of the ME or MTC. Upon renewal, the licensee will be required to report on the efforts, progress, and success of this plan. Some applicants are able to get certain application fees waived if they are a participant in the Social Equity Program.

Social Consumption Establishment licenses are only being awarded to participants in this program for the first two years, and the CCC will only provide delivery endorsements to Social Equity Program Participants or Economic Empowerment Priority Applicants. For more information on these programs, view the guidance here.

Other Barriers to Entry

All license types have limits on the number of licenses an individual or entity can possess. Additionally, each applicant must execute a Host Community Agreement and hold a Community Outreach Meeting to inform the public in the host community about the proposed ME or MTC and answer questions.

How to Get Started

1. Determine what type of marijuana business you would like to operate and make sure to check the state allowances for types of licenses you may possess.
2. Work with the local jurisdiction of your choice to make sure you have all of the information needed to apply for a local license. Different jurisdictions allow for different license types and require different documents. Each local jurisdiction has its own fees and a timeline for approval/denial.
3. Once you have obtained a local license, apply for a state license.

For the state license, submit the license application fee, application of intent, background check, and management and operations profile. Each section requires applicants to provide accurate information about the business, individuals, and entities associated with the business.

The adult and medical license applications have essentially the same requirements:

Application of Intent:

On this portion of the application, an applicant must disclose Persons or Entities Having Direct or Indirect Control in their application for licensure.

Applicants are required to disclose whether any individuals or entities listed in the application are disclosed in any other existing license. Applicants must also disclose capital resources and the source of those capital resources as well as setting aside, through bond or escrow account, an amount of money sufficient to cover the winding down of the business.

The applicant must also hold a community outreach meeting with the surrounding community and a host community agreement along with plans to abide by local ordinances and positively impact disproportionately harmed people.

Background Check:

This will include, but not be limited to, a review of Massachusetts and national criminal database records, involvement in other marijuana businesses, actions taken against any license or registration held by the individual or entity, and descriptions of civil, criminal, administrative, and disciplinary actions.

Management and Operations Profile (“MOP”):

This profile will need to include all of the standard business information including, but not limited to, bylaws, articles of organization, business identification numbers, and DBAs. It should also include a business plan, liability insurance plan, proposed timeline for operations, diversity plan, and summary of SOPs.

There is a number of other specific requirements depending on the license type. You can find this specific information here.

Authors: Rebecca Spence, Dave Rodman

The information in this blog post (the “Blog” or “Post”) is provided as news and/or commentary for general informational purposes only. The information herein does not, and shall never, constitute legal advice and therefore cannot be relied upon as a legal opinion. Nothing in this Blog constitutes attorney communication and is not privileged information. Nothing in the Post or on this website creates any kind of attorney-client relationship or privilege of any kind.

Originally published at https://therodmanlawgroup.com on November 7, 2020.