Emerging Cannabis States: Michigan, Oklahoma, Massachusetts, and Colorado
This month our focus is on Colorado, Massachusetts, Michigan, and Oklahoma. For Colorado and Massachusetts, Social Equity has been a subject of contention. Michigan opened a licensing opportunity in May and Oklahoma has opted to test breathalyzer technology to find tools to better determine whether a driver is impaired.
Oklahoma Cannabis Market
Scott Fegatter, a Republican Oklahoma State representative, has proposed expanding access through full adult-use cannabis legalization in order to generate tax revenue for the state budget, up to $100 million annually. His proposal is just one measure to alleviate the $250 million deficit anticipated for 2021 due to the pandemic. Oklahoma had a ballot initiative effort in the form of a petition prior to March 15, however that was before the shut down when the governor declared a State of Emergency due to COVID-19. There is however, concern that there is not enough support within the state legislature to legalize cannabis.
Something that might aid in decreasing opposition to expanding access to cannabis to full Adult-use is the pilot program for a cannabis breathalyzer which has recently been approved. The bill, approved in May, would require the Department of Public Safety to spend $300,000 on creating a pilot program for testing breathalyzers designed to detect cannabis impairment, the results of the test would not be admissible in court. This could really alleviate some issues with cannabis use and DUI laws for determining impairment. This is one of the first programs to make sure that the breathalyzer system can work to solve the problem of identifying drivers who are actually impaired due to cannabis use as
In early March 2020 Michigan began phasing out caregivers’ ability to sell cannabis to adult-use cannabis companies and are scrapping the ability to for caregivers to supply the Adult-use market entirely. Medical cannabis dispensaries may still obtain products from licensed caregivers, but the Adult-use market cannot. This opens up opportunities for licensed cultivators and producers to ramp up production and be able to meet demand within the privileged licensee supply chain.
In a move that might prompt employees to vote themselves into a union, an update has been made to Michigan’s cannabis industry regulations to no longer require operators to maintain labor peace agreements. This can be seen as controversial as there are many states that are starting to require labor peace agreements to protect both the industry and its workers. Considering unfolding events in Massachusetts where reactions to the pandemic are prompting employees to vote to go union, it will be interesting to see if the same would happen in Michigan and other states.
Colorado Cannabis Market
This year Colorado has taken another step towards greater social equity by passing and signing into law HB1424 changing the Accelerator Program to a Social Equity Program by more clearly defining what the state is looking for in terms of social equity applicants. The legislation also allows for a social equity applicant to own a marijuana store or dispensary this is a change from the original Accelerator Program, which only allowed social equity licenses for manufacturing and cultivation. According to the law an Accelerator Endorsed Licensee is a retail marijuana cultivation, production, or store who has, pursuant to the rules, been endorsed to host and offer technical and capital support to a Social Equity Licensee. These Accelerator Endorsed Licensees may qualify for incentives such as reduced application or licensing fees. A Social Equity licensee is considered a natural person who meets criteria is established in section 44-10-308 (4). A Disproportionately Impacted Area will be defined to the extent relevant State of Colorado data exists or is available and is used for the purpose of determining eligibility, which means that depending on the data sets that are available to determine the areas that have been disproportionately affected by the war on drugs, Colorado will set guidelines. There are requirements for social equity licensees for operating in the same licensed premises or on a separate premise possessed by an Accelerator Endorsed Licensee. Accelerator Endorsed Licensees are not required to exercise the privileges of their license on the premises where a social equity license he operates. The implementation deadline has been moved from July 1, 2020 to July 1, 2021.
This legislation also has created an exception to the felony restriction for social equity applicants. A marijuana conviction shall not be the sole basis for a license denial. Effective January 1, 2021 a social equity applicant may apply for a license and the qualifications for a social equity licensee are as follows:
- The applicant must be a Colorado resident
- They may not be a beneficial owner of a license subject to legal action
- They must demonstrate the following
- Residence in Colorado for at least 15 years between 1980 and 2010 in any census tract designated by the office of economic development and international trade as an opportunity zone or designated as a disproportionately impacted area as defined by section 44-10-203 (1)(j).
- They have a parent, legal guardian, sibling, spouse, child, or minor in their guardianship that was arrested for a marijuana offense or was subject to civil asset forfeiture related to a marijuana investigation.
- Having a qualifying household income can also be a determining factor
- Applicant must hold 51% or more of the beneficial ownership of the company applying for a social equity license.
State licensing for marijuana Accelerator store licenses is scheduled to begin on January 1, 2021.
Massachusetts Cannabis Market
Massachusetts intends to speed up cannabis license there cannabis licensing process from application applicants having to wait 121 business days down to only 60, that is if COVID-19 hasn’t ruined the chances for that in the budget. The Governor of Massachusetts deemed adult-use dispensaries as non-essential over concerns that adult-use cannabis dispensaries attract clientele from neighboring states and closed them only weeks after the market’s opening, jump-starting a considerable fight over whether or not Adult-use dispensaries should remain closed. A judge ruled in favor of the governor’s position and Adult-use dispensaries were eventually reopened on May 26 along with other businesses.
Whether or not to determine Adult-use cannabis dispensaries as essential hasn’t been the only controversy in Cannabis licensing. Cannabis activists are currently in opposition to Massachusetts changes to Social Equity guidelines. This was due in large part to regulatory change that decreased the percentage of the ownership percentage from 51% down to 10% of minority ownership. There is currently a petition to revise it. The drop down to 10% does directly conflict with many city and town ordinances that require 51% ownership for social equity applicants. Cambridge Massachusetts is also dealing with a social equity issue. The municipality chose to only allow social equity applicants for the first stage of license applications and is being sued by a current medical marijuana licensee That is demanding to have the opportunity to have a co-located adult-use facility. The city appears to have established the special licensing for social equity applicants in an attempt to provide social equity licensees an opportunity to establish market share before non-social equity applicants are able to dominate the market. Massachusetts also began accepting business license applications for cannabis delivery on May 28 though it is unclear as to whether or not an application period is currently open.
In a move to protect employee interests, Massachusetts Mayflower Medicinals employees have voted to join the United Food and Commercial Workers Union Local 1445. The employees chose to join the union due to Coronavirus related issues such as a lack of consistent treatment from management, inadequate
healthcare coverage, and slow responses to the pandemic. They are obviously not the first in Massachusetts to choose a union, however, it is a trend that is worth watching because it’s occurring in multiple states not just Massachusetts
While none of the states in this report have legalization efforts in their legislatures or on the ballot there are developments occurring that have implications for the cannabis industry as a whole. Social Equity programs are becoming more than token efforts to address the cannabis industry’s issue with diversity while the continued efforts of labor unions to unionize the Industry’s labor force showcase a need in some markets to address labor concerns and management practices.