Time to end ‘negative impact’ fees for minority cannabis businesses
Beacon Hill should make good on its commitment to equity in the new industry
THE CANNABIS INDUSTRY continues to boom in Massachusetts – for some. On 4/20, the unofficial “high holiday” for the industry, sales records were shattered when consumers purchased a record-breaking $6 million worth of products from roughly 215 recreational pot shops in the state, according to the Cannabis Control Commission. But out of all the licenses handed down, only 7 percent have gone to minority applicants – also known as Economic Empowerment (EE) or Social Equity (SE) entrepreneurs.
Why this divide? The answer isn’t as complex as you might think. Because of marijuana’s federal illegality, there is still a fear and stigma. Couple that with a banking industry and government that doesn’t provide any loans to the industry and what you have is a recipe for wealthy, multi-state operators to come in and dominate the market. While the Massachusetts House of Representatives this week passed a bill to make some equity and business improvements to the industry, we have yet to see any changes actually take effect. The Senate previously passed a bill with similar provisions and a House-Senate conference committee must now iron out differences.
In the five years adult-use cannabis has been legal in Massachusetts, the Commonwealth has collected more than $75 million in tax revenue (through December 2021). The commonly discussed excise tax of 10.75 percent on recreational cannabis companies is only about half of the actual total tax revenue being collected.
There is also a 6.25 percent state sales tax, plus the local negative impact fee of up to 3 percent of gross revenue. When this last fee was included in the original regulations, there was a general nervousness and a bit of fear mongering in communities surrounding cannabis businesses. But now the evidence is clear that there has been absolutely no negative impact. If we truly want to make this industry equitable, we need to focus on removing as many barriers to entry for economic empowerment and social equity entrepreneurs as possible.
On March 21, 2022, the Cambridge City Council voted unanimously to eliminate the 3 percent impact fee for cannabis companies that qualify as economic empowerment and social equity license holders. While communities such as Northampton, Lee, and Dracut have all made commitments to lowering the impact fee for these licensees, Cambridge is the largest and first community in Greater Boston to make this historic move.
It is time we stop merely talking about equity in the cannabis industry and start doing something concrete about it. Cambridge has set the equity agenda and now it is time for Beacon Hill to follow. Eliminating the impact fees is one step forward, but the Legislature needs to act fast and pass other measures that update the regulations that were set nearly five years ago. A fund needs to be established, as set out in the legislation the House passed this week, to allow minority entrepreneurs access to the capital they need to enter the industry. Without that, people of color, who have been tormented by the racist and unethical war on drugs for the past 60 years, will never be able to create the generational wealth they deserve and this industry could provide. Without that, the same deep-pocketed, out of state entrepreneurs will once again have a huge head start in establishing themselves in the local market, leaving everyone else to fight over the table scraps.
On 4/20 in Central Square, Yamba Market had its grand opening as the first recreational marijuana dispensary. Rep. Ayanna Pressley toured and celebrated this moment just days before, standing proudly shoulder to shoulder with the team that brought this vision to reality.But Rep. Pressley and the City of Cambridge can’t do this alone. The entire Massachusetts congressional delegation needs to come together in support of the federal legalization movement and put real resources behind ending prohibition. And Beacon Hill needs to stop the lip service and, at the very least, start making a real commitment to equity by eliminating negative impact fees across the Commonwealth once and for all.
Cambridge City Councilor E. Denise Simmons is a Cambridge city councilor and former two-term mayor who is currently serving her 11th term on the City Council. Sieh Samura is a cannabis activist and entrepreneur. He is the CEO of Yamba Market, the first adult use cannabis dispensary in Cambridge.