THE STATE’S CANNABIS Control Commission has asked lawmakers for another $5.2 million for the remainder of the fiscal year on top of the $2.3 million that was already set aside to get the regulatory structure for legal marijuana up and running in time for the launch target of July 1 for retail pot shops to open.
Commission chairman Steven Hoffman outlined the request that was quietly given out last week to legislative leaders and members of the administration. Hoffman, a former partner at Bain and Company and longtime management consultant with no prior public service experience, said the estimate was not inflated to allow room to negotiate down, which is typical in the horse-trading budget process on Beacon Hill.
“There’s no fluff in these numbers,” Hoffman said at the board’s public meeting Tuesday. “I did not pad these numbers in anticipation of them being negotiated down. This is what we need to do our job.”
The total $7.53 million budget for the remainder of fiscal year 2018 is about 25 percent lower than the $10.4 million the State Treasurer’s office had estimated would be needed to fund the commission for the first year. The treasurer’s office was initially charged with oversight of the commission under the voter-approved referendum but the commission was formed as an independent panel under a statute passed by the Legislature.
Ironically, Shawn Collins, who started work on Monday as the commission’s executive director, was the main author of the treasury office estimate when he served as an assistant treasurer before being selected for the new post from a field of 42 applicants, largely because of the groundwork he did on the budget and structure of the regulatory system. Hoffman, though, said Collins was not consulted on the commission’s request.
It’s unclear how the money would be appropriated. Hoffman was asked following the meeting whether the commission would consider a loan that would be paid back, similar to what the Gaming Commission did when it received a $12 million loan from the state’s rainy day fund. Hoffman said the commission hadn’t been asked to consider that option but would be open to discussing it if it was presented.
One difference, though, is the Gaming Commission received more than $4 million in application fees and another $195 million in licensing fees once the casino and slot licenses were awarded. The cannabis commission’s revenue will not approach that, with just a maximum $3,000 application fee and a $15,000 licensing fee for stores, manufacturers, or cultivators.
A spokesman for House Speaker Robert DeLeo said the request would be reviewed by the Ways and Means Committee. A spokeswoman for Gov. Charlie Baker said the administration would analyze any requests while noting they have already released the initial funds for the commission to begin its work.
“The administration is working closely with the Commission to ensure they have the necessary resources to implement the recreational marijuana law, and we have secured and transferred initial startup funding to support the Commission,” Sarah Finlaw, a spokeswoman for the Executive Office of Administration and Finance, said in an email. “We look forward to reviewing their additional request and any final legislation reaching the governor’s desk.”
The budget was based on 10 months as opposed to the 12 months used in the treasury’s calculations, said Hoffman, as well as lower projections for capital spending, accounting for the lower figure than the treasury estimate.
More than half of the budget request — $3.95 million – is slated for capital spending, specifically technology and software development for seed-to-sale tracking, licensing, and revenue collection and enforcement. That is about $1 million below what Collins estimated would be needed for technology. The largest chunk is earmarked for the revenue portion. Hoffman said officials from the Department of Revenue put him in touch with their new software vendor, who estimated a system to collect and track the state’s and communities’ share of taxes from the projected billion-dollar industry would cost roughly $2.5 million.
The remaining $3.59 million would be spent on everything from salaries to rent to paper and pencils. The commission expects to have a staff of 38 full-time employees, including commissioners, before the end of the year. That includes a robust community outreach staff and program focused on getting minorities, women, and veterans into the business.
The commission is also still seeking temporary office space and is expected to sign a lease this week for an unnamed location near Beacon Hill. They will be searching for a permanent location once they get settled in.
The five commissioners had been largely handling all the work themselves and say approval of the supplemental budget will be a boon in getting help on board.
“We need staff desperately,” said Commissioner Kay Doyle.