Massachusetts Regulators Give Final Green Light to Cannabis Delivery
Cannabis delivery is getting the official go-ahead in Massachusetts after regulators adopted revised regulations that will enable consumers across the Commonwealth to purchase adult-use marijuana without ever leaving their homes.
During a virtual meeting on Monday, the Massachusetts Cannabis Control Commission (CCC) voted 3-1 in favor of creating two classes of adult-use marijuana delivery licenses.
So-called “marijuana couriers” and “marijuana delivery operators” will soon be allowed to transport online orders directly to consumers across the state.
Under the updated rules, marijuana courier license holders will be allowed to deliver cannabis products to consumers from a retail dispensary for a fee. Meanwhile, marijuana delivery operators will be allowed to buy wholesale cannabis products from cultivators and make deliveries from their own warehouse without having to operate a retail storefront.
Holders of both licenses will be allowed to establish relationships with Commission-approved third-party technology platforms, such as Eaze and Emjay, however those companies themselves may not own or indirectly control a delivery license.
Additionally, delivery licensees are barred from sharing profits or a cut of sales with the technology companies, and a fee structure for services must be defined in a contract.
Both license types will be exclusively available to social equity and economic empowerment applicant for the first three years, though existing retailers would be allowed to obtain two of their own delivery licenses sometime in 2024.
In a statement, Massachusetts Cannabis Business Association CEO David O’Brien applauded the decision to establish two license types, saying that it was “a major step towards the equitable cannabis industry that was envisioned by voters and lawmakers when they established the adult-use cannabis market in Massachusetts.”
Massachusetts residents voted to legalize recreational cannabis in 2016, however sales didn’t commence until November 2018. Since then, retail dispensaries have sold more than $1 billion worth of adult-use cannabis products.
“The Commission’s new delivery regulations will provide true opportunity for those who have been disproportionately harmed by cannabis prohibition to build wealth in the Massachusetts cannabis industry,” O’Brien added. “Delivery businesses will provide a new outlet for existing dispensaries and cultivators to sell their products, while satisfying consumer demand that, four years after voters supported legalization at the ballot, is still being met by the unregulated and untaxed illicit market.”
However, a prominent trade group representing the state’s marijuana retailers — the Commonwealth Dispensary Association — took issue with the creation of a secondary license.
Speaking to CBS Boston, CDA president David Torrisi said retailers aren’t getting a fair shake.
“To cut retailers out of the equation altogether is very disconcerting,” he told the outlet.
The CDA also issued a statement on Monday expressing its “disappointment” with the decision and suggested the approval process — which began back in August and included two public comment periods — was rushed.
“Since 2018, the CDA has consistently worked with the CCC to create a more equitable, profitable delivery model that could support our shared goals of creating opportunity for minority-owned entrepreneurs,” the group wrote in a statement. “However, the CCC has seemingly pushed these thoughtful deliberations to the side to pursue misguided online retailer policies that will only serve to cannibalize the legal industry by large, corporate interests at the expense of our small businesses, communities and Main Streets.”
Retailers also appear to be in the process of mounting a legal challenge.
“This will not be the final word on delivery,” the CDA wrote. “The very real concerns of introducing online retailers should be heard and addressed."
Medical marijuana delivery is already legal in Massachusetts, and the CCC has been considering a framework for regulating adult-use cannabis delivery for nearly three years, according to the State House News Service.
During most of that time, dispensaries looked to figure heavily into the equation. After listening to feedback, the CCC opted to expand the framework and create a second license type that allows delivery companies to get cannabis directly-to-consumers without involving a retailer.
Proponents of courier licenses have said that minority entrepreneurs would benefit from lower startup costs since they’d only need to invest in a vehicle to pick up and deliver cannabis orders from existing retailers. But critics say delivery fees alone wouldn’t be enough to create a sustainable or scalable business.
When the idea of a wholesale-like license was proposed, retailers cried foul and suggested that Amazon-style e-commerce platforms would spring open without storefronts and undercut the market.
To help assuage those concerns, the CCC has limited companies from owning more than two delivery licenses and placed certain restrictions on third-party technology platforms.
“A contract between a Delivery Licensee and a Third-party Technology Platform Provider shall be negotiated and entered into on an arm’s length basis,” the regulation states. “A Delivery Licensee may not accept any investment in a Delivery License by a Third-party Technology Platform Provider with which they have a contract.”
It’s unclear if a lawsuit brought forth by dispensary operators will prove successful, but the CDA has vowed to "contest the matter" in a bid to "ensure that policy continues to adhere to the statute and that the market is not upended.”
The CCC has already issued two provisional licenses for couriers, according to the Boston Business Journal. Another 49 delivery-only pre-certifications have also been issued.
An application for the delivery operator licenses is expected to be released in January, the BBJ noted.
Adult-use cannabis delivery in Massachusetts is expected to begin in 2021.