🔒Northeast cannabis regulators talk similarities, differences between states’ adult-use programs

While many Northeast states are launching recreational cannabis markets at the same time, how their programs get off the ground and operate will differ.

That’s because states are taking their own approach to setting up and regulating their respective industries, with each including a social equity component that aims to give disenfranchised individuals a piece of the action.

State officials from Connecticut, Massachusetts and New York recently spoke at Hartford Business Journal’s “CT Cannabis Conference & Expo” about how their states launched, or are launching, their respective industries.

Massachusetts Cannabis Control Commission Executive Director Shawn Collins, whose state began rolling out its recreational market about five years ago, said his state created a new government entity to oversee the industry.

“We took on a really tall task — we had to build an agency where one did not exist before,” Collins said.

He said establishing credibility was one of his first tasks and priorities. Using information from the state’s already-existing medical program, Collins said, prepared his agency for what was to come.

“When we did roll out the introduction of our first stores in November of 2018, we had a fully regulated marketplace,” he said. “We had a supply chain in place — cultivation, product manufacturing, lab testing, retail — we also had metrics like seed-to-sale tracking up and running. Everything that you could possibly want in a regulated system existed. We didn’t have to catch up on anything.”

Collins said Massachusetts was the first state to have a social equity component embedded in its statute, something that Connecticut added in its legalization law, which passed last year. It was up to his commission to assess what that program would look like in Massachusetts, Collins said.

Like Massachusetts, New York established a dedicated cannabis control group to regulate adult-use marijuana. New York State Cannabis Control Board Chairwoman Tremaine Wright said the regulatory process began in 2019, when New York passed a cannabis decriminalization bill.

She said when it came to licensing, her state prioritized people with past marijuana convictions, and then went back to the legislature to allow special industry access for local hemp growers. Hemp farmers in Connecticut have been advocating to be included in the state’s adult-use marijuana market, but they haven’t yet had an easy pathway to inclusion.

“Through that program, we’ve been able to get our hemp farmers involved in growing so they’re the first cultivators in New York state,” Wright said. “So, we use small businesses that exist as a part of our community, many of whom are hemorrhaging money, to roll over and to become the first farmers in this space. … We utilized the existing market and gave them first opportunity.”

New York — which hopes to launch its recreational market by the end of this year, following the same timeline as Connecticut — has reserved dispensary licenses for social equity applicants and dedicated $200 million for a loan program to help social equity businesses get off the ground.

The social equity portion of New York’s legalization effort also includes reinvesting 40% of tax dollars from the cannabis market into communities most impacted by the war on drugs. More of New York’s adult-use cannabis regulations are expected to be finalized and rolled out toward the end of this year, Wright said.

Connecticut took a different approach than some of its Northeast neighbors. While the drug control division of the state Department of Consumer Protection oversees and regulates the adult-use market in Connecticut, the Social Equity Council assesses applications for those specific candidates.

Connecticut Department of Consumer Protection Commissioner Michelle Seagull said the creation of the Social Equity Council gave Connecticut a dedicated group to make sure social justice initiatives were being applied.

“There is a really committed group of people who are very invested in seeing that succeed and are monitoring how things are working to make legislative changes so we can continue to adapt,” Seagull said.

The Social Equity Council is now taking steps to finalize details on its business accelerator and low-interest loan programs. State lawmakers have allocated up to $50 million to help launch social equity cannabis businesses. The state also has tax credits for potential angel investors that want to contribute to a startup cannabis operation.

Seagull said her agency is monitoring the state’s regulatory process as the first wave of cannabis businesses get preliminary licensing.

She said one of the things Connecticut has done correctly so far is recognize it should have flexibility regarding the law, and that legislative changes can be made. Already, state lawmakers this year implemented some changes to the recreational marijuana law, based on recommendations from the Social Equity Council.

“No state got it exactly, perfectly right the first time,” Seagull said. “We’re regulating the market initially with policies and procedures, and those are easier to change and adjust as we see where maybe we’ve gone too far or not far enough in certain areas.”