On Tuesday, September 22, the Massachusetts Cannabis Control Commission (“CCC”) proposed regulations that would establish new marijuana delivery business opportunities. The regulations contemplate the issuance of “Limited Delivery Licenses,” which are similar to previously-proposed delivery licenses, and new “Wholesale Delivery Licenses” that would allow companies to buy product from cultivators and production licensees and sell directly to consumers without having “brick and mortar” retail locations.
On Thursday, September 24, 2020, the CCC held a public hearing on the proposed changes, and will shortly open a public comment period. The final hearing on the regulations is scheduled for October 20, 2020, with the expectation that the final votes will be held on October 29, 2020.
Under the new proposal, similar to previous versions of Delivery Licenses, Marijuana Limited Delivery Licensee or Limited Delivery Licensee means an entity that is authorized to deliver Finished Marijuana Products, Marijuana Accessories and Branded Goods directly to Consumers from a Marijuana Retailer, or directly to Registered Qualifying Patients or Caregivers from [a Marijuana Treatment Center, an “MTC”], but is not authorized to sell Marijuana or Marijuana Products directly to Consumers, Registered Qualifying Patients or Caregivers and is not authorized or to Wholesale, Warehouse, Process or Repackage.
Thus a holder of a Limited Delivery License (“LDL”) will be able to
- Deliver Finished Marijuana Product from Adult-Use Retailers to Consumers;
- Deliver Finished Marijuana and Marijuana Products from MTCs to Consumers; and
- Deliver Marijuana Accessories and Branded Goods which may come from either the LDL, MTC, or Retailer to Consumers.
The proposed regulation also requires MTCs and LDLs to agree on a means to return undelivered product after hours. Current “pre-certified” holders and applicants for delivery licenses will automatically be converted to Limited Delivery Licenses.
The Commission has responded to earlier criticisms of the limitations on delivery licenses by creating the new Wholesale Delivery License (“WDL”).
“Marijuana Wholesale Delivery License or Wholesale Delivery License means an entity authorized to [purchase at] Wholesale and Warehouse Finished Marijuana Products acquired from a Marijuana Cultivator, Marijuana Product Manufacturer, Microbusiness or Craft Marijuana Cooperative, and sell and deliver Finished Marijuana Products, Marijuana Accessories and Marijuana Branded Goods directly to Consumers. A Marijuana Wholesale Delivery License shall not be considered to be a Marijuana Retailer.
Holders of these will be authorized to:
- Deliver Finished Marijuana Products acquired from Marijuana Establishments with which they have a Wholesale Agreement;
- Deliver Marijuana Accessories and Branded Goods that come from either the WDL or Marijuana Establishments from which products are wholesaled;
- Deliver Warehouse Finished Marijuana Products;
- Deliver White Label Products, created either in-house at the WDL or by a Cultivator, Product Manufacturer, Microbusiness or Craft Marijuana Cooperative on behalf of the WDL
Responding to numerous complaints that the earlier Limited Delivery format was not practicable in part because it required returning all undelivered inventory each day, the CCC is proposing that Wholesale Delivery Licensees be relieved of that obligation. However, WDL holders WILL be required to have a warehouse, subject to same security, storage, sally port and other requirements that apply to cultivators. In addition, the Wholesale Delivery Licenses are granted more of the rights of retailers, so they are made subject to many of the regulations applicable to retailers, such as those addressing:
- Limitations on sales
- Unauthorized sales and right to refuse sales or delivery
- Recording sales
- Consumer education
- Testing
- Product database
- Vendor samples
Existing regulations provide that only Economic Empowerment (“EE”) Applicants or Social Equity Program Participants will be able to hold either type of Delivery License during the first three years they are available. While the criterion for EE Applicants and some of the requirements for participating the Social Equity Program are quite detailed, for others, all that is needed to qualify as a Social Equity Program applicant is to show (A) that they have lived in Massachusetts for the preceding 12 months, and (B) that they, a spouse or a parent has a past drug conviction, either in Massachusetts or elsewhere, at any time during their life.
Note: While a Wholesale Delivery License holder would not be deemed a Marijuana Retailer, the new regulations would limit holders to an aggregate of three Marijuana Retailer and Wholesale Delivery Licenses.
For more information, please contact the author of this alert, Cannabis practice co-chair John Bradley (jbradley@princelobel.com; 617-456-8076) or any member of the Prince Lobel Cannabis team.