Prince Lobel Provides Comments to the Cannabis Control Commission on August 14, 2020

Firm News · August 17, 2020

August 14, 2020

Cannabis Control Commission Commonwealth of Massachusetts Steven J. Hoffman, Chairman Union Station

2 Washington Square

Worcester, MA 01604

Commission@CCCMass.com

Re: Comments to the Cannabis Control Commission’s draft regulations as proposed to amend 935 CMR 500.000, on July 24, 2020 (the “Proposed Regulations”).

 

Dear Chairman Hoffman:

On behalf of our Cannabis clients, we want to thank you and your fellow members of the Commonwealth’s Cannabis Control Commission (the “Commission”) for the thorough and careful efforts you have made with regard to the Proposed Regulations published in July 2020.

After a detailed review of the Proposed Regulations, we welcome the opportunity to share the following comments from our Cannabis Team. [Note, unless otherwise stated, all references to “Sections” are to the Sections of the Proposed Regulations, 935 CMR 500.000 et seq.].

I.  DELIVERY LICENSES

We heartily endorse the thoughts of those speaking at the Public Comment Hearing on Monday August 3, regarding the need to allow delivery licensees to source and enter into agreements with both related and unrelated cultivators and product manufacturers. We have tried on a number of occasions to find a reasonable business model based on the current regulations, with no success.

COMMENTS:

A.  Section 500.145(1)(k) allows deliveries only to …:

2.  Any municipality which allows for retail within its borders whether or not one is operational; or

3.  Any municipality which after receiving notice from the Commission, has notified the Commission that delivery may operate within its borders.

We believe that allowing delivery services to deliver into all municipalities is consistent with governing law. In this, we agree with the staff memo dated October 18, 2018 that delivery does not require local approval. G.L. c. 94G, allows a licensed Marijuana Retailer to deliver marijuana and marijuana products to consumers. Nothing requires that the Marijuana Retailer obtain approvals from multiple localities. In fact, we believe that the limitation is in direct conflict with the explicit language of the statute authorizing retailers to deliver.

B.  We agree that there should not be any requirement that the delivery licensee return undelivered product to the source as required by Section 500.145(2)(j). The amount of product is already limited. Storage should be allowable in the vehicle if the motor vehicle is garaged in a reasonably – but not expensively – secured facility

C.  In Section 500.145(1)(e), in each subpart, and in 500.145 (2)(a) and (b), “or MTC” should be added after each reference to a “Marijuana Retailer”.

D.  We do not understand the wording of Section 500.145(2)(i) “For home delivery, each order shall be packaged and labeled in accordance with 935 CMR 500.105(5) and (6) originating the order prior to transportation by the Delivery Licensee or a Marijuana Establishment with a Delivery Endorsement to the Consumer.

E.  Section 500.145(3)(b) regarding pre-verification, requires a Marijuana Retailer to pre-verify a Consumer’s identification in-person or through a Commission approved electronic means, but a Marijuana Establishment with a Delivery Endorsement shall only pre-verify via electronic means. Does the Commission intended this distinction?

F.  Finally, we believe the word “transport” should be changed to “deliver[y]” in 500.145 (4)(g), (h) and (n).

G.  We also suggest that Microbusinesses also be permitted to deliver products that they did not manufacture, but which are sold at their establishment, including Marijuana Accessories and Marijuana Establishment Branded Goods.

II.  DEFINITIONS

A.  “AREA OF DISPROPORTIONATE IMPACT

Area of Disproportionate Impact means a geographic area identified by the Commission for the purposes identified in M.G.L. c. 94G, 4(a1/2)(iv), 935 CMR 500.040:Leadership Rating Program for Marijuana Establishments and Marijuana-related Businesses and 935 CMR 500.101: Application Requirements, and which has had historically high rates of arrest, conviction, and incarceration related to Marijuana crimes.

THE ISSUE:

When used in the Regulations, the phrase is limited to use in conjunction with definitions of Economic Empowerment Priority Applicant) which “means an applicant who is owned … by people who have lived for five of the preceding ten years in an Area of Disproportionate Impact, as determined by the Commission.” We appreciate that the Commission has and is dedicated to identifying the “areas of disproportionate impact. However, it seems apparent that some of the geographic regions meeting the Commission’s current definitions do not match well with the populations that have suffered those impacts. As communities with historic and generational levels of poverty and criminal activities, such as Mission Hill, are not included within the list because of recent gentrification.

COMMENT:

The Commission might consider altering the definitions of those eligible to confirm eligibility of applicants who resided in areas disproportionately Impacted in the past at times when they were indeed Area of Disproportionate Impact, even if those areas are not declared so by census bureau statistics due to recent gentrification or other changes. For example, San Francisco goes back as far as 1971 to identify areas of disproportionate impact, and looks for various period of years within that time. San Francisco also uses as additional criteria such as whether the applicant attended the Public Schools within the city, which in many cities is an equal measure of disproportionate Impact.

B.  EQUITY HOLDER”:

THE PROPOSED REGULATION:

The definition of “Equity Holder” in Reg. 500.002 is proposed to include “A person or entity that holds, or may hold as a result of one or more of the following, including, without limitation, vesting, conversion, exercising an option, a right of first refusal, or any agreement that would trigger an automatic transfer of or conversion to equity, any amount of equity in a Marijuana Establishment or an MTC.”

THE ISSUE:

The provision as written is overly broad and is not well related the goals of the commission. As written, virtually every investor holds more than 10%, and major investors can manipulate the definition to avoid disclosure of their true interests.

COMMENTS:

  1. This is a two sided provision that may enable manipulation. Adding additional holders to the definition means that others will automatically be able to report – or not report – their holdings as being a smaller percentage than would otherwise be the case. Consider, with this language:
  • If an existing licensee holds 3 licensee and wants a fourth;
  • Another applicant may be formed with 100 shares issued to X, a person who has no license.
  • At the same time, X is issued warrants for 1Million shares, at a price of $1,000 per share (a warrant which will never be paid).
  • This means there are 1,000,100 shares of “equity”
  • So issuing 1,000 share to the existing licensee that holds 3 licensee is not reportable – even though it owns 91% of the 1,100 shares of the new licensee.

2.  Virtually every Licensee entity has a provision that offers all other equity holders a right of first refusal when a holder wishes to sell. This protects the integrity of the investor group, and gives the others a first chance to secure the additional shares or units. While such rights are usually offered initially in proportion to the buyer’s equity interest, if enough of the other holders say no, any holder could acquire an interest greater than 10%. The provision as written would mean all members or stockholders which are eligible to participate in the right (including holders of infinitesimal portions) are Ten Percent Equity Holders.

3.  The additions to the definition threaten all sources of needed funding: if every such right is to be an Equity Holding, then many will require Commission approval prior to the funding – which will delay construction of cultivation and other locations at great expense to the Licensees.

4.  Unless this is limited to rights that the holder may exercise immediately, this further restricts the availability of capital to cannabis businesses. Lenders always seek to have rights to licenses and licensees if the borrower-licensee breaches the loan (see additional suggestion below). Indeed for many cannabis companies, these are the only assets available to a Lender. Currently such terms allow the lender to take control of the Licensee in the event of breach, but requires that the transfer be approved by the Commission before being effective. Is it the Commissions intent that with the pre-approvals now required, that no further approval will be required at the time of the foreclosure – or will notice ne sufficient?

5.  With the new language as written not exempting rights that arise only in the event of a breach, no Lender, including financial institutions and Banks, will be able to fund more than three licensees, even if the breach never occurs and the rights are never available.

6.  Due to the limitation that each “Owner” may hold only three of each type of license, funding sources will be able to offer capital to only 3 licensees in the Commonwealth because under normal terms they will be consider Owners of more than 10% of the equity. This cuts off some active institutional lenders which hope to supply funds on ordinary loan terms to multiple Licensees without ever wanting or having voting or management control.

7.  There should be a time constraint related to when the conversion may occur. If the rights do not arise until the passage of a certain period of time, or upon the completion of another financing or other uncertain event that the holder does not control, including the holder in the definition adds and does nothing except confuse the record.

8.  Treating anyone with a 10% conversion right as having any form of Control is both inaccurate and unnecessary in the business world. A 10% interest confers only the right to vote and have profits of 10% – each of which are separate indicia of “Control” so “ownership” is not a useful additional criteria.

9.  Finally, the provision as written is grammatically incorrect – it must be either “one or more of the following” or “as the result of any right, including without limitation”.

RECOMMENDATION:

We suggest that the definition be edited to be:

“A person or entity that holds, or may hold within the following 12 months of the date of any filing as a result of any vesting, conversion, exercising an option,  or any agreement that would trigger a voluntary or an automatic transfer of or conversion to equity, any amount of equity in a Marijuana Establishment or an MTC, provided that if a Marijuana Establishment or an MTC is seeking or maintaining the status of an Economic Empowerment Priority Applicant, then the 12-month limitation of this sentence shall not be applicable. Notwithstanding the identification of the holder of such rights as an Equity Holder, any such event or conversion shall require the approval of the Commission as provided in ….”

We also suggest that the Commission formally confirm that that pledges of a license are permitted, provided that the secured party is not otherwise a “Person or Entity Holding Direct or Indirect Control”, and any foreclosure or other exercise of the rights granted by the pledge must be subject to the full approval process if the license is to be taken or sold by the secured party.

C.  “IMMEDIATE FAMILY MEMBER is not used in the Regulation and should be deleted.

D.  “OWNER”

THE PROPOSED REGULATION

“Owner means any Equity Holder that possesses 10% equity or more in a Marijuana Establishment, MTC or Independent Testing Laboratory.

THE ISSUE

The defined term “Owner” is not used uniformly throughout the Regulation. It is used variously as meaning a ten percent Equity Holder, the “owner” of premises on which a Marijuana Establishment is located, and even abutters. See Section 500.101.

The use of the terms “Equity Holder” and “Owner” in parallel creates confusion – as not every ‘owner” in the literal sense is a Ten Percent Equity Holder.

RECOMMENDATION:

We suggest that “Owner” not be defined, and that a new term “Ten Percent Equity Holder” be defined as “any Equity Holder that has or controls 10% or more of the equity in a Marijuana Establishment, MTC or Independent Testing Laboratory, and inserted at each location where “Owner” is currently used in a manner that has that meaning

E.  PERSON OR ENTITIES HAVING DIRECT CONTROL.

THE PROPOSED REGULATIONS

Persons or Entities Having Direct Control means any person or entity having direct control over the operations of a Marijuana Establishment, which satisfies one or more of the following criteria:

(a) An owner that possesses a financial interest in the form of equity of 10% or greater in a Marijuana Establishment;

(b) Person or Entity that possesses a voting interest of 10% or greater in a Marijuana Establishment or a right to veto significant events;

(c) A Close Associate;

(d) A Person or Entity that has the right to control or authority, through contract or otherwise including, but not limited to:

  1. To make decisions regarding operations and strategic planning, capital allocations, acquisitions and divestments;
  2. To appoint more than 50% of the directors or their equivalent;
  3. To appoint or remove Corporate-level officers or their equivalent;
  4. To make major marketing, production, and financial decisions;
  5. To execute significant (in aggregate of $10,000 or greater) or exclusive contracts; or
  6. To earn 10% or more of the profits or collect more than 10% of the dividends

(e)       A Person or entity appointed as a receiver.

ISSUES:

Some of the criteria do not properly define individuals or entities that should most concern the Commission, and require unneeded intrusion into those that do not.

COMMENTS:

A.  In clause (a) “An Owner that possesses a financial interest in the form of equity of 10% or greater in a Marijuana Establishment” can be said more clearly (since “financial interest” is not defined and can mean a great number of rights).Clause (a) should be replaced with: “A Ten Percent Equity Holder”

RECOMMENDATION:

Clause (a) should be replaced with: “A Ten Percent Equity Holder”

B.  Clause (d)(5),

  • describing the contracts as ”significant” with $10,000 in the parenthetical seems to create two tests.
  • The $10,000 limit is too low for companies that generate millions each month.
  • It is also not clear if this is $10,000 is the amount spent weekly, monthly or annually.
  • Does it refer to orders that total over that amount due to periodic renewals, or just binding contracts that require the ME or MTC to purchase more than $10,000 of supplies or services from the provider over a period of time?
  • Finally, the verb “to execute” is not viable, many may be authorized to execute small ($10,000) agreements, the focus should be on those who have the power to decide that the contacts are to be executed – which requires the real power. Otherwise, this would make many store managers “control persons” (if they renew police details on a monthly basis, or order regular supplies).

RECOMMENDATION: Clause (d)(5) should be

(d)(5) To authorize the execution of contracts requiring the expenditure of the greater of (1) 1% of the ME’s or the MTC’s annual revenues or (2) $10,000 during any three month period; or;

  1. Clause (d)(6): the Regulation recites: To earn 10% or more of the profits or collect more than 10% of the dividends.

ISSUES:

  1. As written, the term identifies as a “control person” any person who receives an amount that equals “10% or more of the profits or collect more than 10% of the dividends” regardless of whether that is because of a right to the profits or is simply an amount payable for services performed and billed., or a loan repayment that requires a monthly return exceeding that amount until paid in full.
  2. This also restricts access to shopping center and other landlords who require percentage rents that may be based on gross sales, but in some months may exceed 10% of profits because of the difference between gross sales and profits.
  3. Finally, holders of preferred interests usually have the right to receive all distributions until they get their investments back, then a smaller percentage. I propose that Commission interest (absent other power over decision making) should be on the rights to the profits after the investor or lender has had its money returned.

RECOMMENDATION:

We respectfully request that clarifying language be added.

  1. The following phrase is included in the definition of Licensee. For all of the reasons set forth above regarding the inclusionary language of the definitions, we propose to add the following as a new clause (e) to the definition of Persons or Entities Having Direct Control.

(e)        Notwithstanding the foregoing. any person or entity that provides capital to establish or operate a Marijuana Establishment or MTC and to whom, in return for the capital, requires only repayment of the loan and is not otherwise a Ten Percent Equity Holder or does not have direct or indirect authority to control the Marijuana Establishment or Independent Testing Laboratory, will not be a Persons or Entities Having Direct Control.

F.  THE ADDITION OF THE WORD “OWNERS” IN SECTION 500.030 AND ITS IMPACT ON SECTION 500.105(2)(A)(1) :

THE PROPOSED REGULATIONS

Section 500.030: Registration of Marijuana Establishment Agents, as proposed provides:

(1) A Marijuana Establishment shall apply for registration for all its employees, Owners, Executives, and volunteers who are associated with that Marijuana Establishment. The Commission shall issue an agent Registration Card to each individual determined to be suitable for registration. All such individuals shall:

And Section 500.105(2)(a)(1), provides that:

Marijuana Establishments shall ensure that all Marijuana Establishment Agents complete minimum training requirements prior to performing job functions.

(a)    At a minimum, Marijuana Establishment Agents shall receive a total of eight hours of training annually.

ISSUES:

The addition of the word “Owners: (which we believe means “Ten Percent Equity Holder” as proposed above), requires that even passive, non-management decision makers obtain Registration Cards (and later be subject to training under Section 500.105(2)(a)(1), as it does not include the carve outs in Section 500.105(2)(a)(2), which limits the requirement to those “involved in the handling and sale of Marijuana for adult use at the time of licensure or renewal of licensure, as applicable,

COMMENTS:

A Holder of 10% of the “financial interest” or voting equity of a business has no real power or authority unless they also hold positions giving them the powers recited in at clause (d) in the definition of Persons or Entities Having Direct Control They have no inherent right to enter the Premises, make any decisions binding the Licensee or any party, or handle the products. Frequently such owners are residents of other states.

The requirement that each Owner hold a Registration Card is a surprising new requirement that all such Owners meet the additional standards of an Agent of Reg. 500.031 and Reg. 500.032, instead of those investigatory requirements otherwise applicable to Owners.

The Commission must provide for a period of defeasance of the Owners interest if it intends that the failure of an Owner to qualify or to maintain qualification as an Agent requires that Owner transfer its interest. Will the requirement be applicable to the entire interest, or only those in excess of 10% Interest?

The requirement that each “Owner” be subject to the 4 hours of training under 500.105(2(a)(1) is also an unnecessary burden on Licensees and their investors. Training adds nothing, and is a uniquely cannabis business requirement. if the person trained is not a decision maker or active in the business, it adds little to the administration of the industry.

RECOMMENDATION:

Delete the word “Owners”

4.  SECTION 500.104(1) REQUIRES COMMISSION TO APPROVE CERTAIN CHANGES:

THE PROPOSED REGULATIONS

(b) Ownership or Control Change.

  1. Ownership Change. Prior to any change in ownership, where an Equity Holder acquires or increases its ownership to 10% or more of the equity or contributes 10% or more of the initial capital to operate the Marijuana Establishment, including capital that is in the form of land or buildings, the Marijuana Establishment shall submit a request for such change to the Commission.
  2. Control Change. Prior to any change in control, where a new Person or Entity Having Direct or Indirect Control should be added to the license, the Marijuana Establishment shall submit a request for such change to the Commission prior to effectuating such a change. An individual, corporation, or entity shall be determined to be in a position to control the decision-making of a Marijuana Establishment if the individual, corporation, or entity falls within the definition of Person or Entity Having Direct or Indirect Control.

THE ISSUES:

The existing definition of “Ownership Change” remains disjointed, as the phrase “or contributes 10% or more of the initial capital to operate the Marijuana Establishment” does not make clear when that contribution is made. The word “Initial” suggests a timing limit, but it is unclear how to apply it. Does it refer to the contributions provided at the time of the initial investment, or made at any time in excess of that amount?

COMMENTS:

Under the proposal, if the initial capital is $500,000, 10% of initial capital is $50,000. But requiring that every source of a $50,000 increment be listed without a time limit, suggests that each $50K source be reported and approval sought when the Company is raising $5,000,000 later in its existence is not reasonable.

RECOMMENDATION:

We propose that the definition become:

“Prior to any change in ownership, where an Equity Holder becomes a Ten Per Cent Equity Holder  at or before the initial filing of the Application of Intent contributes 10% or more of the capital to operate the Marijuana Establishment, including capital that is in the form of land or buildings, the Marijuana Establishment shall submit a request for such change to the Commission.”

In fact, since an “Ownership Change” is now also fully included by the definition of a “ Person or Entity Having Direct or Indirect Control” 500.104(1)(b)(1) is no longer needed, as 500.104(1)(b)(2) covers that.

5.  EXECUTIVE DIRECTOR APPROVAL

THE PROPOSED REGULATION

Section 500.104(2) provides that the “The Executive Director of the Commission may approve” … (c) Any new equity owner, provided that the equity acquired is below 10%.

ISSUE:

Transfers below 10% of Equity have not required approval previously. Is this intended to be a new requirement?

RECOMMENDATION:

Delete Clause 500.104(2)(c)

THE PROPOSED REGULATION

Section 500.104(2) provides that the “The Executive Director of the Commission may approve” … “(e) A reorganization, provided that the ownership and their equity does not change;”

ISSUE:

The word “reorganization” is not defined, and the phrase “ownership” and equity” is imprecise. It is unclear what type of reorganization could occur without a change of “ownership” (except a conversion from a corporate form to an LLC) unless the phrase is intended to man “ultimate ownership”

COMMENTS:

We suggest that this expedited process should permit a transfer of a Licensee to another entity wholly owned by the same owner of the Licensee (to create a 3 level structure), or a transfer of a license to a licensee’s wholly owned subsidiary or another entity wholly owned by the same individuals or entities and in the same proportion as the licensee. This will allow the normal tax and business structuring of separating the assets represented by the Licenses. For example:

If Company A owns 100% of two Licenses, and the separates them into two wholly-owned subsidiary companies each with one license, wholly-owned by Company A, and having the same management, then nothing regarding control or ownership has changed other than to create the new intermediate License Holder entity that remains subject to the control of the same owner.

While this is in fact a “transfer” of ownership, the proposed change would render such clerical changes to be allowed upon notice to, not approval by, the Commission. These transfers are part of the ordinary and appropriate development of additional licenses by a licensee, but structured for appropriate tax planning and limitations of liability.

RECOMMENDATION:

We propose that clause (e) be:

“(e) A restructuring, separation of or reallocation of assets, provided that all Persons Having Direct or Indirect Control remain exactly the same other than the creation of new entities having no activities other than to hold the assets or securities to be transferred and to continue the business of the ultimate the ownership. Note, minor changes of less than 10% should not be disqualifying, as this changes could be effected without Commission approval in any event.

6.  500.130(4)- ADDITIONAL OPERATIONAL REQUIREMENTS FOR MARIJUANA PRODUCT MANUFACTURERS

THE PROPOSED REGULATION

Subsections (a)-(d) of Section 500.130(4) add a broad requirement that Product Manufacturers retain all records of purchases “of any ingredient, additive, device, component part or other materials” obtained by the Licensee relative to manufacturing Vaporizer Devices.

ISSUE:

There is no time limitation regarding new data retention requirements.

This would include, inter alia, sales records, vendor business information, component material, and manufacturing information regarding all component parts, batteries, and additives to be included in vaporizer products.

COMMENTS:

Product Manufacturers with sufficiently large and diverse product offerings must deal with multiple vendors for materials. The above-noted information would require dozens of pages of information regarding each transaction between the Licensee and each of its vendors. The aggregate information relative to each of these transactions will require significant data storage capability. Given that products have a statutory one (1) year shelf life, limiting data retention requirement to one (1) year is appropriate.

RECOMMENDATION:

We propose limiting the time period for which the Licensees must retain these records to three (3) years.

7.  500.160(13)- REANALYSIS LIMITATION FOR “FAILED” PRODUCT THE PROPOSED REGULATION

500.160(13)-A Licensee that receives notice that Marijuana or a Marijuana Product it has submitted for testing has failed any test for contaminants shall either reanalyze the Marijuana or Marijuana Product without remediation, take steps to remediate the identified contaminants, or dispose of the Marijuana or Marijuana Product.

(a) Reanalysis by a Second ITL. If the Licensee chooses to reanalyze the sample, the same sample shall be submitted for reanalysis at the ITL that provided the original failed result. If the sample passes all previously failed tests at the initial ITL, an additional sample representing the same sample set previously tested shall be submitted to a second ITL other than the initial ITL for a Second Confirmatory Test. To be considered passing and therefore safe for sale, the sample shall have passed the Second Confirmatory Test at a second ITL. Any Marijuana and Marijuana product that fails the Second Confirmatory Test may not be sold, transferred or otherwise dispensed to consumers, patients or Licensees. Any such product shall be destroyed.

(b) If the Licensee chooses to remediate, a new test sample shall be submitted to a licensed ITL, which may include the initial ITL for a full-panel test. Any failing Marijuana or Marijuana product may be remediated a maximum of two times. Any Marijuana or Marijuana product that fails any test after the second remediation attempt may not be sold, transferred or otherwise dispensed to consumers, patients or Licensees. Any such product shall be destroyed.

(c) If the Licensee chooses to dispose of the Marijuana or Marijuana Products, it shall do so in compliance with 935 CMR 500.105(12): Waste Disposal.

The implicated provision allows Licensees the option to retest or remediate product that fails for any test for contaminants. Specifically, “[i]f the licensee chooses to reanalyze the sample, the same sample shall be submitted for reanalysis at the ITL that provided the original failed result… Any Marijuana and Marijuana Product that fails the Second Confirmatory Test may not be sold … And such product shall be destroyed.”

ISSUES:

Under the current language, a Licensee choosing reanalysis before remediation may preclude Licensee from the ability to remediate “failing” product;

Samples used for testing are destroyed and cannot be “resubmitted” to testing centers

COMMENTS

As is noted in the Commission’s Protocol for the Sampling and Analysis of Finished Marijuana and Marijuana Products, samples to be tested require homogenization and processing involving physical and chemical changes to the product. Thus, when one sample is tested, it is effectively destroyed and cannot be submitted for reanalysis.

If a Licensee is unwilling or unable to go through the expense of remediating failed product and chooses to retest, that Licensee would be precluded from remediating if the Second Confirmatory Test fails. However, should the Licensee choose to remediate the product, that Licensee ostensibly has multiple additional opportunities to test remediated product. This presents an unfair disadvantage for those Licensees who do not have sophisticated remediation capability.

RECOMMENDATION:

Adjust language such that retested samples be pulled from the same batch rather than being the “same sample.”

Allow Licensees to remediate retested product that fails a Second Confirmatory Test rather than forcing them to destroy it prematurely.

OTHER COMMENTS:

A.  500.103(a): Licensure and Renewal: Applicants should not be prohibited from at risk construction activities.

Recommended changed language:

“(a) The Commission shall review architectural plans for the building or renovation of a Marijuana Establishment.  Submission of such plans shall occur in a manner and form established by the Commission including, but not limited to, a detailed floor plan of the Premises of the proposed Marijuana Establishment that identifies the square footage available and describes the functional areas of the Marijuana Establishment, including areas for any preparation of Marijuana Products, and, if applicable…”

B.  500.003: Co-located Marijuana Operations: The regulations should make it clear that wholly owned subsidiaries can hold these licenses and still be considered a CMO. An adult-use Marijuana Cultivator, Product Manufacturer or Retailer also be registered as an MTC, or a wholly owned subsidiary or sibling entity registered as an MTC, as defined in to 935 CMR 501.002. No other adult-use license type qualifies to be a CMO. Unless otherwise specified, CMOs shall comply with the requirements of each the adult-use and medical-use license or registration located on the Premises of the CMO.

 

Recommended changed language:

An adult-use Marijuana Cultivator, Product Manufacturer or Retailer also registered as an MTC, or a wholly owned subsidiary or sibling entity registered as an MTC, as defined in to 935 CMR 501.002. No other adult-use license type qualifies to be a CMO. Unless otherwise specified, CMOs shall comply with the requirements of each the adult-use and medical-use license or registration located on the Premises of the CMO.

C.  500:002: Definitions:

The definition of Close Associate should be deleted as it is overly vague and subject to multiple interpretations. The phrases relevant managerial, operational or financial interest” and “able to exercise significant influence over” have not been defined by the Commission. With these two subjective words included in a definition, it is nearly impossible for a Marijuana Establishment to understand which employees or members need to be identified to the CCC in applications or are subject to the change of control provisions.

We hope this is helpful and ask the Commission to strongly consider each of these comments.

John F. Bradley,

Co-chair Cannabis Team

 

cc:

Commissioners:

Jennifer Flanagan

Britte McBride

Shaleen Title

 

Prince Lobel Tye LLP:

Michael Ross

Julie Barry

John Bateman

Serge Béchade

Adam Braillard

William Burke

Daniel Glissman

Joy Karugu

Joseph P. Messina

Robert Schlein

Jill Schafer

Ricardo M. Sousa

Joseph S. Sano

John Lawler

Ashley Tan

Craig M. Tateronis

 

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