Massachusetts’ legal marijuana industry is already taking a hit after U.S. Attorney Andrew Lelling promised a hardline approach to businesses that cultivate and sell the drug, which is illegal under federal law.
Lelling, of Sharon, called marijuana a “dangerous” drug after U.S. Attorney General Jeff Sessions’ reversal of Obama-era guidance that instructed federal authorities to leave the marijuana businesses alone in states where the drug is legal.
Lelling said his office would “aggressively investigate and prosecute bulk cultivation and trafficking cases, and those who use the federal banking system illegally.” Unlike the U.S. attorney in Colorado, Lelling did not offer protection for people who participate in the “state-level marijuana trade.”
Medical-marijuana businesses throughout Massachusetts are already feeling shock waves caused by Lelling’s words.
Most of the state’s 17 operating dispensaries told customers they could no longer accept checks or cards as financial institutions started to pull out following threats of prosecution.
Ermont Inc. in Quincy said it was forced to become a cash-only business when an attorney for its debit card processor, Merchant Services Consulting Group, said it would no longer do business with them.
“Ermont Inc. was instructed (Monday) night by its debit card processor to immediately suspend the use of debit cards at the dispensary,” CEO Jack Hudson said in a statement. “We have complied and all transactions are cash-only until further notice. This is an unfortunate situation beyond Ermont’s control, and we sincerely apologize to our patients for the inconvenience.”
In Good Health of Brockton also told its customers online this week that debit card payments would cease “due to federal changes beyond our control.”
Merchant Services Consulting Group did not return requests for comment by the Ledger’s press deadline on could not be reached for comment Wednesday.
The changes in federal priorities on marijuana prompted a harsh backlash from Massachusetts lawmakers and business advocates alike –even from those who weren’t in favor of legalization.
Gov. Charlie Baker said Lelling should focus on “street drugs” such as fentanyl instead of marijuana.
The state Cannabis Control Commission, which will set regulations for retail marijuana sales this spring, is forging ahead.
“We have a job to do, and we’re going to continue to do the job,” Chairman Steven Hoffman said.
But in an industry predicted to build a market worth $1.1 billion by 2020, according to marijuana-market economists ArcView Group, the message from federal authorities is already having a chilling effect.
Joe Nelson, co-owner of Mass. Cannabis Chefs, said he’s already having second thoughts about expanding his marijuana-focused business, but he has no doubt the cannabis market will continue to exist in Massachusetts.
“The market’s going to be there, but the government won’t be getting taxes. They won’t be making anything, which in my mind makes less sense,” Nelson said. “They would make way more off of taxes than they will off jail time.”
For businesses like Nelson’s it’s not just about the inconvenience to customers reverting to cash-only payments, it’s about how it will stifle growth.
Mass. Cannabis Chefs is a fine-dining, marijuana-infused event and catering business that Nelson and his partner launched on Dec. 15, the same day recreational marijuana was legalized.
Nelson’s business operates in a legal gray area. It doesn’t sell marijuana extracts or edibles, it sells food. It hosts
pop-up style catered dinners around the Boston area twice a month.
“We sell tickets to parties but don’t charge for the weed,” he said.
Nelson had hoped to expand the business into selling infused foods and opening a brick-and-mortar location after recreational marijuana sales are legalized in July, but now he said he’s having second thoughts.
“We were working on buying an event space or warehouse-type space for an open consumption club, but that may put more of a target on us than the actual dinners do,” Nelson said.