“Local Cannabis Companies Face Extinction” Marijuana Businesses Plead With Mass. Lawmakers

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It took almost two years for Massachusetts marijuana company T. Bear, Inc., to receive approval to commence operations, which finally came down on March 20, recounted owner and CEO Angela Brown.

That approval authorized the East Wareham company to start operations on March 24, which happened to end up being the day an order from the governor shut down businesses deemed non-essential, including marijuana companies.

“Just one day before we were able to make our first sale, we were shut down,” said Brown on Tuesday, testifying before state lawmakers in support of a bill that would offer a Massachusetts version of the federal Paycheck Protection Program, or PPP, amid the COVID-19 pandemic.

Brown said her company was forced to furlough its whole team.

“All I can do now is wait, with no income and no revenue,” she said. “And while I wait, I still pay my rent, my lenders, my utilities and my health insurance for my furloughed employees.”

Gov. Charlie Baker in March issued an order that shut down non-essential businesses starting March 24. While medical marijuana companies are allowed to operate during the pandemic, adult-use marijuana businesses have been shuttered since. The order has been extended multiple times, and now has an end-date of May 18.

The Joint Committee on Community Development and Small Businesses met virtually Tuesday to hear testimony on two bills, S. 2564, An Act to support MassMakers, and S. 2643, An Act establishing a Massachusetts Paycheck Protection Program (PPP) for businesses ineligible for the comparable federal PPP.

While the PPP bill would assist several different industries that have been left out of the federal PPP, the majority of the conversation during Tuesday’s hearing was centered around recreational marijuana.

“We can’t keep having cannabis be the odd business out,” said Caroline Pineau, the owner and CEO of Haverhill Stem and an economic empowerment applicant. “Governor Baker said liquor stores can stay open yet closes down cannabis. This arbitrary reasoning further disproportionately impacts the entire industry, an industry that has demonstrated we can safely operate with proper social distancing, appointment only and online ordering.”

Pineau reiterated that cannabis businesses like hers have payrolls, taxes, licensing fees, mortgages and high insurance premiums. But because marijuana is still federally illegal, marijuana businesses have been left of economic relief measures.

“What am I supposed to do,” asked Pineau, who told the committee she invested millions into her business while doing everything by-the-book.

Business owners repeated many of the same points: Massachusetts is the only state with legal marijuana that has shut down adult-use sales amid the pandemic, and that the state is not benefitting from tax revenue with these businesses shuttered.

Without the bill’s passage, the future for small businesses in the state’s marijuana industry could be grim, some predicted.

“Without this bill passing, local cannabis companies face extinction before we get going. We can’t let this be our legacy,” said Brown, who told the committee that last year, there was upwards of $84 million in tax revenue from cannabis sales.

Ellen Rosenfeld, the president of CommCan, which she owns with her brothers, testified that CommCan has contributed more than $1.1 million in sales tax to the state in fewer than 5 months. A PPP loan would return $400,000 to CommCan, she said.

“We have done all we can to protect our employees,” said Rosenfeld, who testified that the company has not laid off any of its 90 employees. “The PPP loan would add to that protection.”

CommCan has a cultivation facility in Medway, a co-located medical and adult-use dispensary in Millis and a medical-only dispensary in Southborough.

Segun Idowu, the executive director of the Black Economic Council of Massachusetts, said any Massachusetts version of the PPP must have a specific carve-out for minority-owned businesses to access the funds.

“We believe that the cannabis industry provides Massachusetts with a unique opportunity to grow wealth in already suffering communities,” Idowu said. “[The governor’s] order may have been well-intentioned but it will have the disastrous effect of destroying any chance that the state had of creating equity in an industry that was already and is already deeply inequitable.”

In particular, Idowu said he was thinking of Pure Oasis, the state’s first economic empowerment applicant to open, which greeted its first customers in Boston just before the non-essential business order.

David O’Brien, the president and CEO of the Massachusetts Cannabis Business Association, asked the committee to consider approaching the Cannabis Control Commission, which has a meeting scheduled for Thursday, to see if it would offer a letter of support for a Massachusetts version of the PPP.

State Sen. Diana DiZoglio, the senate chair of the committee, testified as the sponsor of the legislation and said that small businesses are in crisis and that it’s up to the state to close those gaps and provide equitable relief.

After Baker’s order closing down recreational businesses, a group launched a lawsuit against the governor. A judge ruled that Baker was acting constitutionally in his decision to shutter recreational businesses, but suggested that there are ways for the companies to operate safely during the pandemic.

As recreational stores shut their doors, the state saw a spike in new registrations for medical marijuana patients. Cannabis regulators have allowed for the recreational market to support the medical market with wholesale transfers.