Massachusetts cannabis regulators agree to explore licensing freeze
Massachusetts cannabis regulators are considering a licensing freeze to address businesses that have been squeezed by falling marijuana prices.
The Cannabis Control Commission voted Thursday to schedule a public hearing on a potential freeze of new cultivation licenses and a temporary moratorium on approving additional canopy capacity.
Testifiers could also share their thoughts on freezing other license types including craft marijuana cooperatives, product manufacturing and micro-businesses.
The move, which comes as regulators are rolling out social consumption regulations, is meant to open up a conversation about how to support marijuana businesses and stabilize the market as an influx of supply has led to plummeting prices.
The average retail price for an ounce of flower reached a record-low $113.68 in December, down from $401.43 in December 2020, according to CCC data. The falling prices come as cannabis sales continue to rise, crossing the $9 billion gross sales mark on Feb. 4, largely thanks to high volume sales right before January’s major snowstorm, according to a CCC representative.
“Price compression is really unsustainable, people are operating on pennies on the dollar, and then it’s a race on raw volume versus quality of product,” commissioner Kimberly Roy said.
The commission offers a range of license types, including cultivators, craft marijuana cooperatives, product manufacturers, retailers, research facilities, independent testing laboratories, transporters and microbusinesses. Retailer, cultivator and product manufacturer are the most common license types.
Commissioners noted increasing supply is largely to blame for falling prices. The number of licensees has risen from 223 in July 2023 to 686 in January, according data provided in a Jan. 15 CCC meeting. Some businesses are struggling to stay open, with 24 licensees placed into court-appointed receivership.
Also, the state’s cannabis canopy density is in the “upper middle” range among other states that have legalized adult-use cannabis with about 1.1 acres per person over 21, Roy said.
“Unchecked canopy expansion has created structural oversupply, and without swift intervention, we continue to risk widespread economic harm to licensees in the communities that host them,” Roy said. “…the receivership list is growing, and all arrows point back to too much flower in the supply chain.”
The vote came after a debate on whether a CCC’s legal team memo on the policy should be confidential. Tensions were sparked when associate general counsel Erica Bruno refused to answer a commissioner’s question during the public meeting about advice included in a 13-page memo the legal team gave to the CCC, saying it’s “privileged and confidential.” Bruno offered to speak more with commissioners about it privately.
Almost immediately after Bruno declined to answer the question publicly, CCC chair Shannon O’Brien asked to entertain a motion to waive the privilege of the informatioN.
