Massachusetts marijuana repeal effort threatens social equity businesses

The state’s slew of cannabis social equity programs has helped owners like White, but things have still been tough for them — and now the stakes couldn’t be higher. November’s election comes with a ballot question that could repeal legal recreational marijuana and dissolve the industry. Social equity businesses say, with their limited resources, they’ll be hit the hardest.

“The general sense from the social equity-owned companies is that we haven’t been given what we thought we would get,” White said. Now, he added, “We’re trying to get clarity so that we’re not closing the same businesses that the industry was supposed to make sure survived.”

The ballot initiative, called Question 8, would eliminate regulated recreational marijuana sales in Massachusetts, impose a $100 fine for people caught with one ounce to two ounces of weed, and keep medical cannabis legal. People caught with less than one ounce would not face penalties; possessing over two ounces could result in the same consequences as today: criminal charges carrying up to a $500 fine or six months in prison.

If the question passes, Massachusetts would be the first to repeal weed legalization, and the first to illegalize cannabis twice — in 1911, the state was the first to prohibit the then-popular drug.

The state’s Cannabis Control Commission declined to comment on the upcoming ballot measure, but noted that it has a legislative mandate “to mitigate the harms of marijuana prohibition.” The commission said it encourages “full participation” in the industry by people from communities that were most affected by weed criminalization, which had uneven impacts.

In Massachusetts, for example, Black people were four times as likely as white people to be arrested for marijuana in 2018, despite similar usage rates, according to the American Civil Liberties Union.

Social equity businesses in Massachusetts aren’t always owned by people with criminal records — they can also include people from neighborhoods targeted by weed policing, many of which were predominantly Black and Latino.

Recreational weed businesses must decide whether to shut down or try to become medical marijuana dispensaries if the question passes.

At least 100 open weed businesses — roughly 15 percent of the industry — were owned by people in the state’s social equity programs as of January, the Globe reported. None have medical licenses.

The Cannabis Control Commission charges much higher fees for medical marijuana operators — $50,000 per year and $3,500 application fees. Meanwhile, recreational businesses pay $10,000 annually and $1,500 to apply. For social equity-owned businesses, as well as minority-owned and women-owned ventures, the commission charges just $5,000 per year.

That big a change in costs has social equity businesses grappling with their futures, White said: “With the ballot questions, it’s even more like, ‘What the hell is going to happen?’”

The state’s efforts aimed at helping social equity businesses include exclusive access to certain types of licenses, training programs, and technical support. The Cannabis Social Equity Trust Fund, which receives money from taxes on cannabis sales, fines, and fees, has also awarded close to $60 million to businesses.

Many of these businesses, however, have still struggled to stay afloat amid plummeting cannabis prices, regulatory costs, and sky-high taxes at an effective rate of 60 to 80 percent.

Dennis Kunian, CEO of The Kunian Group and a consultant for dozens of dispensaries, said the industry is in danger even without the ballot question.

“If the ballot [question] does not pass, you’ll probably see 50 to 75 dispensaries go out of business anyway,” Kunian said. Social equity businesses are especially in trouble, he said, because they have less capital at their disposal compared to bigger corporations.

Nike John, owner of Beacon Hill dispensary The Heritage Club, was the first Black woman dispensary owner in Boston and one of the first in the state. Another social equity recipient and real estate agent, John got into the industry after being a cannabis consumer and noticing the lack of Black ownership in the industry.

“I was excited because someone wanted me to be there,” John said of the social equity program.

But since then, she said, the industry isn’t where she thought it would be. John expected to see social equity businesses take up more market share and compete with larger companies.

“That’s who the first people who will be getting cut are — the social equity operators,” John said. A worst-case scenario for the ballot question, she said, “is if all the social equity operators had to close.”

John always wanted to expand her store’s offerings and get a medical license. Such a license would enable her to sell tax-free cannabis and higher-potency products to registered medical marijuana patients.

In April, the Legislature passed a reform measure that made it easier to become a medical marijuana business by scrapping a requirement that such dispensaries grow and produce their own products. That law also opened up new medical retail licenses, which are exclusively available to social equity businesses for two years.

But even then, John said, the medical fees are too expensive for her business.

Some advocates, like Kunian, want the cannabis commission to work with the state Legislature to make medical licenses even more accessible if the ballot question passes. But that could take time that businesses may not have. (The ballot question, if passed, would take effect Jan. 1, 2028.)

If licensing fees stay the same, most social equity businesses won’t be able to afford to make the shift to medical, said Ryan Dominguez, executive director of the trade group Massachusetts Cannabis Coalition, who sits on the state board for the social equity fund.

Dominguez said he’s helping lead the fight to keep recreational cannabis alive, which would go a long way to fulfilling the state’s promise to people harmed by the war on drugs.

“We said we were going to create all these new benefits for them and create this generational wealth,” he said.

Former mayoral candidate and Boston city councilor Tito Jackson founded Apex Noire, a downtown dispensary with an enclosed rooftop lounge he hopes to turn into a cannabis cafe. He said he doesn’t plan to shift to medical sales due to the high costs, leaving Apex with a foggy future if recreational marijuana goes away.

If that happens, he said, he worries about a lack of access to safe, regulated cannabis and skyrocketing arrests for weed, along with the potential collapse of small, social equity-owned businesses like his.

Jackson said the industry will likely survive in some form, but it would likely be dominated by big corporations: “When we say success of an industry, is it successful for some or all?”

Auzzy Byrdsell can be reached at austin.byrdsell@globe.com.