Massachusetts Greenlights Delivery-Only Marijuana Businesses
Free Book Preview Cannabis Capital
A new plan to allow delivery-only cannabis businesses in Massachusetts could result in big changes for entrepreneurs in the state. Massachusetts Cannabis Control Commission approved changes that would enable new licenses for standalone marijuana delivery businesses. The goal of the change is to make the state’s cannabis system more diverse.
But not everyone supports the change.
The proposal has set up a battle at the state level that could end up where all such battles typically end up: the courtroom.
“This will not be the final word on delivery,” the Commonwealth Dispensary Association (CDA) said in a statement after the CDA is threatening legal action if the new rules go into effect.
The situation in Massachusetts raises yet another issue around cannabis delivery, which already has gone through a local official vs. state official tiff in California. State leaders there eventually had to override local officials and allow delivery.
Not ties to dispensaries
The previous rules only allowed a third-party delivery company to contract with existing brick-and-mortar dispensaries to deliver their products, much in the way Uber Eats delivers Pho from your favorite Vietnamese restaurant.
Under the new rules adopted by the Cannabis Control Commission, a delivery company could set up their own business if they have warehouse space that meets state standards for storing marijuana. They then could take orders and deliver directly from their own supply and not rely on contracting with a dispensary.
The change makes the chances of running a profitable business company much higher, delivery company owner Chris Fervy told Commonwealth magazine. He said that under the current rules, his company could not charge fees high enough to consistently make a profit. They also are reliant on other businesses for work.
Proponents of the new rules claim they will lead to more diversity in cannabis business ownership in Massachusetts by making it easier to get into the cannabis industry without the high costs of trying to open a dispensary.
A level playing field
The rule change is meant to help level the playing field between small business delivery owners and larger companies that own dispensaries. David O’Brien, president of the Massachusetts Cannabis Business Association, said the rule change would open the door for minority ownership of cannabis businesses, according to Boston.com.
“Since 2018 alone, the retail cannabis industry has generated over one billion dollars in revenue, but entrepreneurs with limited access to start-up capital, especially Black and Latino entrepreneurs and those who have been harmed by the failed war on drugs, have been largely shut out of this fast-growing market,” he said. “These regulations will open the door.”
However, the CDA argues that the rule changes will negatively impact the very people the state wanted to help. The organization’s leadership notes that many small, minority-owned businesses will not be able to afford the capital costs, including the investment in technology needed to run a successful delivery operation.