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Massachusetts’ Host Community Rules Under Fire by Cannabis Board Chairman

Because of Massachusetts’ host community rules and a general lack of funds, social equity applicants in the state are unable to compete fairly with larger, better-funded cannabis firms, according to Cannabis Control Commission Chairman Steven Hoffman.

Full story after the jump.

Massachusetts social equity applicants have been stymied by the state’s host community rules paired with a lack of funds, Cannabis Control Commission Chairman Steven Hoffman said in an interview with MassLive. Of the 537 applications first submitted to the commission, just 14 came from “economic empowerment” applicants; and from the 122 economic empowerment businesses given the priority status, only 28 were minority-owned.

“The biggest issue is they don’t have any money,” Hoffman said in the interview, noting that if a lender is willing to invest in a cannabusiness, “they will not lend to someone who lives in Boston, has a criminal record and $8 net worth.”

Hoffman also said that the host community agreements – which require businesses to pay a 3 percent community impact fee – also pose problems for social equity applicants because larger businesses can, and do, pay more than the 3 percent required by law.

Those host agreements have come under fire recently after the arrest of Fall River Mayor Jasiel Correia, who allegedly used the host agreement to extort tens-of-thousands of dollars from cannabis companies. The Springfield City Council is also investigating a donation from a cannabis company to ensure it is not a bribe.

“It does give a disproportionate advantage to bigger companies that can afford to throw in a fire truck on top of their 3 percent.” – Hoffman, in an interview with MassLive

Hoffman said that officials need to “find other sources of financing” for economic empowerment applicants and that he floated the idea of a state-run bank to lend to the applicants but Gov. Charlie Baker did not approve the idea. He indicated he was working on developing a public-private partnership to create no- or low-interested loans for disadvantaged applicants and that some banks have approved the idea so long as the loans are guaranteed by the state.

Hoffman also noted that the commission is set to vote this week on rules that would authorize both home delivery and social-use of cannabis which would provide more potential licenses for minority-owned businesses.

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