Surprise! Massachusetts’ Recreational Marijuana Law Is Facing Some Major Changes

Senator Jason Lewis recently introduced 14 bills, some of which could place serious restrictions on the pot industry within the state.

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IMAGE SOURCE: GETTY IMAGES.

Election Day held significance for a number of reasons. For all Americans it represented a turning point in policy with the election of the 45th president of the United States, but for the marijuana industry it was the culmination of two decades worth of work. Nine states went into the Nov. 8 election with a marijuana initiative or amendment on their ballot, and eight came out victorious (sorry Arizona). The year ended with 28 states having legalized medical cannabis and eight with recreational pot laws now on their books.

One of the many victorious states on election night was Massachusetts, where 53.6% of the nearly 3.3 million people who voted filled in the “Yes” box for Question 4. However, with nearly three months having passed since that vote, one thing is looking painfully clear to the residents of Massachusetts: the state’s recreational marijuana law may look nothing like what was passed on election night.

Are big changes in store for Massachusetts’ recreational marijuana law?

As reported by The Boston Globe last week, even though residents have made their voices heard and marijuana will eventually become legal for adults in Massachusetts, state regulators may be able to impose serious restrictions on the cannabis industry prior to the law’s implementation.

Jason Lewis Senator Ma

SEN. JASON LEWIS (D-MA). IMAGE SOURCE: JASON LEWIS’ SENATE WEBPAGE.

Senator Jason Lewis (D-MA) filed 14 bills with Massachusetts’ legislature this month concerning the state’s recently passed recreational weed law, some of which would look to substantially curb how much consumers can purchase and what retailers will be able to sell. Mind you, these bills come after state legislators in December passed a law delaying the sale of recreational marijuana products in approved retail dispensaries until July 2018.

Lewis’s legislation would hit the marijuana industry in four ways, assuming all of his introduced bills are passed.

  1. It would reduce the amount of marijuana an adult over the age of 21 could possess in their home from 10 ounces to two ounces, and it would limit the number of marijuana plants that could be grown from 12 per household to six per household.
  2. It would delay the ability of pot dispensaries to sell marijuana edible products and massage oils by at least two additional years.
  3. Any marijuana products other than the unadulterated plant matter itself would be permanently banned.
  4. Cities and town governments would be granted greater power to reject marijuana dispensaries without having to bring a vote to the residents of the city or town.

What makes these proposals so difficult for the cannabis industry to accept is that Lewis was a prime opponent of Question 4 during the November election. However, he’s viewed as the top authority of Massachusetts’ recreational marijuana industry and is probably going to be the co-chairman of a new Senate-House committee on marijuana. In other words, his bills could have strong sway with regulators.

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IMAGE SOURCE: GETTY IMAGES.

Of course, not all of the bills Lewis introduced are being critiqued by pro-legalization advocates. For example, Lewis wants tough regulations on the packaging of marijuana products and edibles to ensure they don’t wind up in the hands of minors. Lewis also wants to see tax revenue apportioned to drug education programs for adolescents.

Another of Lewis’ bills likely to gain traction is the proposed creation of a research program to monitor the social and economic impacts of the legalization of recreational weed. These latter proposals are likely to get resounding support by state regulators.

Could Massachusetts’ model limit recreational pot access in other states?

While Lewis aims to make Massachusetts a model that other recreational legal states can follow, it could also have worrisome consequences for the cannabis industry.

In particular, giving considerably more power to local municipalities to reject marijuana establishments could wind up hampering the ability of the pot industry to expand. For those who may not recall, we’re already seeing something of a bifurcation in Colorado, which is currently considered the model marijuana state. Even though Colorado wound up generating close to $1 billion in legal sales in 2015, these sales pretty much came from a quarter of the Colorado’s counties. About three-quarters of its jurisdictions have rejected the idea of recreational cannabis establishments in the state.

But, here’s where things get tricky. If municipalities are given more power to control whether or not marijuana dispensaries are allowed into their town without a public vote, it could mean legislators squashing the will of the people. It presents a tricky balance: trying to integrate a previously illegal industry into a state’s economy safely when essentially no precedence can be looked upon for guidance.

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IMAGE SOURCE: GETTY IMAGES.

Making matters even tougher for the cannabis industry is the likelihood under the Trump administration that cannabis will remain a schedule 1 drug. As long as pot remains an illicit substance, marijuana companies will struggle to gain access to basic banking services from financial institutions, and weed businesses will be handicapped come tax time by having to pay tax on their gross profits instead of net profits. Since marijuana is illegal at the federal level, selling the drug at the state level excludes cannabis companies from taking normal business deductions.

Thus, what happens in Massachusetts’ legislature in 2017 could have big implications in how other states may handle recreational pot legalization in the future.

For the time being, it remains in investors’ best interest to remain on the sidelines and watch the progression of the marijuana industry solely as an observer. Even with some analysts suggesting that the legal marijuana industry could grow by 30% annually through the remainder of the decade, the federal government and state legislatures still have the power to make life very difficult for the cannabis industry as a whole – and that’s bad news for prospective investors.

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