Lawmakers heard a litany of complaints about the business and regulatory environments for marijuana companies Wednesday as a key committee mulls whether and how it should intervene legislatively to address chronic problem spots in the industry and with the Cannabis Control Commission.
People involved in the legal marijuana world have been frustrated with the slow pace of regulatory changes from the CCC and a series of internal conflicts at the agency attracted even greater scrutiny from the public and Beacon Hill. Inspector General Jeffrey Shapiro pleaded with lawmakers in June to intervene by appointing a receiver to manage day-to-day CCC operations at the "rudderless agency" and then restructure it by amending the "unclear and self-contradictory" enabling statute that legislators wrote in 2017.
Lawmakers called the situation at the CCC a "trainwreck" during a July hearing with Shapiro, but stopped short of embracing a response plan. When he punted the issues until this fall, House chair Rep. Daniel Donahue said in late July that the Committee on Cannabis Policy thinks receivership is not the way to go, but "recognizes the need for clarity in structure and accountability at the Cannabis Control Commission" and "foresees a legislative path forward addressing the sources of concerns about the CCC’s administrative function."
Wednesday's hearing was the first in a series planned for this fall, with lawmakers' eyes turning towards legislation they could propose when the new session starts in January. Donahue, of Worcester, and Senate chair Sen. Adam Gomez, of Springfield, indicated Wednesday they're most focused on how the CCC is structured, the nitty-gritty of the rules for commission operations, and industry workers' rights. But another member of the panel questioned just how much legislative intervention is even required.
"I think the Legislature was very clear on the laws that we passed and the things that we did. I think this comes down to the fact that the CCC is just not understanding what their job is," Rep. Michael Soter of Bellingham said. "Every single testimony I hear is that they have all the tools they need. They just don't have the -- I don't know if it's the ability, I don't know if it's the counsel, the general counsel not giving them the right advice on what their job is, or it's just too much chaos. I haven't figured it out."
Soter seized on comments from Megan Dobro, founder and CEO of SafeTiva Labs, to emphasize his view that the CCC is not using all tools at its disposal. Dobro explained her concerns with the structure the CCC has put in place to have all cannabis products sold here tested by an independent testing lab like hers before it can be sold. She said the CCC's structure is "incentivized all wrong."
She said there isn't a lot of guidance about how testing labs should conduct the testing, so it's up to each lab to have its own "scientific background and integrity." But having each lab interpret the CCC's regulations differently leads to variability in the testing process, as does the use of different equipment in different lab facilities.
"When there's variability in the results, the producers are shopping for labs that are going to give them results that allow them to sell their products for more. So they're shopping based on THC numbers being high. They're shopping based on safety checks passing," Dobro said. "And so that means ... the labs that are passing the most and the labs that have the highest THC are getting the most business. And so we are selecting out the labs that are trying to do things the right way."
Soter said the CCC "has the ability to do their own testing" by contracting with a lab or labs to run testing for the state and suggested that the testing issue Dobro cited is something the CCC doesn't need legislation to address.
"That doesn't sound to me like the Legislature has any power to do anything. It sounds to me like the CCC just isn't doing ... the power that we've already given them from the beginning," he said.
While the hearing was taking place on Beacon Hill, the CCC was holding a meeting in Worcester. Commissioners voted to finalize regulations that will finally put into motion policy changes they agreed to last year, and which cannabis delivery businesses in particular say will make a big difference to their bottom lines, including easing a rule that requires two employees to travel in cannabis delivery cars.
"A lot of people would say, what took us so long?" Acting Chair Bruce Stebbins told reporters after the CCC meeting. He added, "The promulgation process is not quick, and it requires us to be really thoughtful about it. I think we have been. I think if you saw our meeting today -- the incredible collaboration among my colleagues, as well as with our legal and investigations and enforcement team -- I mean, we were walking through some pretty granular issues, trying to make sure we weren't creating loopholes, and that process takes time."
Stebbins pointed to work the CCC has accomplished this year, including implementing parts of the 2022 law that addressed things like host community agreements and the process for launching social consumption licenses and addressing problems related to transportation of cannabis to be sold on Nantucket or Martha's Vineyard. He also highlighted an upcoming listening session on issues around cannabis testing and said he is eager to address the longstanding industry complaints about the badging requirements for employees.
"I've always said this is a very entrepreneurial industry, and sometimes the challenge is having a regulatory body to keep up with that," he said. "But I think we've done a lot of good work this year, and I think we have a lot of good work ahead of us too."
A memo that Donahue drafted for Speaker Ronald Mariano identified three areas of the CCC's enabling statute that the committee would like to revisit, including the definition and use of "commission" throughout the law and whether that means the agency at large or the five-person board; and two potentially contradictory sections delineating powers of the CCC chair and the agency's executive director.
Paragraph "h" of the state law that created the CCC says that "the chair shall have and exercise supervision and control over all the affairs of the commission," but paragraph "j" of the same section of law says that "the executive director... shall be the executive and administrative head of the commission and shall be responsible for administering and enforcing the law relative to the commission and to each administrative unit thereof."
Conflict between the CCC's chair and its executive director was at the heart of the spat that led to former Chair Shannon O'Brien's firing and the resignation last year of Executive Director Shawn Collins.
"Based upon the recent history impacting the day-to-day leadership and the overall commission structure, the Legislature should work to modify the structure to clearly delineate the role of the chair and the executive director so that the agency can properly function and avoid working at cross purposes, ensure that the agency can maintain the budgeted revenue stream, and provide clarity and certainty to its stakeholders," Shapiro wrote.
Donahue and Gomez suggested Wednesday they are interested in considering changes to the requirement currently imposed on the CCC that all matters before the body receive three votes of support to pass. With only three commissioners currently active -- the chair is vacant as a result of O'Brien's firing and Commissioner Ava Callender Concepcion is out on medical leave -- that means every decision of the CCC must be a unanimous one to pass.
"In my opinion, I think that's when statute comes into play, not the regulatory things that you guys are advocating for," Gomez said about changing the CCC's majority vote rules in response to a series of specific concerns raised by members of the Massachusetts Cannabis Coalition business group. The Senate chair added, "That position, I think, in my opinion, is a statutory change that we have to look forward to in our next session."
Donahue asked several of the people and groups that were invited to testify Wednesday (the CCC was not invited to testify) whether they thought that the statutory structure of the CCC contributed to the issues they raised. He asked about how other state cannabis oversight agencies are structured and whether moving the CCC under an executive office might make sense.
That idea would be a non-starter for Kevin Gilnack, the policy co-chair for Equitable Opportunities Now, though he did agree that "recent events obviously have highlighted the need for some potential clarification and enhancements of the CCC's authorizing statute."
"I'm here to emphasize the importance of preserving the quasi-independent nature of the CCC, with five commissioners appointed by three constitutional officers," Gilnack told lawmakers. "Concentrating the power and responsibility of overseeing cannabis policy under one officer puts an unfair burden on them and their bureaucracy, and often leads to opaque and politicized decision making with limited opportunity for public comment, for debate. While the CCC deliberations are often very slow and messy, they also prioritize debate, including different perspectives from different commissioners of different backgrounds, and they encourage stakeholder input."
Donahue said at the end of Wednesday's hearing that the committee will provide notice of its next informational hearing in the next few days. A future session is expected to include administrative law experts, perhaps to probe the possibilities and pitfalls of finding the CCC a new home within state government's organizational structure.
