Pot Shop Closures A Pain Point At Hearing For Mass. PPP Bill

By Sam Reisman
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Law360 (May 5, 2020, 10:16 PM EDT) -- A virtual hearing Tuesday on two Massachusetts bills to provide assistance to state businesses turned into a forum for cannabis industry stakeholders to vent frustration at the governor's controversial decision to close recreational stores.

Massachusetts cannabis business owners urged lawmakers to advance a bill to establish a state Paycheck Protection Program to provide much-needed relief to cannabis businesses that were frozen out of federal COVID-19 relief. But witnesses also used the opportunity to testify that the challenges posed by federal illegality had been amplified by Gov. Charlie Baker's decision in March to deem recreational cannabis a nonessential industry.

State Sen. Sonia Chang-Díaz, D-Suffolk, voiced her support for the spirit of the PPP bill, but she said it amounted to a cure for "a self-inflicted wound," because lawmakers were considering using spending to support flagging businesses rather than allow the recreational marijuana industry to remain open and generate much-needed tax revenue.

The adult-use industry "stands at the ready to meet the needs of the consumer public in a safe way, on par [with], if not under greater public health strictures, than their peers in the alcohol and restaurant industries," she said.

The status of recreational marijuana was not at issue in the bill, and state Sen. Diana DiZoglio, D-Essex, a sponsor of the PPP bill, emphasized at the hearing that the legislation was not written exclusively for the cannabis industry but geared toward all small businesses that did not qualify for federal loans for any reason.

"The magnitude of the current crisis has created an absolute undertow for small businesses across our entire state," she said in her written testimony. "It is with those small businesses in mind, who have been excluded under the federal CARES Act and who have no opportunity to mitigate their losses under the administration's current executive orders, that I filed this bill to create a Massachusetts version of the Paycheck Protection Program."

Many witnesses noted that Massachusetts was unique among states that had legalized adult-use recreational marijuana in that recreational cannabis retailers were deemed nonessential by the governor and ordered to close on March 24 and not reopen until April 7. That order was most recently extended to May 18. Recreational retailers filed suit against Baker, saying the order was arbitrary and discriminatory, but they lost an emergency bid for preliminary injunction in April.

"Imagine you're a small business and there are no programs or options available to you to help you keep what you have built from the ground up," said Ellen Taylor Brown, founder of cannabis education and training company Sinsemilla Seminars. "What the cannabis industry is asking for from the state of Massachusetts is to be treated with respect and understand that, even though we are cannabis businesses, we still have families and employees to provide for."

Several cannabis retailers took the opportunity to note that the nascent adult-use market in Massachusetts was already under financial strain owing to a significant tax burden, costly licensing fees and difficulty borrowing funds from traditional lenders. One business owner said they had not even opened their doors or begun generating revenue before the governor's March order to close came down.
"To use a term of art, I just think it's bananas that we are not allowing these retailers to open in a way that's safe, that's controlled, and that can serve the greater needs of the commonwealth in this time of emergency," Chang-Díaz said.

While generally supported by witnesses, the bill was not without its detractors. Anti-legalization group Smart Approaches to Marijuana said in written testimony that many Massachusetts recreational businesses were owned by multistate operators and that the product hurt those infected with COVID-19.

A spokesperson for the governor did not immediately respond to a request for comment.

The PPP bill, S.B. 2643, was one of two measures discussed in a virtual joint committee hearing that drew testimony from Bay State entrepreneurs, local politicians and chambers of commerce and other stakeholders. The other bill, S.B. 2564, would create a host of web-based projects to support local Massachusetts industries.

--Editing by Haylee Pearl.

For a reprint of this article, please contact reprints@law360.com.

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