After a long delay, the Marijuana Social Equity Fund in Massachusetts is awarding $2.3 million in grants to cannabis companies

“As one of the few majority black-owned licensed manufacturers, this support is deeply meaningful.”

By Bhaamati Borkhetaria, Commonwealth Beacon

After nearly two years of delays, a social equity fund designed to help struggling marijuana businesses finally started distributing some money, with Gov. Maura Healey (D) doling out $2.3 million in grants and making plans to close the fund later this year construction to $27.4 million. year.

The Cannabis Social Equity Trust Fund was signed into law in 2022 to direct a portion of marijuana tax revenue to “entrepreneurs from communities that have been disproportionately harmed by marijuana prohibition and enforcement.” The fund sat empty for months, largely because of the way the law was written.

Now that these design issues have been resolved with legislation passed in December, Healey is starting to push money out the door, starting with grants ranging from $20,000 to $50,000 for 50 cannabis businesses in 28 different communities.

Phil Smith, who received a $50,000 grant for his company, Freshly Baked Co. from Taunton, said the money would help him pay off loans to ensure some stability.

“As one of the few licensed manufacturers that is majority Black-owned, this support is deeply meaningful and reaffirms our and the state’s commitment to breaking down barriers and advancing inclusivity in the cannabis industry,” said Smith.

Stakeholders were disappointed last summer when it became known that a much smaller starting amount of $2 million to $4 million would actually end up in the fund. However, Juan Vega, the deputy secretary of the Executive Office of Economic Development, said the fund should grow to more than $27 million later this year.

“I believe part of what this fund should do is try to address this issue that is a priority for many social equity applicants and economic empowerment applicants,” Vega said. “(They) don’t have access to huge capital, don’t have deep pockets, don’t have the ability to tap into a bigger player. The idea here is to try to level the playing field a bit and provide these companies with much-needed capital and cash.

As cannabis prices have fallen and many operators are buckling under the debt they took on to keep their businesses afloat, some cannabis operators doubt the $2.3 million will save many businesses.

“I think the social equity fund is a great idea, but the $50,000 grants won’t help any business survive,” said Sean Hope, the owner of the Cambridge pharmacy Yamba, which did not receive a grant on Tuesday. “Frankly, for many (of us), that amount is too little too late. And we’re going to apply for it, and we’ll gratefully accept it, but I think you’re going to continue to see closures over the next eight to 10 months even though we’ve received the $50,000.

The Social Equity Fund Act required 15 percent of marijuana tax revenue to be funneled into the trust fund. In 2022, the state collected $156.7 million in marijuana taxes, which could have meant more than $20 million could have gone into the trust fund.

Cannabis operators are struggling across the state and the biggest demand many have is for capital. Many operators are struggling to even open their businesses and those with open storefronts are struggling to become profitable while still paying off debt.

Because cannabis is illegal at the federal level, cannabis companies are unable to secure financing the way many traditional businesses do. Operators are often unable to obtain small business loans because banks and credit card companies are unwilling to work with them.

Social equity operators are particularly affected because this group has historically lacked access to capital. Social equity programming in Massachusetts is designed to close this gap and help entrepreneurs from communities harmed by the war on drugs build wealth. However, without a functioning social equity trust fund, these companies have slowly racked up more and more debt as they go through the cumbersome regulatory process of opening a business.

“It’s an extremely expensive process, and I can’t think of any other business in the world that compares to dispensaries in terms of start-up costs,” says Kijana Rose, owner of a cannabis business based in Roslindale that sells vegan cannabis baked goods. “While the costs for the licenses themselves may not be astronomical, the bureaucratic process to get there is extremely expensive. There will be a lot of debt.”

The head of the Massachusetts Cannabis Coalition, Ryan Dominguez, said he would have liked to see the social equity trust fund funded and given out grants much sooner, but that he’s glad it’s up and running now.

“I think a lot of operators are facing a lot of issues right now,” Dominguez said. “So I think these immediate grants can help to maybe stabilize some of those, but I just know that a lot of these types of $50,000 grants will probably be spent immediately. I think it’s a good first step, but there is certainly a need for more.”

This article first appeared on CommonWealth Beacon and is republished here under a Creative Commons license.

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