A correction has been added to this story.
AFTER NEARLY TWO years of delays, a social equity fund designed to help struggling marijuana businesses finally began dispensing some money, with Gov. Maura Healey handing out $2.3 million in grants and laying plans to build the fund up to $27.4 million later this year.
The Cannabis Social Equity Trust Fund was signed into law in 2022 to steer a portion of marijuana tax revenues to “entrepreneurs from communities that have been disproportionately harmed by marijuana prohibition and enforcement.” The fund sat empty for many months, largely because of the way the law was drafted.
Now that those drafting 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 to 50 cannabis businesses in 28 different communities.
Phil Smith, who received a $50,000 grant for his business, Freshly Baked Co. of Taunton, said the money would help him pay off loans to ensure some stability.
“As one of the few majority-Black-owned licensed manufacturers, this support holds profound significance, affirming our commitment and the state’s commitment to breaking barriers and fostering inclusivity in the cannabis industry,” said Smith.
Stakeholders were disappointed last summer when it was revealed that a much smaller starting amount of $2 million to $4 million would actually make it into the fund. However, Juan Vega, the assistant secretary of the Executive Office of Economic Development, said the fund should grow to more than $27 million later this year.
“I believe that part of what this fund is meant to do is to try to address this issue that a lot of social equity applicants and economic empowerment priority applicants have,” said Vega. “[They] do not have access to massive capital, do not have deep pockets, do not have the ability to draw from a larger operator. The intent here is to try to level the playing field a bit and provide some much-needed capital and cash to these businesses.”
With cannabis prices down and many operators buckling under the debt they’ve taken on to keep their businesses afloat, some cannabis operators doubt the $2.3 million is going to save many companies.
“I think the social equity fund is a great idea, but the $50,000 grants are not gonna help any business survive,” said Sean Hope, the owner of the Cambridge dispensary Yamba, which received a $50,000 grant on Tuesday. “Frankly, that amount of money is too little too late for a lot [of us]. And we’re gonna apply for it, and we’ll gratefully accept it, but I think you’re gonna continue to see closures over the next eight to 10 months despite getting the $50,000.” [This paragraph was corrected to state that Hope’s dispensary did receive a $50,000 grant, but under the operating name Home Grown 617 LLC.]
The social equity fund law required 15 percent of marijuana tax revenues 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 ended up in the trust fund.
Cannabis operators are struggling across the state and the biggest ask that many have is for capital. Many operators are struggling to even open their businesses and those with open storefronts are having a hard time becoming profitable while still paying off their debts.
Because cannabis is illegal on the federal level, cannabis businesses are unable to secure funding in the ways many traditional businesses do. Operators often can’t take out small business loans because banks and credit card companies are unwilling to work with them.
Social equity operators are particularly suffering because that group historically hasn’t had access to capital. The social equity programming in Massachusetts was set up to address 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 accumulated 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 one other business in the world that could compare to dispensaries in terms of startup costs,” said Kijana Rose, a cannabis business owner based in Roslindale who sells vegan cannabis baked goods. “While the fees for the licenses themselves might not be so astronomical, the bureaucratic process in order to get there is extremely expensive. There’s a lot of debt that’s gonna be incurred.”
The head of the Massachusetts Cannabis Coalition, Ryan Dominguez, said that he would have loved to see the social equity trust fund get funded and give out grants much sooner but that he’s glad it’s running now.
“I do think that a lot of operators are dealing with a host of issues right now,” said Dominguez. “So I think that these immediate grant funds can help to stabilize maybe some of those, but I just know that a lot of these kind of $50,000 grants will probably get spent immediately. I think it’s a good first step but there’s definitely a need for more.”