Steven Hoffman, chairman of the Massachusetts Cannabis Control Commission (CCC) announced recently that commissioners would be considering license types that are currently available exclusively to participants in the CCC’s social equity program and economic empowerment applicants.
The licenses were set up to help compensate for the damage done to minority communities by the War on Drugs.
Hoffman said he is “deeply troubled by continuing reports” of social equity and economic empowerment applicants being targeted by would-be investors with financing deals that include things like forced sales once the exclusivity period has ended, control over key hiring and personnel decisions, and cash distributions significantly disproportionate to stated equity ownership, reported Diane McLaughlin for Banker & Tradesman.
“We’ll continue to use that authority to look at all relevant contracts, including financing contracts, to ensure compliance with our regulations as they relate to cap limits, required [economic empowerment applicant] or [social equity participant] control and disclosure requirements,” Hoffman said. “And if there are violations, we have the necessary tools to enforce compliance. I am determined to put an end to predatory lending practices in the industry and commit to using all the resources available to the commission to do so.”
Hoffman noted that many prospective licensees “feel that they have no choice but to agree to egregious terms” since there are few alternative sources of financing available to them.
In addition, Hoffman told his fellow commissioners that a publicly-run solution was necessary, and “implored” Beacon Hill to set up a “social equity fund” for minority entrepreneurs.”
Out of more than 1,000 applications submitted to the CCC as of November 2021, just 232 came from social equity program participants or economic empowerment priority applicants, CCC director of Government Affairs and Policy Matt Giancola said.
Photo by Cameron Venti on Unsplash.
