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Cannabis Coops: The Hidden Giant

Want to know a secret about Massachusetts cannabis licenses? The hidden giant of available license types is … the Craft Cannabis Cooperative license. Many people think of the Co-op license as a kind of niche cultivation license with onerous restrictions imposed on the founders. But this isn’t exactly true. The Co-op license has the potential to encompass a vertically integrated behemoth that maxes out the ownership limitations of nearly every license type.


LIMITS?

What is the Co-op NOT allowed to do? Delivery. The statute and the regulations say that Co-ops may not deliver cannabis to consumers. Also, no Independent Testing Labs because those labs have to be, well, independent. But this leaves everything else on the table for the savvy Co-op.

POTENTIAL!

First, the Co-op license permits cultivation at an unlimited number of locations, subject to the same 100,000 square foot canopy limit that applies to all cultivators. Big or small, indoor or outdoor, you can mix and match until you hit the 100k sq. ft. cap.


Second, the license permits manufacturing operations at three separate locations. These can be different locations than any of the cultivation sites. Manufacturing can include everything from making pre-rolls to hydrocarbon extraction to cooking edibles to making hash. Each of the three sites is the equivalent of a Manufacturing license.


Third, the Co-op can acquire a retail license. Although individual members of the Co-op may not have ownership or control in other licenses, the regulations permit the Co-op itself to apply for a retail license. In fact, since the regs don’t say otherwise, we believe the Co-op could hold three retail licenses, just like any other owner.


Fourth, the Co-op can acquire an Existing Licensee Transporter license. Since you will already be driving around between all your cultivation, manufacturing, and retail sites, you might as well make a little extra money transporting other people’s cannabis.


Fifth, the Co-op can hold a Research license. Research establishments cannot sell marijuana, but they can cultivate and manufacture for research purposes. Such a facility could be invaluable for a full-scale, vertically integrated company that needs to stay competitive.


Sixth, the Co-op can acquire a Social Consumption license. Granted, these licenses are not yet available as some legislative action is necessary, but they are coming at some point. Farm tours, anyone?

WHAT ABOUT HEMP?

To make this mix even more interesting, we note that MDAR and the CCC have given the green light to hemp farmers to sell hemp flower at licensed cannabis retail stores. What if a Co-op added a hemp farm to their mix? And then sold the hemp flower at the Co-op owned retail store?

DO IT RIGHT

What’s the catch, you ask? The catch is structuring this mega operation into a single cooperative business. You have a half-dozen distinct businesses that must be aligned with the Seven Cooperative Principles and the idea of “Members”. You may have a mash-up of a producer cooperative (cultivation), worker cooperatives (manufacturing and retail), non-member employees, a mix of licensed and unlicensed members, and investors. So, fire up your imagination, sit down with your local cannabis cooperative lawyer, and see what you can do with the Co-op license.

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