Tax Rate: The sales tax of 6.25% as well as a 3.75% state excise and optional 2% municipal tax for an effective tax rate of 12%.

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1 SUMMARY OF HOUSE & SENATE ADULT USE CANNABIS BILLS HOUSE BILL SENATE BILL REFERENDUM (CURRENT LAW) Tax Rate: The 6.25% state sales tax plus a daily surtax of 16.75% plus a mandatory 5% municipal surtax would equal an effective tax rate of 28% for any adult use cannabis licensee at the point of sale. Deadlines: The CCC must have the necessary application process in place by March 15, The CCC must begin receiving applications from all applicants for cannabis licenses on April 1, 2018 but may not issue any license until July 1, Elimination of Head Start for Provisionally Licensed Medical Marijuana Applicants. The bill repeals the provision in the referendum that entities that had applied for a medical marijuana license and received a provisional or final certificate of registration from the Department of Public Health may apply one year early for adult use retail and product manufacturer Tax Rate: The sales tax of 6.25% as well as a 3.75% state excise and optional 2% municipal tax for an effective tax rate of 12%. Deadlines: The CCC must begin receiving applications from all applicants for cannabis licenses on April 1, The CCC has up to 90 days to grant or deny an application. Elimination of Head Start for Provisionally Licensed Medical Marijuana Applicants. The bill repeals the provision in the referendum that entities that had applied for a medical marijuana license and received a provisional or final certificate of registration from the Department of Public Health may apply one year early for adult use retail and product manufacturer Tax Rate: The sales tax of 6.25% as well as a 3.75% state excise and optional 2% municipal tax for an effective tax rate of 12%. Deadlines: The CCC was required to accept applications from entities that had applied for a medical marijuana license and received a provisional or final certificate of registration from the Department of Public Health on April 1, 2018; from all other applicants for a retail or product manufacturer adult use license on April 1, 2019 and from applicants for an adult use cultivator license on April 1, Elimination of Head Start for Provisionally Licensed Medical Marijuana Applicants. Would have allowed for the licensing head start for such applicants.

2 licenses and two years early for adult use cultivation licenses. Expedited Review of Applicants Already Provisionally Licensed by DPH: Medical entities that hold a Provisional or Final Certificate of Registration from the DPH that apply for any type of adult use license will be presumed to be accredited and cannot be subjected to any application requirements already were functionally completed as part of the DPH licensure process. Presumably, there will be a shorter application and/or expedited review for this category of applicants compared to general applicants. Restrictions on Number of Licenses Company Can Hold: An entity may only hold one adult use retail, one product manufacturer, and one cultivator license. An entity with a certificate of registration to operate medical use retail locations (up to three are allowed) and cultivation and product manufacturer location(s) may continue to operate those locations and, in addition, hold one adult use retail, one product manufacturer, and one cultivator license. licenses and two years early for adult use cultivation licenses. Expedited Review of Applicants Already Provisionally Licensed by DPH: Medical entities that hold a Provisional or Final Certificate of Registration from the DPH that apply for any type of adult use license will be presumed to be accredited and cannot be subjected to any application requirements already were functionally completed as part of the DPH licensure process. Presumably, there will be a shorter application and/or expedited review for this category of applicants compared to general applicants. Restrictions on Number of Licenses Company Can Hold: None. Expedited Review of Applicants Already Provisionally Licensed by DPH: None, but such applicants were permitted to apply for licenses under the head start. Restrictions on Number of Licenses Company Can Hold: None.

3 Restrictions on a Licensee s Investment in or Operation of Another Licensee: A licensee that holds adult use cannabis licenses may not invest in or operate, in whole or in part, the business of another licensee. It is not clear from the language of the bill whether this could limit to individual investors who own shares/units in multiple licensees. Our most informed read is that it does not, but the language is confusing. Local Control: Cities may now prohibit the siting and operation of a marijuana business by a vote of the City Council and approval of the Mayor or City Manager (whichever is applicable). Towns may now prohibit the siting and operation of a marijuana business of any kind by a vote of the Board of Selectmen and the attendees of Town Meeting. Host Community Agreements. Any licensee must execute a host community agreement with the municipality in which it is located, which must include payment of an impact fee, reasonably related to reimbursing the municipality for its costs. Restrictions on a Licensee s Investment in or Operation of Another Licensee: None. Local Control: Cities and towns may only (i) prohibit the siting and operation of adult use marijuana businesses; (ii) limit the number of marijuana businesses to less than 20% of the number of alcohol licenses allotted to the municipality; or (iii) limit the number of adult use marijuana businesses to fewer than the number of medical use businesses in the municipality, by a referendum vote of the entire city or town. Host Community Agreements. Such agreements are not required and may only reimburse municipalities for their costs in regulating the marijuana business. Restrictions on a Licensee s Investment in or Operation of Another Licensee: None. Local Control: Cities and towns may only (i) prohibit the siting operation of adult use marijuana businesses; (ii) limit the number of marijuana businesses to less than 20% of the number of alcohol licenses allotted to the municipality; or (iii) limit the number of adult use marijuana businesses to fewer than the number of medical use businesses in the municipality, by a referendum vote of the entire city or town. Host Community Agreements. Such agreements are not required and may only reimburse municipalities for their costs in regulating the marijuana business.

4 Co-location of Medical and Adult Use Cannabis. Allowed unless prohibition is voted by municipal governing body. Prohibition on Stricter Zoning for Adult Use than Medical. Municipalities May Not Prohibit Adult Use Cannabis Businesses Where Medical Marijuana Businesses Have Been Previously Zoned or Licensed. Suitability Investigation Into The Applicant, Its Officers, Close Associates and Investors. As a condition of receiving a license, the CCC will first conduct a suitability investigation into the financial suitability of the applicant, its background and business ability, including compliance issues, as well as the background, character, and reputation of its qualifiers. Qualifiers include the applicant s: (i) Managers and/or officers; (ii) close associates; (iii) any person or entity holding more than a 5% financial stake in the applicant; and (iv) any institutional investor holding more than a 15% financial stake in the applicant. Eliminates the Requirement that Medical Marijuana Licensees Operate as Not-For Profit Corporations. The bill removes the requirement that medical marijuana licensees organize as not-forprofit corporations and limit their ability Co-location of Medical and Adult Use Cannabis. Allowed unless prohibition is voted by municipal referendum. Prohibition on Stricter Zoning for Adult Use than Medical. Municipalities May Not Prohibit Adult Use Cannabis Businesses Where Medical Marijuana Businesses Have Been Previously registered. Suitability Investigation Into The Applicant, Its Officers, Close Associates and Investors. None required. Eliminates the Requirement that Medical Marijuana Licensees Operate as Not-For Profit Corporations. The bill removes the requirement that medical marijuana licensees organize as not-forprofit corporations and limit their ability Co-location of Medical and Adult Use Cannabis. Allowed unless prohibition is voted by municipal referendum. Prohibition on Stricter Zoning for Adult Use than Medical. Municipalities May Not Prohibit Adult Use Cannabis Businesses Where Medical Marijuana Businesses Have Been Previously Zoned or Licensed. Suitability Investigation Into The Applicant, Its Officers, Close Associates and Investors. None required. Eliminates the Requirement that Medical Marijuana Licensees Be Not- For Profit Corporations. Would not eliminate this requirement.

5 to share revenue with investors. The bill provides procedures for not-for-profit RMDs to convert to for profit corporations consistent with Massachusetts law. Structure of Regulatory Body: The CCC is an independent commission with its own offices and five full time commissioners. One is appointed by the governor who must have a public health or toxicology background; one is appointed by the Attorney General with a public safety background; one is appointed by the Treasurer with a corporate finance background; and two are appointed by consensus of the governor, attorney general, and treasurer, one with experience in legal issues for regulated industries and one with business experience in regulated industries. Transfer of Medical Program. Transfers Department of Public Health ( DPH ) Medical Marijuana Regulatory Program and employees to the CCC. Requires separate medical use regulations Trigger if Regulations are not Drafted: None. to share revenue with investors. The bill provides procedures for not-for-profit RMDs to convert to for profit corporations consistent with Massachusetts law. Structure of Regulatory Body: The CCC is housed entirely within the Office of the State Treasurer, but the structure is changed. There are five commissioners and the chair is appointed by the Treasurer and must have a background in the regulation of consumer commodities; one is appointed by the governor who must have a public health or toxicology background; one is appointed by the Attorney General with a public safety background; and two are appointed by a consensus of the governor, attorney general, and treasurer, one with experience in social justice issues and one with experience in the production and distribution of marijuana products. Transfer of Medical Program. Transfers DPH Medical Marijuana Regulatory Program to the CCC. Trigger if Regulations are not Drafted: If the CCC does not adopt regulations necessary implement an adult use program in full by July 1, 2018, Structure of Regulatory Body: The CCC is housed entirely within the Office of the State Treasurer, with all three Commissioners appointed by her under the same model of governance as the Alcoholic Beverages Control Commission. Transfer of Medical Program. Would keep programs under separate regulators. Trigger if Regulations are not Drafted: If the CCC does not adopt regulations necessary implement an adult use program in full by July 1, 2018,

6 Cultivation Co-Operatives. There is no mention. Repeal. Repeals entirety of referendum (c. 334 of the Acts of 2016) and of the medical marijuana referendum (c. 369 of the Acts of 2012) medical marijuana facilities may begin dispensing marijuana to adult use consumers. Cultivation Co-Operatives. Requires the CCC to pass regulations on cultivation cooperatives and including small farmers in the industry. Repeal. Does not repeal either referendum. medical marijuana facilities may begin dispensing marijuana to adult use consumers. Cultivation Co-Operatives. There is no mention, but referendum authorizes the CCC to create new categories of licenses. n/a