Massachusetts Governor Charlie Baker signed legislation on Thursday to amend the state’s marijuana laws, approving the addition of social equity provisions and other changes to cannabis regulations in the Bay State. Baker approved all but one of the provisions of the bill, which is the first overhaul of the state’s cannabis regulations since voters approved recreational pot use in 2016.

Baker said in a statement that he supports “many of the provisions that this bill adopts to improve regulation of the cannabis industry” as well as “the bill’s efforts to expand opportunities for social equity businesses.”

The compromise bill, which was passed by state lawmakers in the early morning hours of August 1, aims to increase diversity in Massachusetts’ cannabis industry by creating a new social equity trust fund. This program will be funded with 15% from the Marijuana Regulation Fund. It is funded through cannabis taxes, licensing fees, and penalty levied against licensed cannabis businesses. Funds in the social equity trust fund will be dedicated to providing grants and loans to prospective cannabis business owners, focusing on communities of color and those harmed by the nation’s failed prohibition policies.

“This law will rebalance the playing field, where so far wealthy corporations have been able buy their way through the licensing process and too many local, small business owners and Black and brown entrepreneurs have been locked out,” said Senator Sonia Chang-Díaz, the co-chair of the state legislature’s Cannabis Policy Committee. “The reforms and funding we fought so hard for will be game changers, putting Massachusetts back among the leading states for racial justice in our economic policy on cannabis. I’m so grateful to the many community members and grassroots leaders who came together and held the state’s feet to the fire to make this happen.”

At a meeting of the Cannabis Control Commission (CCC) held on Thursday before Baker signed the legislation, commissioner Ava Callender Concepcion encouraged her fellow commissioners to “take a moment today to recognize the significance of this moment and the magnitude of this impact.”

“By no means am I saying that this single piece of legislation will solve every issue that’s facing the cannabis industry, but it is a massive step,” Concepcion said. “This is monumental.”

New Legislation is Applauded By Cannabis Activists

Shanel Lindsay, a cannabis advocate who campaigned for the 2016 ballot measure that legalized pot in Massachusetts, said that the governor and lawmakers “have made history with this vital — and overdue — grant and loan fund.”

“This bill is an important step forward in undoing the harms of prohibition and over-policing and will provide an important path for families of color to create jobs in their community and generate generational wealth,” said Lindsay, the co-founder of Equitable Opportunities Now.

CCC also has the power to approve and review host community agreements that cannabis companies must develop with local authorities. They will only be in effect for the first eight year of an operation, and there will be a limit on the fees charged to companies. Community impact fees will be limited to 3% of a company’s gross receipts and must be “reasonably related” to costs incurred by local governments to implement cannabis legalization and regulation.

In addition, cannabis companies can be classified as legal business entities by the state tax code. This allows them to access standard deductions not allowed under federal tax regulations. Sieh Samura, the owner and chief executive officer of the Yamba Market dispensary, Cambridge, and an advocate of minority representation in cannabis, stated that the tax burdens for businesses operating in this industry could be as high as 75%.

“It makes the barrier to entry higher and presents a lot of obstacles for entrepreneurs, especially for those with less resources,” he said.

Samura stated that the law would make taxes more fair and give oversight to host community agreements. It will also provide funding for minority entrepreneurs to start their own businesses.

“We’ve got to see the money start flowing, and the earlier it starts flowing, the earlier we’ll see an effect in the bigger market on how many equity businesses there are, how much diversity there is,” Samura said.

Baker approved additional sections to the bill, which include provisions for simplifying expunging previous weed-related criminal convictions. Also included is a process that allows local communities and voters to approve cannabis use lounges.

Governor Nixes Explores Medical Pot in Schools

Baker opposed a section of the legislation which would have examined the possibility that students could use cannabis-based treatments in school. Under that section, the CCC, the Department of Elementary and Secondary Education and the Department of Public Health would be directed to study and develop recommendations for “eliminating obstacles and expanding accommodations to possess, administer and consume medical use marijuana and public and private schools” among students who possess valid medical cannabis cards.

In a statement to lawmakers, Baker said that the measure as written “is highly prescriptive — making it clear that the agencies charged with producing the study must identify ways to make medical marijuana widely available within schools, rather than considering whether such an allowance is advisable.”

”The voter initiatives that legalized medical marijuana in 2012 and 2016 included strong measures to keep marijuana away from K-12 schools and school children. Both laws explicitly stated that marijuana would in no circumstance be permitted on school grounds,” Baker added. “Because the study proposed in section 26 clearly works against these important and well-established protections and disregards the clear intentions of the voters in legalizing marijuana use, I cannot approve this part of the bill.”