Chairwoman O’brien
Commissioner Ryan, did you want touch on. Yes, I am. Yeah.

Commissioner Roy
Okay.

Chairwoman O’brien
Okay. So. So the issue of debarment was raised a while ago by Commissioner Roy, and I, I thank Attorney Ladiszynski. I think he’s out there, but I.

Chief Jones
Don’T know if he.

Chairwoman O’brien
Can. Can join us. But anyway, this is basically looking at what New York State regulators have done to, you know, basically, this is a pretty tough penalty that if you have seen, you know, third parties, unlicensed third parties that have been collaborating with licensees for the unauthorized sale or diversion or inversion of cannabis products. It’s my understanding that New York does not have as robust a seed to sale tracking as Massachusetts, but they do have greater enforcement actions related to unlicensed activities. And so I don’t know if. I don’t know if we could have. I don’t know if attorney Ledozynski is able to. Share Commissioner Wright, if he’s not.

Commissioner Roy
I have just a little synopsis I.

Chairwoman O’brien
Can show if you want to do that.

Chief Jones
Yeah.

Chairwoman O’brien
Because I, I have this memo which I think everyone has. Has everyone received this memo in time?

Commissioner Roy
Yeah, so.

Chairwoman O’brien
And so there’s nothing we’re voting on today. Yeah, but it’s just, it’s. It’s an issue. Commissioner Roy and I are going to be doing a meeting within the next week or two looking at the issue of inversion, trying to understand the scale. You know, is it a problem? Is it something that we need to be addressing more quickly? So, you know, and a more robust conversation may better entertained after we have that meeting where we understand maybe the true depth of the problem. But maybe you can explain why you raised this in the first place.

Commissioner Roy
And thank you, Madam Chair. It caught my eye. I was reading MJ Biz Daily and there was an article, new York Moves to Punish Marijuana Distributor at Heart of Inversion Scheme. So, you know, reading the article, I saw this enforcement tool that I had never heard of before, and I asked for a legal opinion regarding it. And I want to do. I do want to thank the legal team and I wanted to thank, you know, Attorney Ladiszynski as well, for doing this memo. But I just want to share, for those listening, a little background information. So it’s not disbarment, it’s debarment. So New York’s cannabis debarment is an enforcement sanction that can bar a person or business from holding a cannabis license in the future and from contracting with.

Commissioner Roy
Now, this is in New York with the Office of Cannabis Management or with licensees usually following serious or repeated Violations of cannabis law definition and legal basis in New York’s cannabis regulations. Quote, debarment is defined as an exclusion from obtaining a cannabis license, registration or permit under cannabis law. Contracting or subcontracting with the ocm Contracting or subcontracting with licensees in the regulated cannabis market. Debarment is one of several penalties OCM may impose under Part 133, enforcement alongside fines, suspension and revocation of existing licenses. When debarment can be imposed, debarment is generally sought in cases involving serious non compliance, such as operating or facilitating unlicensed cannabis activities, including quote, reverse licensing arrangements where unlicensed businesses operate under another’s license, material misrepresentations to OMC or failure to disclose significant ownership or operational changes, violations that undermine market integrity, public health or equity objectives.

Commissioner Roy
Recent OCM charging documents and high profile cases have explicitly requested debarment from applying for future licensure as a remedy in addition to revocation and substantial civil penalties. Thank you.

Chairwoman O’brien
So I think that the point and the reason that we’re, we’d like to explore this further and again, it’s really, I’m trying to regularize us having conversations because we can’t have these conversations and I don’t think, I. Think that the public can fully understand how cumbersome it is dealing within the open meeting law because we don’t have the opportunity to have some of these conversations. But when I’ve been going out and having meetings, and I’m sure you know that all of you, when you go out or talking to the different groups, the operators who are operating under the law, who are burdened by significant taxation, burdened by significant, you know, regulation, they want to do the right thing. And that’s who I think we’re getting the pressure from.

Chairwoman O’brien
It’s the people who want to follow the law, who want to make sure that they’re, you know, paying their fees and paying their taxes and supporting the important programs that cannabis does support across the Commonwealth. So anyway, it’s really understanding how do we as a commission strengthen the work of the good operators and making sure that the people who are not following the law don’t have the opportunity to compete illegally or to undermine the health or safety of our system. So I don’t know if I have. I think that this, we probably should table this until we have a little bit more opportunity. But you know, I would suggest that we all take some time to read up on the issue of inversion or talking. We are going to be holding a meeting with a couple of people who have some thoughts about this.

Chairwoman O’brien
But I think that this would be something that we all should continue to educate ourselves on to understand. And some of this is, it is underground. We don’t know it and we’re trying to figure it out. We don’t know whether it’s real, but we’ve heard rumors that this could be a little bit more widespread than we think in Massachusetts. And so we just want to get ahead of it and we want to figure out ways to address it. So Commissioner Stevens, you had a comment you wanted to make.

Commissioner Stebbins
Thank you, Chair. And. I think like Commissioner Roy, like you, Chair, I saw this article when it popped up in our news feed. And really. Exploring the article actually reading I think it was there was a link to Green Standard Alliance. New York had an article about it and where they were seeing it, certainly they were calling out the New York State’s seed to sale tracking system, which they thought was lacking and was awaiting a long delayed implementation. But you know, just thinking through the art, just thinking through the issue itself, not I was thinking about it in two parts. If were to uncover it happening, do we have the tools to stop it immediately from happening either through, you know, our ability to cease to desist, somebody putting an administrative hold on product.

Commissioner Stebbins
And then the ultimate, the follow up to that is how do we penalize the people that we catch doing it. So I ran through, jotted down a whole bunch of questions. I’ll be happy to share those with legal and enforcement counsel. Because some of it does tie back to other parts of our statute, other parts of mass statute in terms of what you can get arrested for felony conviction for. But something that occurred to me last night and then kind of picking up on our earlier conversation of some stuff we might want to add to the. The regulatory Runway may or may not have to do with exclusivity is that we don’t offer a definition, diversion or inversion.

Chairwoman O’brien
Right.

Commissioner Roy
We will now in this round.

Commissioner Stebbins
Yeah, I mean we speak to diversion, we do not speak to inversion. So we should try to find the places to couple those up. But we definitely need, let’s start with the definition and then we can think about, you know, the penalties later on.

Chairwoman O’brien
Yeah. And I think that’s. So it’s my understanding. That we do need to make some regulatory changes before we can do this in New York as a different legal infrastructure. But it’s my understanding that way back when that this was left to the Attorney General’s office. And I think it might Be might not be a bad idea for us to have a meeting with representatives of the Attorney General’s office to see what, if anything, you know. This, some of this stuff would be civil penalties. And it’s my understanding, having spoken from. Spoken with attorney Ladiszynski about this, that in New York State this is actually a source of civil penalties and revenues that do come in. You know, so obviously there’s one issue when it comes to, I don’t know, maybe a referral to the Attorney General’s office for a criminal, you know, intervention.

Chairwoman O’brien
But this is, this would be civil. So, you know, there are some ways that we could actually. So what do we, you know, so what do we do now? You know, if we are aware of, you know, maybe a licensee engaged in an illegal grow or something like that. What do our investigators do?

ED Ahern
Generally speaking?

Chairwoman O’brien
Yeah, generally speaking, I think.

ED Ahern
Well, probably want to pull up. I need to go through the whole process, I think as it relates to kind of what we have now in the debarment conversation. And just to clarify too, this is not listed as confidential, so people will probably ask for the memo since we’ve mentioned it. So going to provide that as well. Mention that I think the overlap of what we have right now with the debarment conversation that’s. That’s kind of covered here in the memo is our suitability process, which is in our regulations. I think that suitability process allows us in certain instances people have anything in their background for it to be reviewed by the suitability committee and follow that process.

ED Ahern
But within our suitability process, debarment is not an outcome that exists and would require regulatory change for just a general discussion on the process that I. E Goes through investigations. I believe the CIE is here if you’d like to get a high level summary.

Chairwoman O’brien
Sure, yeah.

ED Ahern
I think we may have to call her in. Let me just see if I can. That ca is on her way over.

Chairwoman O’brien
She coming physically here? She’s in the building.

Chief Jones
Okay.

Chairwoman O’brien
Please.

Commissioner Roy
Commissioner, you know. Thank you. Commissioner, you brought up inversion and diversion which will be in this social consumption round once it’s promulgated. So very happy to see that it’s inversion versus other gray market behaviors. Inversion is distinct from simple diversion of licensed product to the illicit market. Instead, it is the illicit to the license direction that corrupts the legal supply chain. It also differs from legacy or gray market storefronts that operate entirely outside of licensing. Because inversion depends on at least one licensed entity willing to falsify records or structurally front for unlicensed Operators.

ED Ahern
All right, could you just, what are you reading from?

Commissioner Roy
It was out of mj. The source is Cannabis MJ Biz Daily.

ED Ahern
And Cannabis Business Times on the New York case.

Commissioner Roy
This is just an overall.

Chairwoman O’brien
Yeah, Chief, sorry. We’re generally raising, looking at New York State and looking at, just discussing the issue of debarment. And we know that we would have to make some regulatory changes before and possibly statutory changes. I’m not sure. I think it’s just regulatory changes. But, but Chief Jones, what happens now? What is the process now? When our investigators, if they were to find out about diversion of significant diversion of products or inversion, what do we do now? Do we refer criminally? What do we, what do we do?

Chief Jones
Thank you, Chair. Typically, the process is that we involve the police would have to reach out to the police department, the local police, and then in some instances we do reach out to the state troopers, I mean, to the state police through Mass Fusion center to make a referral to them for follow up.

Chairwoman O’brien
And generally how quickly do we do something like that? I mean, is it immediate? Like if we see something like that, do we refer it immediately?

Chief Jones
Yes, typically we do. We make referrals as soon as possible. As soon as we’re aware.

Commissioner Roy
Commissioner ROY do we make referrals to the district attorneys?

Chief Jones
I have to check if we have. I do know for a fact that in an instance where it involved the Fed, we in fact reached out, you know, to the feds ourselves. Yes. To see. Because we did, we had concerns about jurisdiction and all that stuff. So we reached out to them to see what they were going to be able to do and make the referral. You know, I am aware of that, but in terms of the district attorney, I don’t think, since I’ve been at the commission, if we’ve ever done that. However, instances where we made a referral to the police department. Or the state police, what they have done is if the district attorney is involved, they’ve in fact reached out to us as well to let us know, you know, of their process, of what they’re doing.

Chief Jones
And in some instances they’ve requested that we. Participate as witnesses.

Chairwoman O’brien
Is a criminal. If we make a criminal referral or if we go, is that confidential?

Chief Jones
If we make a change? So if you’re asking that, if we.

Chairwoman O’brien
Make, saying if we observe what we believe is potential criminal behavior and we make a referral, is that confidential?

Chief Jones
Not that I’m aware of. In terms of, you know, in the sense of confidentiality, no. If we in fact made the referral and were asked to participate. We go through the. All the channels that we have to go, which is legal, to see if our staff have to participate and be responsive to what we’re being asked to do.

Chairwoman O’brien
Could we get a list of all criminal referrals that the commission has made over the course of the past four years?

Chief Jones
Yes, we can do so. We’ll look into it.

Chairwoman O’brien
All right. Thank you. I appreciate that. All right. I think we’re good. I think that we can. I think attorney Ladzinski is still having trouble getting in, but I think that we’ve kind of done what we can before we have some of these meetings on inversion. Thank you, Chief Jones. I appreciate it. Commissioner Roy.

Commissioner Roy
Yeah, just thank you, Chair. And thank you, Chief Jones. Next steps. So we don’t, like, put this on the back burner. So we’re. So we’ll have an inversion meeting. Maybe you two, you know, could have. Because we can only do two at a time.

Chairwoman O’brien
We could recommend or you may know, two by twos.

Commissioner Roy
So whoever the two by twos are, to have inversion meetings and then figure out if it makes sense for us to tackle it in regulation once we’ve had the. Get as much information as we can on it and figure out if it makes sense for us to tackle it in regulation.

Chairwoman O’brien
Okay.

Attorney Gooden
Okay.

Chairwoman O’brien
All right. I think that sounds good. Thank you.

Commissioner Roy
Well, actually, do you have any thoughts on debarment? I won’t put you. I’m sorry. Basically, New York has this. It’s not a hammer book. One could argue a sledgehammer, where if you know. So in New York, a massive inversion operation was discovered in the office of Cannabis Management levied an enforcement action of debarment, meaning those principles of those licenses can no longer in any capacity operate in the state of New York, even as a subcontractor with a licensee. So we don’t have anything like that. We have suspension, revocation, fines, but we don’t have that ultimate sledgehammer, if you will. So I just didn’t know if you had any thoughts.

Chief Jones
If I may, please.

Chairwoman O’brien
Thank you. And we don’t want to put you on the spot.

Commissioner Roy
That’s okay, too. That’s okay.

Chief Jones
So, Commissioner Roy, I think listening from the public meeting as you indicated, that this would require some regulatory review and changes and also to. For us to look at our current enforcement tools to see how this would work. And then based on the article, from what I read, looking at what, you know, the issue that happened in New York, as a matter of fact, I not so I think our enforcement console might be available virtually. We’ve had an enforcement action in the past back in 2021, I believe I’d have to look at the date. And the disability agreement is actually available publicly as well, where we had a situation with the licensee where they allowed. They basically assigned the duties of their license to another licensee. And so we in fact, did look into that.

Chief Jones
So we’ve had an enforcement action related to something similar. Again, it goes back to regulatory amendments and also looking into the enforcement tools to see if it would align with what we currently have, or it could be similar to what we do with sustainability. So I’m not so sure if enforcement Counsel Gooden is available to chime in as well.

Chairwoman O’brien
Attorney Gooden, are you there?

Attorney Gooden
Yes, Madam Chair, I’m here.

Chairwoman O’brien
Voice of God. Okay, Voice of God. All right.

Commissioner Roy
Here you go.

Chairwoman O’brien
Thank you, Attorney Good.

Attorney Gooden
Thank you, Madam Chair. And yes, apologies I’m not there in person. I’m coming into wonderful wizard of Oz to that. So just as we’re kind of talking about the various enforcement options that are available to us, I just want to highlight for the board as well, just what’s contained in our regulations currently, as you’re considering other options or things that might be available in other jurisdictions and how those might be transferable to the Massachusetts cannabis market. So as we’re just kind of looking at the options as it stands right now in Massachusetts, pursuant to our regulations, kind of our general bread and butter would be through a notice of deficiency plan of correction process that is primarily administered through the investigations team, and that is as well as testing as well in the case of ITLs.

Attorney Gooden
But that is more so dealing with kind of routine actions when we’re talking about kind of larger actions where we’re bringing a formal administrative action against the licensee, where we would be collecting civil penalties, as discussed previously, that would be through in order to show cause and notice of fine, something along those lines, actions to deal with more kind of immediate or pressing matters that particularly deal with public health, safety and welfare. Those relate to removal, prohibition of marijuana products, quarantine orders, cease and desist order, summary suspension orders. We also can move to revoke or suspend licenses as well as the board is aware. So as Chief Jones identified in a couple of prior instances, we have identified circumstances that were somewhat similar to this action that we’re talking about in New York.

Attorney Gooden
We’ve also had other issues where we’ve dealt with kind of diversion issues. So we have taken enforcement actions in the past on those or in those areas or when we’ve identified and substantiated violations of our regulations that relate to those. I will note to the point that Chief Jones brought up with the kind of unauthorized. In New York, they referred to it as something different, but in our instance, we refer to it as an unauthorized assignment or transfer of a license. So in that instance, there was a marijuana transport, I believe, that was essentially allowing another entity to utilize their license to complete transfers. So we did take an action in that instance, and that stipulated agreement was approved by the board back in 20 and resulted in a relatively significant civil monetary penalty.

Attorney Gooden
But then beyond that, as we’re talking just kind of specifically to the. Penalty of debarment or the contemplative penalty there, if were to take an action and revoke a license, for example, under our suitability tables, in particular Table A, there are two provisions in there that identify or two rows of the suitability table that identify if an individual or entity has had prior. Registration or license violations in Massachusetts or in another jurisdiction, they are for the first five years following that action. And it specifically speaks to the revocation of a license, the failure to renew that license, or a similar action for the next five years that individual or entity was found to be unsuitable per that table, they are mandatorily disqualified from licensure in Massachusetts. After that five years, the standard is lessened slightly.

Attorney Gooden
So from between five years and 10 years following that action, they are presumed to be unsuitable. So when we’re talking about a mandatory disqualification versus a presumptive negative suitability determination, a mandatory disqualification, there were very few instances in which an unsuitable individual or somebody who has been deemed unsuitable is able to overcome that. In essence, it is that we are relying on wrong information or the suitability issue was corrected by the time they are contesting it. When we’re talking about presumed, somebody who is presumed to be unsuitable, there are many more factors that the Suitability Review Committee or the Executive Director can consider in terms of whether that person should be actually deemed unsuitable or if they should be allowed another shot at licensure beyond those 10 years.

Attorney Gooden
However, my understanding, too, is that we do not have a kind of lifetime ban that this New York option seems to be considering. So I hope that information is helpful as the board is considering kind of what happened in New York, whether that would be transferable over to here, and also just kind of the general options that are available to us at this time.

Chairwoman O’brien
Okay, thank you. Attorney Goodman, are you. I. Again, I think that we still. Oh, sorry, Commissioner Bennett, I’m sorry.

Commissioner Roy
Thank you, Chair. Just One follow up question. After 10 years, can a prior regulatory violation still be considered as a factor in evaluating suitability? Or after 10 years, does it essentially get wiped out clean?

Chairwoman O’brien
Chief Jones or Attorney Gooden wants to handle that. Did you hear, did you hear that? You want to just restate that question, Mr. Bennett? Sure.

Commissioner Roy
My question is, after the 10 years, can a prior regulatory violation still be considered as a factor in evaluating suitability, or is it no longer considered at all after the 10?

Chairwoman O’brien
Chief Jones.

Chief Jones
Thank you, Chair. I think we’d have to look into that because I don’t think we’ve ever really encountered.

Chairwoman O’brien
We haven’t been around that long.

Chief Jones
We haven’t been around that long would be a case of first impressions. So we’d have to look into that.

Chairwoman O’brien
Yeah. Thank you. All right, thank you. Any other questions or comments? Yes, Chief.

Chief Jones
And then the other thing that I wanted to add related to that matter back in 2021, we also, it wasn’t just a monetary fine. We also placed them on a one year probation to monitor their activities to ensure that if there were any future violations, anything like that, or similar violations, then we take further action. So I just wanted to add that as well.

Chairwoman O’brien
If we have observed criminal activity and we make a referral, how quickly is that brought to the commission for review? I mean, we don’t review criminal referrals, do we? We don’t, we don’t review that.

Chief Jones
No. If I may, Chair, please. So in those instances, no, we would not be bringing that before the board because typically what we do with all our enforcement actions, we wait till they arrive for the board’s review, consideration, or contemplation or discussion. So we would not bring that forth before the board to, you know, for the board’s consideration because it wouldn’t be ripe, you know, for the final evidence.

Chairwoman O’brien
Ripe. Define right. Because it is. For instance, if a licensee is engaged in criminal behavior and we make a referral and you know, at what point in time does it become right? What if, what if they do something else wrong in the interim? Does it just stay open indefinitely? At what point in time? You know, should it take six months, should it take a year, should it take three years? When we are aware of potentially criminal activity, how long before that comes to the commission?

Chief Jones
If I may, Chair, please. Is it the key word potential? Right. At that time, as we all know, yeah. Innocent until proven guilty. So we are, it’s not within our jurisdiction for us to look into criminal matters. And then also we’ve had instances if they self identify or they self report to the staff that they’ve in fact launched a criminal complaint with the police department. We would not be the ones to then make the referral because they have self reported that they’ve in fact done so. And then also too, it’s on a case by case basis. So we don’t want to prejudice the licensee.

Chief Jones
If we bring the issue before the board and say, yeah, there’s an allegation of a criminal complaint and they’ve in fact not gone through, you know, the due process, it wouldn’t be fair to the licensee for us to do that. Again, it comes down to the fact that it’s not within our jurisdiction for us to oversee criminal complaints.

Chairwoman O’brien
But if we’ve made a refer. See, this is also my concern about what is ripe and when does the team come to us and how long these take. You know, at what point in time when we’ve observed and made a criminal referral, we’ve obviously seen something that could impact the suitability of a licensee. I mean, it’s. Right. I mean, is that, am I correct in assuming that if we have made a determination that criminal activity may have occurred and we make a referral, does that not. Is that not incumbent upon the staff to say to us or to do something about suitability? What happens after that?

Chairwoman O’brien
If you potentially observed it and you’ve made a referral, then what happens in terms of the people that were, apparently we could observe that there might be criminal behavior, what is incumbent upon the staff to do, to look at suitability, to determine whether or not that suitability still remains information?

Chief Jones
We have to wait on, you know, for the outcome of the criminal complaint from, you know, for, from those agencies or that are actually looking into the matter. We have to wait until the matter has been adjudicated in order for us to be able to even get involved in that regard. And also you’re talking about observation. Observation. That means at that point we’re either a witness or we can attest or corroborate to something. Which is why earlier I’d indicated that instances where we’ve made a referral and then the matter proceeds to an action where it goes, you know, before it is attending and we’re asked to testify, we’ve in fact done so for other criminal complaints that we’ve made referrals for.

Chief Jones
And we do not want to be stepping on tours of other jurisdictions for things that we are not expertise on, but not expertise when it comes to criminal complaints. What we adjudicate is matters related to cannabis laws and pursuant regulations and pursuant to our laws.

Chairwoman O’brien
Okay. All right. Thank you, Commissioner Ryan.

Chief Jones
Nope.

Chairwoman O’brien
Okay, we can. Thank you. So we will. Well, I was gonna say that we will. We will take. We will take a break until 11:30, and then we will jump in with. With both feet to. Move towards the end here on social consumption.