Cannabis Business in Massachusetts

Interested in Starting a Cannabis Business in Massachusetts?

Medical and adult-use cannabis businesses in Massachusetts generate over $1.7 billion in revenue annually combined. Cannabis industry serves around 2 million users in the state:

  • 35 percent of the adult population in Massachusetts report using cannabis,
  • 13 percent of adult residents report using cannabis daily,
  • over 97,000 Massachusetts residents participate in the state's Medical Use of Marijuana Program and require annual recertification.

Types of Cannabis Business in Massachusetts

Cannabis businesses in Massachusetts can be broken down into two major types:

  • Cannabis-Touching (plant touching) business
  • Cannabis-Adjacent (non-plant touching / support) business

It’s important to understand which business you are dealing with because each type comes with its own rules, laws, and challenges.

What is a Cannabis Touching Business?

Cannabis-touching businesses are directly involved in the cultivation, processing, distribution, or sale of cannabis products. These businesses have a first-hand connection to the cannabis products. For example, all registered marijuana dispensaries (RMDs) in Massachusetts are required to be vertically integrated, which means that the dispensary owns the entire process of cannabis production and sale (so called: seed-to-sale).

Here are some additional examples of plant-touching cannabis businesses (which may be part of the same company or separate entities):

CULTIVATORS: This involves growing cannabis plants, either indoors or outdoors. Cultivators can specialize in various strains and may also engage in breeding programs to develop new types of cannabis.

PROCESSORS: These businesses transform raw cannabis into a variety of products, such as oils, edibles, concentrates, and topicals. Processing involves extraction techniques, refinement, and sometimes the creation of entirely new product forms.

TESTERS: Testing lab companies perform the key role of ensuring that only the cleanest and mold-free cannabis reaches the dispensary shelves.

DISPENSARIES AND RETAIL STORES: These are the retail fronts where cannabis products are sold directly to consumers. They must adhere to state regulations concerning sales and are involved in ensuring compliance regarding the age and purchase limits of customers.

DISTRIBUTORS AND SUPPLY CHAIN: Companies in this sector handle the logistics of getting cannabis products from producers to retailers, managing supply chains, transportation, security, and often compliance with state tracking systems.

What Are Non-Plant Touching Cannabis Businesses?

Non-plant cannabis touching businesses, also known as cannabis-adjacent, “ancillary” or “support” businesses, offer services or products related to the cannabis industry without handling the plant itself. These companies allow the cannabis industry to function:

  • Banking and Payment Processing Solutions: With cannabis still being federally illegal in many places, specialized financial services, including banking, loans, and payment processing solutions, are essential for cannabis businesses.
  • Insurance Services: All businesses require insurance coverage, and a cannabis business doubly-so. Cannabis plants themselves are insured differently depending on the stage of production, plus the business operations, staff, and liability must be also covered. It is important to work with an insurance agent who understands your business model and can quote coverage from multiple insurers.
  • Accounting Services: Specialized accounting services are crucial for cannabis business owners because they help navigate unique financial and regulatory challenges. The main issue is Section 280E of the IRS Code, which limits tax deductions to the cost of goods sold (COGS), resulting in higher taxes. Additionally, strict inventory management requirements demand precise tracking and financial recording from seed to sale. Specialized accountants ensure compliance and optimize financial strategies within these constraints, helping cannabis businesses manage their unique set of legal and fiscal challenges effectively.
  • Legal Services and Regulatory Compliance: Lawyers and legal firms specializing in cannabis laws help businesses navigate complex and often changing regulations at both the state and federal levels.
  • Consulting and Management Services: These firms help cannabis businesses with everything from compliance and licensing to business operations and market strategy.
  • Packaging and Labeling: With strict regulations on how cannabis must be packaged (often requiring child-resistant, opaque, and clearly labeled packaging), companies that specialize in compliant packaging solutions are crucial.
  • Marketing and Branding: Due to advertising restrictions on cannabis products, specialized marketing and branding services help businesses promote their products within the legal framework.
  • Technology, Software, and Equipment: From seed-to-sale tracking systems to consumer apps, Point-of-Sale systems, eCommerce platforms, and security solutions, technology plays a crucial role in modern cannabis business operations.
  • Data Analytics: Data analytics helps cannabis businesses optimize operations, comply with regulations, and improve financial management by analyzing consumer behavior, supply chains, and product quality. It also supports strategic decision-making and risk management, enabling businesses to adapt to market trends and strengthen customer relationships.
  • Advocacy Organizations: Organization which advocates on behalf of the cannabis industry on the state-level.

What Are The Differences Between Plant-Touching and Non-Plant Touching Businesses?

The differences between cannabis plant-touching and cannabis-adjacent businesses impact compliance, regulatory scrutiny, insurance coverage, and financial operations. Here are the main ones:


  • Cannabis-Touching Businesses: These require specific state licenses, adhere to stringent regulations including security, product testing, and comply with tracking systems. They face significant banking restrictions due to the federal illegality of cannabis.
  • Cannabis-Adjacent Businesses: These businesses need general business licenses, face fewer regulatory burdens, and generally have better access to banking and financial services.


  • Cannabis-Touching Businesses: They are subject to Section 280E of the IRS Code, which prevents them from deducting typical business expenses from their taxable income, leading to higher taxes. They also deal with complex inventory management requirements.
  • Cannabis-Adjacent Businesses: These can claim standard business deductions on their taxes and utilize more straightforward accounting practices without the stringent compliance required for cannabis inventory tracking.


  • Cannabis-Touching Businesses: They face significant banking restrictions due to federal regulations, often operating in cash and relying on a limited number of banks willing to accept the legal risks. This results in high compliance requirements and challenges in financial management.
  • Cannabis-Adjacent Businesses: These entities enjoy broader access to financial services, including traditional banking accounts, loans, and credit lines, due to their indirect involvement with cannabis. This facilitates simpler financial operations and growth opportunities.

Do You Own a Cannabis-Related Business in Massachusetts?

Contact us to be listed in the state directory.
Submit Your Company
In this section: