Should businesses selling marijuana illegally in Massachusetts be hit with a civil fine?

Anyone running a marijuana business outside of the state’s licensing scheme can be charged criminally. But a bill generating controversy on Beacon Hill, H.4168, would create a new multi-agency illicit marijuana task force to investigate and target illegal marijuana growers and sellers. It would also authorize the Department of Revenue to levy a fine on these operators to make up for the tax revenue lost when marijuana is sold illegally.

Cannabis Control Commissioner Britte McBride is among the supporters of the bill. “We know an illicit market for cannabis continues to thrive,” McBride said at a public legislative hearing on Tuesday. “The existence of that market lures tax money from the commonwealth, undermines public health regulations including testing requirements and obstructs the will of voters who asked for a legal, taxed and regulated system.”

But the bill is also causing an outcry from pro-marijuana advocates who describe it as “prohibitionist.” Grant Ellis, a medical marijuana user who relies on the illegal market, said the bill aims to “introduce more police action to protect the profits of regulated businesses.”

Bill Flynn, president of the Massachusetts Cannabis Reform Coalition/NORML, which supports marijuana rights, called the bill “utter ridiculousness right from the get go.” Flynn said the underground market is the only place to buy “craft cannabis” and find specific strains of marijuana. Flynn said if regulators want to bring more people into the legal market, they should work to lower dispensary prices and make it easier for small businesses to open shop. “You’re overregulating and overtaxing an industry that’s been thriving for years in Massachusetts,” Flynn said.

The Legislature’s Joint Committee on Cannabis Policy held a hearing Tuesday on a range of marijuana-related bills. Lawmakers will decide which of the bills to recommend for consideration by the full House and Senate.

The bill establishing the civil fine for illicit marijuana businesses, sponsored by Sen. Michael Moore, D-Millbury, and Rep. Hannah Kane, R-Shrewsbury, received some of the most impassioned testimony.

McBride said the bill is necessary not to crack down on people growing a small amount for friends but for those behaving as a full-fledged business. For example, there are companies advertising online that offer delivery of a $300 t-shirt, with a possible gift of free marijuana.

“The continued illicit market is a risk to public health and safety. It’s diverted tax money, and its existence perpetuates the stigma of cannabis as the domain of drug dealers, not the responsible regulated industry the voters voted for and the Legislature wrote into law,” McBride said.

McBride said a civil fine could also provide an alternative to criminal charges.

But Michael Latulippe, an advocate for medical marijuana patients, said less onerous options, like sending a letter or shutting down websites that advertise these companies, could be used before civil fines or criminal prosecution.

Lucas Thayer, who has applied for a marijuana cultivation license, called the bill a “witch hunt.” Thayer said because prices at dispensaries are so high, “People are going to go to ‘the guy.’” Rather than shutting down the illicit market, Thayer said regulators should lower fees and barriers to entry into the legal industry.

Peter Bernard, president of the Massachusetts Growers Advocacy Council, said a pound of marijuana sold on the legal medical market can cost $4,500, while a pound on the illicit market can go for $1,800. He suggested a better way to address the illicit market is to increase the number of cultivation licenses that are issued, so there is more supply and cheaper prices.

Tito Jackson, a former Boston city councilor and CEO of a medical marijuana company, worried that new penalties for illegal marijuana sales would be disproportionately levied on people of color.

A separate bill lawmakers are considering, S.1128/H.3539, would fundamentally restructure the state’s medical marijuana market by eliminating a requirement that medical marijuana companies be “vertically integrated” – that is they grow, manufacture and sell their products. The recreational market has no such requirement, so a store can open only as a retail shop and a cultivator can grow marijuana, then sell it to multiple stores.

The Massachusetts Patient Advocacy Alliance has long supported this change, arguing that it would let smaller businesses get into the medical market. Today, they say it is too expensive for a small company to open as a medical marijuana dispensary because of the requirements that a store have an indoor cultivation facility and a commercial kitchen.

“We want small businesses to be a part of the medical marijuana industry,” said MPAA executive director Nichole Snow.

Allowing someone to open solely as a medical marijuana manufacturer or grower could also result in new products being developed.

Today, medical marijuana advocates say, large dispensaries are making products that they can sell to both the recreational market and the medical market. There is little financial incentive for a manufacturer to create specialized medical products like pediatric products or high-dose edibles. Michelle Herman, of the Massachusetts Growers Advocacy Council, said her child needs medical marijuana but she cannot find a product targeting pediatric patients.

Advocates say allowing separate licenses could let a company focus on manufacturing specialized medical products, which could then be sold to multiple dispensaries.

Bernard said medical businesses could also operate in more communities than recreational businesses, since state law does not allow communities to ban medical marijuana businesses.

Frank Shaw, a medical marijuana patient, said vertical integration harms pricing, product availability and quality. “My medicine is more expensive, harder to find and not the best product for the price,” Shaw said.

Another bill being considered would provide anti-discrimination protections in employment for medical marijuana users and caregivers.

Two other bills would let landlords ban the growing of medical marijuana and the “use or smoking” of medical marijuana by tenants.

Rep. Carole Fiola, D-Fall River, introduced a bill, H.4147, that would require a vote of the city council or a town select board before approving a host community agreement or letter of non-opposition, documents required for the licensing of marijuana businesses.

Fiola said she filed the bill in response to federal criminal charges filed against former Fall River Mayor Jasiel Correia who allegedly accepted bribes in exchange for issuing letters of support to marijuana companies.

“The bill intends to ensure that one sole municipal official is not the only person responsible for approval of a host community agreement,” Fiola said.