As Massachusetts was creating its legal marijuana industry, farmers lobbied for the creation of craft cooperatives — a business model that lets local farmers band together to each grow marijuana and split the costs for things like production, packaging and marketing.

In response, the Cannabis Control Commission established regulations allowing growers who have lived in Massachusetts for at least a year to join together, grow up to 100,000 square feet of marijuana plants among them, pay lower licensing fees and sell wholesale to marijuana retailers.

But so far, the Cannabis Control Commission has not licensed a single craft cooperative. As of July 18, only two cooperatives had submitted their complete applications, according to commission data: Canman in Milford and Roaring Glen Farms in Conway.

Interviews with growers and entrepreneurs involved with one fledgling cooperative, Farm Bug Co-op, shed some light on the challenges facing these organizations. While some of the challenges are unique to Farm Bug and no two businesses are alike, some are also likely to be the same problems facing other cooperatives.

“A craft co-op has a lot of regulatory items you have to check the box on,” said Eric Schwartz, co-founder of Farm Bug Co-op.

Local bylaws

Throughout the marijuana industry, entrepreneurs are struggling to negotiate host community agreements and zoning with cities and towns. Municipalities have authority to ban marijuana businesses or restrict their zoning. Communities use agreements to negotiate fees and mandatory donations.

For cooperatives, the same difficulties apply, and those who want to grow on their existing farms have less flexibility to move to a new location.

Jessica Lee Allen’s family owns a 56-acre farm in Monson, which she is looking to make more profitable. While some of her neighbors turned to solar energy projects, Allen is considering marijuana. “The old ways of farmers producing eggs and milk and whatnot, they can’t stay afloat. We’ve got to think outside the box,” Allen said. “This opportunity is a way for us to think outside the box.”

But Allen has clashed with town officials regarding bylaws. She resigned from the town’s marijuana advisory committee after referring committee chairman Craig Sweitzer to Attorney General Maura Healey’s office over an open meeting law violation.

According to a ruling by Healey’s office, a video of a dispute during a meeting between Allen and Sweitzer over the size of buffer zones for marijuana growers was posted on a marijuana advocacy organization’s website, along with a criticism of Sweitzer’s position. Sweitzer sent a two-page emailed response to the video to other committee members, violating the state’s Open Meeting Law.

“I was the only person on the committee who wanted to have opportunity for farmers,” Allen said.

Allen obtained signatures to call a special town meeting to vote on bylaws she proposed, which would have allowed all types of marijuana businesses. But the planning board recommended against approving the bylaws. The bylaws got support from 92 voters, with 76 in opposition —18 votes short of the two-thirds threshold required to pass.

Now, Allen plans to propose another bylaw narrowly tailored to allow co-op farmers. “I’m going to find my way forward. I just have to figure out how strategically I’m going to do it,” she said.

Averyl Andrade, who is starting a marijuana company called Between the Rows, is in a similar position. She and her husband started Healthy Futures Farm in Westport in 2015. They have not taken a paycheck for four years, and they barter produce for beef as they struggle to grow their farm. She wants to grow marijuana to help keep the farm profitable.

But Westport banned marijuana businesses. After advocacy by Andrade, town officials agreed to form a committee to write bylaws to allow marijuana and bring those bylaws for a vote. But at a May town meeting, Westport voted to keep the ban in place, the Herald News reported.

Meanwhile, Westport police arrested Andrade for illegally cultivating and conspiracy to distribute marijuana after Between the Rows advertised and held a marijuana party, according to WBSM. Andrade says she was harassed by town officials for supporting marijuana cultivation.

Now, Andrade is seeking a new location. “We decided that we are not going to continue to push the issue here, we’re going to move our location to a more friendly community,” Andrade said.

‘If you’ve got millions in the bank to spare, fine’

Money has been a barrier for many small entrepreneurs trying to enter the marijuana industry. That is similarly true for cooperative growers.

James “J” Jasper, head grower for Farm Bug Co-op and a Springfield resident, said if a cultivator has to rent land or a building, they must have money to hold the property without using it during a months-long application process.

“If you’ve got millions in the bank to spare, fine, you might be able to afford six to eight months lead time of no income and all expense,” Jasper said. “Small farmers do not have that ability to expand.”

Jasper said money is also an advantage when negotiating with host communities. Larger companies can pay higher fees and make more community donations than small farmers. Although state law caps community impact fees at 3%, many communities have added on required donations or additional fees. “They’re competing with the multi-state operators with hugely deep pockets,” Jasper said.

Aaron Drouin, a chiropractor and cannabis cultivator, said he thinks cooperatives are more ethical than large companies, so he wants to enter the legal market as part of one. But he said finding start-up capital is the hardest part.

“It takes a whole lot of money to get into this industry at any level,” Drouin said.

Drouin said co-ops historically have had difficulty finding lenders. Generally, there is little lending available to marijuana entrepreneurs because marijuana remains federally illegal.

Farm Bug Co-op Head Grower, J Jasper, speaks with Ed Tivnan, a prospective member of the co-op. (Courtesy Eric Schwartz)

Other challenges

Schwartz said because Massachusetts’ legal marijuana industry is so new, most experienced growers are from out of state. To get a co-op license requires growers to have lived in Massachusetts for a year.

“It’s a little tricky structurally because cultivators in Massachusetts are more immature,” Schwartz said.

Farm Bug Co-op is still in the stage of talking to growers and trying to get firm commitments from members. Once it has commitments, members will have to approve bylaws.

Schwartz said some farmers he works with are still trying to get land or money, while others are dealing with municipal zoning. Some growers that signed host community agreements decided to branch out on their own.

Jasper said he hopes the co-op will be able to submit its application by November. “I have full confidence in Farm Bug,” Jasper said.