Massachusetts cannabis regulators are considering a licensing freeze to address businesses that have been squeezed by falling marijuana prices.

The Cannabis Control Commission voted Thursday to schedule a public hearing on a potential freeze of new cultivation licenses and a temporary moratorium on approving additional canopy capacity.

Testifiers could also share their thoughts on freezing other license types including craft marijuana cooperatives, product manufacturing and micro-businesses.

The move, which comes as regulators are rolling out social consumption regulations, is meant to open up a conversation about how to support marijuana businesses and stabilize the market as an influx of supply has led to plummeting prices.

The average retail price for an ounce of flower reached a record-low $113.68 in December, down from $401.43 in December 2020, according to CCC data. The falling prices come as cannabis sales continue to rise, crossing the $9 billion gross sales mark on Feb. 4, largely thanks to high volume sales right before January’s major snowstorm, according to a CCC representative.

“Price compression is really unsustainable, people are operating on pennies on the dollar, and then it’s a race on raw volume versus quality of product,” commissioner Kimberly Roy said.

The commission offers a range of license types, including cultivators, craft marijuana cooperatives, product manufacturers, retailers, research facilities, independent testing laboratories, transporters and microbusinesses. Retailer, cultivator and product manufacturer are the most common license types.

Commissioners noted increasing supply is largely to blame for falling prices. The number of licensees has risen from 223 in July 2023 to 686 in January, according data provided in a Jan. 15 CCC meeting. Some businesses are struggling to stay open, with 24 licensees placed into court-appointed receivership.

Also, the state’s cannabis canopy density is in the “upper middle” range among other states that have legalized adult-use cannabis with about 1.1 acres per person over 21, Roy said.

“Unchecked canopy expansion has created structural oversupply, and without swift intervention, we continue to risk widespread economic harm to licensees in the communities that host them,” Roy said. “…the receivership list is growing, and all arrows point back to too much flower in the supply chain.”

The vote came after a debate on whether a CCC’s legal team memo on the policy should be confidential. The tensions were sparked when associate general counsel Erica Bruno refused to answer a commissioner’s question during the public meeting about advice included in a 13-page memo the legal team gave to the CCC, saying it’s “privileged and confidential.” Bruno offered to speak more with commissioners about it privately.

Almost immediately after Bruno declined to answer the question publicly, CCC chair Shannon O’Brien asked to entertain a motion to waive the privilege of the information.

“I don’t know how we do our jobs if we get these legal opinions and then we can’t talk about this body in public meetings,” she said. “We are a public agency. These are public attorneys. I mean, if someone actually sent a records request asking for this legal opinion that we’re about to use to color our conversation here, you’re telling me that this would not be released under public records request?”

Bruno said attorney-client privilege is generally protected under public records requests and that the CCC can release the memo if they want, but suggested they consult with the legal team before they do.

Roy noted that the memo isn’t marked privileged or confidential. Bruno said there may be best practices, but there is no law requiring any identification whether the material is privileged or confidential.

O’Brien asked if the issue had ever been raised before in a CCC public meeting and asked staff to find an answer before its meeting scheduled for next Friday.

“This is completely unsatisfactory,” O’Brien said, also acknowledging the legal team has produced good work. “I am just stunned, because again, it feels like the ongoing attempt to put in place legal barriers to transparency.”

O’Brien noted that Massachusetts has never imposed a cannabis license moratorium and the move could mark a “significant step” of the CCC exercising its regulatory authority.

“When the commissioners ask for a memo that will color and flavor and inform our thinking about regulations or conversations in a public meeting, the public needs to have confidence that we’re doing this the right way,” she said, suggesting the commission should prepare a draft motion whether to release privileged information provided by the legal team in case the issue comes up again.

O’Brien also said that lawyers have led commissioners astray in the past, in one instance resulting in the CCC violating the open meeting law.

Commissioner Carrie Benedon said the legal team did their job in offering the CCC its advice on whether to keep the memo private and it’s up to commissioners to decide to follow it.

After returning from a meeting recess, Benedon said the legal team informed her during the break that commissioners may not want to publish a section of the memo in question. Roy said she saw the general counsel speak with commissioner Bruce Stebbins and Benedon during the break, but ignored her and O’Brien. Members of the legal team said Roy got the advice anyway. Roy said she had to go through CCC Executive Director Travis Ahern to get the information.

“Two commissioners were treated disparately, and you picked the two that you thought would help you get the vote that you wanted,” Roy said. “That’s unacceptable.”

Ahern acknowledged it would be helpful if commissioners could meet with the legal team before public meetings to be as prepared as possible.

Commissioners ultimately did not take a vote on releasing the memo.

The squabble marked the second time that internal differences at the commission were on display last week and came as lawmakers has out details of a bill that would clear a path for some or all of them to be replaced by a reconstituted board.