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Conditional Licenses and the Current State of Rec

As of August 3, 2020, the Office of Marijuana Policy (OMP) has granted 178 businesses conditional status to operate as a recreational marijuana retailer, with an additional 173 applications still pending. To receive conditional licensing status, the organization’s leadership must undergo criminal record history checks and each obtain OMP identification cards, in addition to submitting the applications and paying the appropriate fees. Within 90 days, beginning once the OMP has begun it’s determination process, the applicant will receive notice of their approval or denial.

Of the 178 conditionally licensed, 29 currently have completed the second step by obtaining clearance from local authorities to begin operations. This involves another 90-day waiting period while the specific municipality makes its decisions. If approved, the municipality will then report to the OMP, which will inform the applicant of their approval within 10 days of receiving it.

These 29 organizations are awaiting the third and final step towards Active Licensure, which requires evidence of electrical and permitting compliance, tax documentation, and updates on any changes to the original application. Once everything has been processed and approved, and not before paying another licensing fee, the organization will be granted a one-year license to sell recreational marijuana.

Despite $300 million annual market projections, there is widespread dissent among applicants and the cannabis community in general. The state of Maine first legalized recreational use, possession, and sales of marjuana in 2016, with the initial sales first being set for sometime in 2018. With the delays approaching four years this fall, many businesses have had their attempts at breaking into the industry met with negative consequences and disappointment.

As with any new industry, there was a sizable initial launch of interested businesses when adult-use sales were first approved. Even with the earliest projections being far from ideal, it was the belief of many marijuana companies that the sooner they meet the requirements, the sooner they can be approved and begin operating. This has led to a number of hopeful businesses purchasing or renting suitable locations, maintaining those buildings to the set standards, paying the numerous fees required for licensure, and taking on significant other costs from the get-go. Four years later, there are those who have spent tens of thousands of dollars on a market which not only has yet to open but still has not even set a definitive start date.

A recent update by state officials claims that recreational sales are expected to begin by the end of the year, but with numerous postponements, changes to policy and regulation, political indecisiveness, and various other delays, very few - if any - see it as a concrete date. Rather, there is much more evidence that depicts how there is still a significant amount of work to be done before recreational sales can begin.

As of July 2020, less than 10% of all local municipalities have decided to allow recreational retailers in their borders. This not only makes it much more difficult to secure a suitable location,


but raises larger concerns regarding accessibility outside of Maine’s largest urban centers. Furthermore, Portland, the state’s most populated city, has implemented additional guidelines for recreational businesses, most significantly setting a limit of 20 storefronts, which further decreases the number of possible retailers in the state’s busiest sector and subsequently will impact sales numbers and earning potential.

The largest issue that must be determined before recreational sales can begin, however, is the ongoing legal dispute between the city of Portland and the Wellness Connection of Maine. In May, Maine’s largest medical cannabis provider, The Wellness Connection succeeded in altering the state’s original recreational guidelines, which places a preference on local businesses over those from out of state. This however did not stop local governments from enacting municipality-specific ordinances which did so, which Portland approved soon after the legal decision. Not long after that, The Wellness Connection filed suit against the city, using the same legal route as before, claiming that under constitutional law, citizens of all states must be treated equally.

For many in the Maine cannabis community, the residency requirement controversy is largely representative of the state’s fight to prevent what is essentially cannabis carpetbaggers using out-of-state funds to influence local legislature to fit their needs, rather than simply play by the existing rules. With its outcome having a major impact on the landscape of the upcoming market, a legal conclusion must be met before recreational sales can begin, and considering the previous plethora of delays combined with complications related to the Covid-19 epidemic, few are holding their breath regarding when a final decision will be made.

While potentially exciting to see any official progress towards adult-use sales, it is impractical to assume that the market will open in 2020, given the amount of time it has taken for just 29 organizations to reach the second of three steps in acquiring a license. While Maine may not see $300 million in annual sales for the time being, the time, dedication, and passion that so many have put into the budding industry will be evident soon enough, and one can only hope that it will be worth the wait.

Zach

Maine Potcast Contributor

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