E-screwed by Escrow? Cannabusting Maine's Marijuana Myths

Just a little over a month ago, during the days after what's becoming a widely recognized national holiday, April 20, news began to surface in the cannabis community that was very unsettling. The newly formed recreational cannabis legislation stated that in order to qualify to apply for a recreational cannabis cultivation facility, one would need to have at a bare minimum $500,000 dollars in escrow.

What is escrow? An escrow account is an account that holds cash and/or assets that are inaccessible to you while they are in that account. What would be the problem with a $500,000-in-escrow-requirement for a “small” cannabis grow operation?

Well, if that isn’t clear to you, go find your nearest medical program caregiver and ask if they’d be able to request a $500,000 business loan. See how he or she responds. The fact is, even the largest caregivers in Maine don’t have that kind of liquid cash, and they probably don’t have that much in equity, and one thing is for sure, there isn’t a bank in the world who’s going to give them that much credit to do what they need to do. If a person were required to have a half of a million in escrow in order to start a recreational cannabis cultivation facility in Maine, every small cannabis grower and/or caregiver in the state would be squashed and pushed out of business. In effect, this would be the ultimate tool for the “corporate takeover” defined by the No On One Campaign.

This was part of the language in a bill introduced at the behest of local dispensaries, possibly because it would secure them the largest portion of the market. Dispensaries are more likely than individual caregivers to have access to large-scale financing, and therefore it's in their best interests to encourage regulations that make it easier for those with large-scale financing to succeed.

The largest facilities, defined in the bill's language as any facility in excess of 3,000 square feet, required 1.1 million dollars in escrow to apply for an application. Needless to say, this would have been a gut-punch for Maine's artisan cannabis industry. But fear not!

Records from the frequently held regulatory committee meetings indicate that this bill has gained absolutely no traction, and Legalize Maine continues to develop new language that is friendly to the mom ‘n’ pop grower. There is yet hope for the artisanal cannabis community. Fear not, lovers of cannabis and supporters of the industry statewide, for the legal demigods of Maine’s legislature appear to be considerably more supportive of the “little guy” than we had previously expected. Let’s overview the details of licensing and application fees.

Licensing and application fees are one of the ways that the government “taxes” the development of a business. The development of these fees are often manipulated by the political process to benefit some more than others; however, they are necessary to the implementation of government. For cultivation facilities, the state has broken units of measurement down into 10x10 plots, or 100 square foot “unit blocks,” which will be charged for per block. As a small scale cannabis grower in this state, one can expect to pay the following fees to apply for and receive licensing for a recreational cannabis business:

Business Type

Application/License Fees

Retail Store

$250-$2,500 with a $10 to $250 nonrefundable application fee

Retail Cultivation Facility

$10 to $100 per unit block, with a $10 to $250 nonrefundable application fee

Retail Social Club

$250 to $2500, with a $10 to $250 nonrefundable application fee

Retail Products Manufacturing Facility

$100 to $1000 with a $10 to $250 nonrefundable application fee

Retail Testing Facility

$500, with a $10 to $250 nonrefundable application fee

 

And fortunately for all of us, there isn’t any mention of escrow to be found in the entire chapter! All readers concerned with this information should be advised to regularly check up on the progress of the bill as it goes through the Maine State Legislature. Checking regularly is important because the language of the regulations can change on a week-to-week basis as new proposals are introduced. For instance, even though it has always been the case that 40 percent of all cultivation licenses will be reserved for “small” cultivators (under 3000 sq. ft), the limitations on number and size of those licenses issued are subject to dramatic change. At one time, the language was written quite favorably for the little guy, indicating that nearly 500 licenses under 500 square feet will be issued. Now, however, chapter 417 simply states that there will be some metric of limitation issued; however they know not yet what.

Keep track for yourself! You can find the entire chapter, which is chapter 417 of Title 7, Part 4, here on the maine.gov website.

 

Last modified onThursday, 01 June 2017 09:43