Despite legal confusion over Portland’s plan to award licenses under a complicated points system, the city has accepted 38 retail marijuana business applications – including four for medicinal providers – by an Aug. 31 deadline.
But how the city will allocate the 20 licenses it intends to award is uncertain.
Part of the city’s complex point system for licenses was derailed when U.S. District Court Judge Nancy Torresen issued a temporary restraining order Aug. 14. Torresen ruled that part of the city’s process, which would give preferential treatment to Maine-owned businesses, is unconstitutional because it violates the U.S. Constitution’s commerce clause.
The immediate future for those who have applied remains cloudy, since the city hasn’t decided how it will move forward, leaving applicants to wonder when they will be able to open adult-use marijauna dispensaries.
City councilors in May established the criteria for a scoring matrix to award a maximum of 20 business licenses. They settled on a system that would award a maximum of 34 points for meeting these requirements, which ranged from having at least $150,000 in liquid assets, good for two points, to being majority-owned by socially and economically disadvantaged individuals, for six points.
Torresen’s ruling came in a lawsuit brought against the city by Wellness Connection of Maine, a cannabis dispensary with locations from South Portland to Brewer. Wellness Connection is a national company founded in 2011 with out-of-state ownership.
City spokeswoman Jessica Grondin on Monday said Portland has not decided whether it will appeal Torresen’s decision. Mayor Kate Snyder did not respond to an interview request.
Portland voters in November will also decide whether to cap the dispensary licenses at 20.
Wellness Connection argued in its court case that the rubric does not offer “equal footing” to all potential applicants, especially since more than 25 percent of the possible points are available via residency.
“I conclude that the Plaintiffs have alleged a concrete injury,” Torresen wrote. “Although the Plaintiffs have not been denied a license, their alleged injury is not the denial itself but the disadvantage they face in obtaining a license due to the City’s points matrix.”
Torresen also wrote it isn’t prudent to wait and see how the points system played out for two reasons.
The first is Wellness Connection might get enough points to be in the top 20, but because of the residency requirements, could still end up with fewer points than an applicant within the 250-foot radius requirement, “thus dooming the application.” The second reason, if Wellness is denied for any reason, is that a subsequent ruling that the points scheme is unconstitutional “could throw a wrench into the process.”
The ruling noted that councilors had suggested they wanted to give preference to Maine residents, and allow the market to grow before there was an opportunity for outside investments to come in.
The city had also argued that Wellness might not suffer injury, since “numerous other events” would have to happen for the company to be denied a license: the criteria from the matrix as well as at least 20 other applicants seeking a license who scored higher on the rubric.
City councilors opted to continue with a residency preference even after the state had abandoned a similar plan. David Heidrich, director of engagement and community outreach for the state’s Office of Marijuana Policy, said OMP was part of a similar lawsuit with Wellness Connection in the spring, where the company alleged the residency requirement violated the Commerce Clause of the U.S. Constitution “by explicitly and purposefully favoring Maine residents over nonresidents.”
The state attorney general’s office eventually filed a stipulation of dismissal in federal court, acknowledging Maine was unlikely to win a legal battle regarding the residency requirement.
Ready to roll
Regardless of the Torresen’s ruling, the statewide date to allow recreational marijuana businesses to begin operating is Oct. 9. And the sense of inching closer is not lost on Portland businesses, despite there being more uncertainty in Portland than the rest of the state.
Scott Howard, operator of SeaWeed Co. on Marginal Way, said the application process has been “grueling,” but that wasn’t a bad thing. He said he turned in the application about two weeks ago, and had to make a few updates at the city’s request.
“The application was very long and it took a lot,” Howard said last week. “But, in a highly regulated business, we’re OK with that. It will keep it professional, which is what it should be.”
SeaWeed, which also plans to open on Running Hill Road in South Portland, produces several cannabis products and sells in bulk to other retail stores. Howard said the Marginal Way shop is ready to open as soon as it is legal to sell. He said they took a gamble and were banking on getting the license, so they started building ahead of that to be ready to open immediately.
“We were just going slow and steady, just kind of getting some things in line,” he said.
Meanwhile, Scott Bloomberg, a University of Maine School of Law associate professor who specializes in cannabis law, the case against the city is “very unique.”
“I’m trying to think of any other circumstance, and I don’t think there is one, where something that is federally illegal makes up such a significant portion of the economy of states,” he said.
At the state level, Bloomberg noted, the attorney general effectively said Maine isn’t going to defend the case. Under normal circumstances, he said, this would be a pretty straightforward case: a state can’t discriminate against residents of another state, because doing so would effectively hamper interstate commerce.
However, he said there was a nearly identical case that appeared before the U.S. Supreme Court regarding alcohol distribution in Tennessee. Bloomberg said a marijuana case is a bit more complex, for a few reasons. The first is that marijuana is still federally illegal. And the second is that the federal government can authorize states to discriminate against each other for interstate commerce.
“There’s some argument that by prohibiting marijuana, the federal government has spoken on the issue and has said that since no one under federal law is allowed to own a marijuana business, states can do whatever they want for licensing marijuana businesses, such as giving preference to state residents or not,” he said.
He said the courts have said Congress has to be very specific if states are going to discriminate, and in this instance, Torresen’s guidance was not specific enough.
“There are the larger implications of saying the dormant commerce clause also applies to the marijuana industry,” Bloomberg said. “Every state prohibits the import and export of marijuana. So a grower in Maine can’t sell to a retailer in Massachusetts. The question is if the dormant commerce clause applies to marijuana, then are any of those state laws constitutional? And if so, will the federal government start enforcing federal law more locally?”
Despite the federal classification, medical marijuana has been legal in Maine for more than 20 years, and medical dispensaries have been operating for more than 10 years. In 2016, Maine voters by referendum approved legalizing recreational marijuana, and in 2018 the state enacted the Marijuana Legalization Act to help facilitate and administrate the regulation of marijuana.
Under this act, a city can allow adult-use marijuana establishments within its jurisdiction via ordinance. If a municipality allows these kinds of sales, applicants must first receive a permit from the Office of Marijuana Policy.
Portland’s possible pot purveyors
Here are the 34 businesses that applied for adult-use retail marijuana business licenses in Portland by the city’s Aug. 31 deadline:
SeaWeed Co., 23 Marginal Way; Green Alien Cannabis, 486 Congress St.; Local Leaf Retail One, 1397 Washington Ave.; Coast 2 Coast Extracts Retail #1, 64 Washington Ave.; The Higher Concept, 301 Forest Ave.; Mystique Retail, 745 Forest Ave.; ME Plant Based Therapy LLC, 605 Congress St.; Coastal Roots Portland LLC, 953 Congress St.; Pot & Pan Retail, 646 Forest Ave.; Meowy Jane, 3 Market St.; The Happy Cloud, 470 Riverside St.; Landrace Cannabis, 373 Forest Ave.; Portland Greenhouse, 1 Spring St.; Sweet Dirt, 1207 Forest Ave.; Stage R1 LLC, 5 Spring St.; Grass Roots Marijuana Shop, 377 St. John St.; OMG Cannabis Co., 47 India St.; Atlantic Farms, 460 Warren Ave.; Core Empowerment ME LLC, 1024 Forest Ave.; Port City Relief, 1236 Congress St.; Ancient Roots Boutique, 701 Congress St.; Cannacity, 1053 Forest Ave.; Growroom LLC, 230 Warren Ave.; Silver Therapeutics, 370 Fore St.; Royal Oil Sebago, 1140 Brighton Ave.; Fire on Fore, 367 Fore St.; Chai High, 442 Fore St.; Caniba, 94 Portland St.; Kind & Co., 684 Forest Ave.; Congress Partners, 602 Congress St.; Wellness Connection, 685 Congress St.; Origins, 327 St. John St.; Upstate Retail 1 LLC, 610 Congress St.; JAR Co., 9 Exchange St.
Here are the four businesses that applied for retail medical marijuana business licenses by the deadline:
Evergreen Cannabis Co., 178A Washington Ave.; Hazy Hill Farm, 482 Congress St.; Higher Grounds, 45 Wharf St.; Beach Boys Cannabis Co., 115 Middle St.