Portland marijuana retailers in limbo as city licensing process drags on

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Despite Portland’s intention to approve three dozen recreational marijuana businesses last October, city officials still haven’t issued any licenses.

“They have one year from the date of application to receive approval from us,” Jessica Hanscombe, the acting director of permitting and inspections, said in a brief email.

The deadline to apply was Aug. 31, 2020, and the city received 43 applications. Hanscombe said 33 applications are still pending. 

Adult-use marijuana stores in Portland, like SeaWeed Co. on Marginal Way, remain in a holding pattern while the city has delayed business licenses. City officials said no stores have been approved. (Portland Phoenix/Colin Ellis)

The delay has left dozens of business owners and investors unsure of when they will be able to start operating.

One of the businesses waiting for an operating license is SeaWeed Co. at 23 Marginal Way. Scott Howard, a principal owner at the company, said it has been challenging and “honestly frustrating” to deal with the city.

When the state authorized adult-use recreational marijuana sales last October, Howard said, the company was essentially ready to flip the switch on Day 1. More than 140 days later, the store at Marginal Way is still closed. 

“(The city’s) communication is extremely frustrating and poor,” Howard said.

He said SeaWeed believes it has satisfied all the requirements and questions city officials have had. But at every turn, he said, the city has added more hoops to jump through before final approval. 

“We’ve been paying rent here for two years,” Howard said.

The company’s other store, in South Portland, has been open and operating since Oct. 9, 2020. Howard said things have been going better than expected there, and not just from a financial standpoint. He said they have learned a lot about dealing with parking and getting people in and out of the store on Running Hill Road. 

“I’m glad we only opened up one (store) at first,” he said. “But Portland has got to open. There’s more supply than outlets available. The big fear when we opened was about the product availability, but that’s not the issue at all. It’s the lack of licensed retailers to get the product moving.”

Jessica Oliver, senior vice president of operations at Sweet Dirt, another pot business waiting for approval, said they hope to open sometime this month because there is only one more city inspection outstanding.

Oliver said it has been a long process in Portland, including a series of City Council meetings over a proposed matrix system for awarding licenses. 

“The city was just trying to be mindful and respectful of other local businesses,” she said. “There’s a component of fear when a marijuana business comes in. But what we’re doing is being able to provide jobs to restaurant workers who are out of work during the pandemic, and pay people good wages. I think Portland will appreciate us … It was a long road to get the licensing process, but now that we’re in it and Portland figured out their wants and needs, it’s been coming along.”

Sweet Dirt, which is in the former Wok Inn restaurant building on Forest Avenue at Morrill’s Corner, has a Waterville store that has been open since Dec. 8. Oliver said the shop has been doing well, and they expect to be similarly received in Portland.

She said they weren’t completely frustrated with the Portland process, although procuring real estate was a frustrating component.

“We were lucky to get locked into the old Wok Inn,” Oliver said. “We had to put a lot of investment into that, and there were some upfront costs that created challenges.”

She said the frustrating part now is the uncertainty of an exact opening date, which prevents them from being able to advertise the business. 

“We’re a local company that’s been building to where we’ve been able to operate, to be able to finally open these stores with a locally owned, Maine-run organization, and we’re really excited and happy to be able to provide jobs in this environment,” she said. 

The way the city will eventually hand out licenses is different than what was proposed a year ago, which has contributed to the confusion and frustration for prospective businesses. 

The city had planned to award licenses based on a matrix that would have awarded points based on a set of criteria. The 20 businesses that scored the highest would have received the licenses.

But after several months of City Council debate, pushback from the public, and a lawsuit challenging the advantage the matrix would have given to Maine residents, councilors abandoned the matrix in October. Instead, they decided to award licenses to all qualified applicants while relying on competition and attrition to eventually reduce the licensed businesses to a cap of 20. A Nov. 3 voter referendum, however, removed the cap entirely.

While Portland’s licensing process remains in low gear, other municipalities and the state have reaped the benefits. According to the state’s Office of Marijuana Policy, which implements and governs Maine marijuana sales, said sales in Maine since Oct. 9 have totaled more than $6.7 million. In January alone there were nearly $2.5 million in sales from just over 33,500 transactions, resulting in more than $247,000 in tax revenue.

David Heidrich, communications director for the OMP, said sales and excise tax revenues are factored into a statewide municipal revenue sharing program.

“At present, there is no direct revenue sharing with municipalities that serve as hosts to Maine’s marijuana establishments,” he said. “However, municipalities may charge reasonable licensing fees intended to offset the actual costs to the community resulting from the operation of these entities.”

According to the application form for Portland’s adult-use marijuana businesses, it would cost more than $10,500 to obtain a license: $10,000 for the license, $500 for an application fee, and $21 per business owner for background checks.