Maine discontinues adult-use cannabis residency requirement to sidestep legal predicaments

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

Cannabis residency requirements have caused a lingering problem in Maine’s legal weed industry. Fortunately things could soon be changing, with Maine regulators declaring an end to the favoring of “cannapreneurial” residents, as opposed to out-of-state business owners. This is according to a report from the Maine Office of Marijuana Policy (OMP) — the Agency responsible for issuing adult-use conditional licenses. 

A court stipulation was filed – and agreed upon by Maine’s Attorney General’s Office on Monday, May 11, stating that regulation over non-residential cannabis business owners would discontinue. The counsel came to their conclusion upon the realization that Maine’s residency requirements were in violation of the U.S. Constitution.

Maine’s largest medical cannabis company, the Wellness Connection, filed a lawsuit against the state in March, protesting against the residency requirement being in violation of the U.S. constitution; Wellness says the OMP prioritized cannabis business applications for residents over nonresidents.

“Regardless of today’s announcement, OMP will continue to work diligently to fulfill its obligations to the industry and public,” the agency’s director, Erik Gundersen, said in a statement following the lawsuit’s filing. At this point in time, no other cannabis company had contested against the constitutionality of the cannabis business licensing preference.

Non-residential business owners can participate in Maine’s adult-use industry

Applicants who wish to obtain an adult-use cannabis business license in Maine will no longer need to prove four-year residency in the state.  Previously, cannabis laws in Maine demanded that every director, manager and officer of a recreational/adult use business must have resided in – and filed taxes within the state of Maine – for a minimum of four years. Anyone who has not held residency in the state for this minimum time period is typically overlooked for involvement in Maine’s adult-use cannabis industry.

“Access to capital is crucial in this industry if you want to be successful, not just for Wellness, but for the broader industry, too,” explained one of the attorneys representing Wellness, Matt Warner. “The residency requirement was the single biggest impediment to getting the industry off the ground quickly and efficiently.”

With a legal weed industry that analysts predict will blow up to $180 million on an annual basis, the eradication of adult-use cannabis residency requirements in Maine means that non-residential business owners can start getting involved in the budding sector. There should be no delays in the enforcement of these new rules. Previously, the residency requirement made it difficult for people who live out-of-state to obtain an adult-use cannabis business license in Maine.

Update on Maine’s adult-use cannabis industry amid COVID-19

Residency requirements pertaining to cannabis business applications have been banished in various states that are acknowledging the magnitude of revenue that could be gleaned through continued sales. For example, Colorado and Oregon have amended their policies to ensure their legal cannabis markets are not stifled by a lack of out-of-state investments.

Wellness – which boasts financial ties to New York-based multistate operator Acreage Holdings – claimed that Maine’s residency requirements for cannabis business license applicants prohibits opportunities for interstate permits; specifically, the lawsuit said that the state is in violation of its constitutional right by favoring Mainers over out-of-staters. 

The lawsuit states that approximately 51 percent of the petitioning company is owned by Mainers. Despite Wellness’ best efforts to raise funding from investors based outside of the state’s borders, restrictions have made things difficult; since more than half of the company has ownership in the State of Maine, the company was considered ineligible under the existing law.

While the four-year residency mandate was expected to disappear in June 2021, its continued validity could have given residential cannabis business owners in Maine a serious head-start in launching and firmly rooting themselves within the growing industry. Thankfully for out-of-staters, opportunities could start blooming.