LOCAL NEWS

JUDGE: MAINE DISPENSARY RULE

(Still) Unconstitutional

Astate law that prevented nonresidents from operating medical Cannabis dispensaries in Maine has been overturned. A federal judge ruled that the state’s residency requirement is unconstitutional.

The lawsuit, which was brought by Wellness Connection, will open medical marijuana businesses to out-of-state companies and investors. The Wellness Connection is Maine’s largest dispensary chain but its parent company, High Street Capital Partners, is headquartered in Delaware.

If this sounds familiar, it’s because it’s the third time Wellness Connection has successfully defeated Maine’s residency requirement in court. The company previously challenged the constitutionality of the requirement for the state’s adult-use market in March 2020. Later that year, Wellness Connection sued the city of Portland for giving retail-licensing preference to state residents.

In each case, the same legal argument was used. And in each case, a judge ruled that Maine’s residency requirement was unconstitutional.

The requirement was included in the state’s marijuana law when medical dispensaries launched in 2011. It called for applicants to live in Maine and have filed income taxes there for four years. The in-state preference was intended to garner support for legalization by creating jobs and entry to the industry for residents.

However, U.S. District Court Judge Nancy Torresen found that the requirement for medical Cannabis dispensary operators discriminates against interstate commerce, a violation of the “Dormant Commerce Clause” in the Constitution.

Photo by Marco Jimenez

There’s big money at stake for investors as marijuana is Maine’s biggest cash crop. The state has set records for recreational Cannabis sales in four consecutive months. Retail sales reached $9.4 million in July, as Maine approaches $40 million in adult-use sales since the program began in October 2020.

However, medical marijuana is still king in Maine, as sales to qualified patients topped $22 million in October 2020 alone. From January through October 2020, the state’s medical Cannabis sales brought in over $221 million.

Now, thanks to a string of successful lawsuits filed by Wellness Connection, investors from any state can take advantage of Maine’s booming marijuana business.

Will Cuomo’s Resignation Delay Pot Sales?

Photo by Tatiana Fet

Andrew Cuomo announced in August that he would resign as governor of New York amid mounting pressure for him to step down after state Attorney General Letitia James issued a report that found that Cuomo sexually harassed 11 women.

Cuomo will leave office without having done much to establish the state’s legal Cannabis industry, beyond signing the adult-use legislation into law in March 2021.

New York has struggled to implement its retail marijuana program as Cuomo failed to make essential regulatory appointments, which caused the legal pot market to stall.

The state’s marijuana law calls for the creation of an Office of Cannabis Management, as well as a Cannabis Control Board. These regulatory bodies are responsible for creating rules for the adult-use industry, including licensing for cultivators and retailers.

As the boards remain unfilled, the state is wasting precious time while other programs in the region get up to speed.

Now that Cuomo has resigned, retail sales in New York could be further delayed. The state was already looking at a start date in 2022. It is possible that the turmoil surrounding the governor’s office could cause adult-use sales to be delayed until 2023.

Legislators worked hard to pass a timely recreational Cannabis law that would make New York competitive with neighboring New Jersey. However, a retail start date in 2023 could put the state a year behind New Jersey, which anticipates launching sales in early 2022.

However, some industry experts see Cuomo’s departure as a positive for pot. Cuomo was seen by most Cannabis advocates as “reluctantly supporting” legal weed. While he ultimately worked with lawmakers to pass an adult-use bill, some viewed his support as opportunistic. Legalization did replace his scandals in the headlines – but only briefly.

Cuomo will be replaced by Lt. Gov. Kathy Hochul. Time will tell whether she makes legal pot a priority – or pushes it to the backburner while dealing with the mess left by her predecessor.

HALF OF NEW JERSEY

TO OPT OUT OF POT INDUSTRY

As the deadline to opt out of the legal Cannabis industry in New Jersey approaches, nearly half of all towns in the state are planning to ban pot.

New Jersey’s adult-use law set the deadline to opt out at 180 days from the date the bill was signed into law. If a jurisdiction doesn’t have a ban in place by August 21, 2021, it will be governed by state law for a period of five years.

Unfortunately, opt outs are becoming increasingly common in the Garden State, as jurisdictions don’t need voter approval to ban marijuana businesses. City councils and committees are ignoring the will of the voters and making the decision to ban the Cannabis industry despite the widespread support for pot seen on Election Day 2020, and in numerous polls before and after.

Many officials in towns that have opted out say they are choosing to ban marijuana to keep the children safe. An old saw that always plays well with voters – somehow even voters who chose to legalize marijuana.

Almost nothing about what is happening in New Jersey makes any sense. Union City Mayor Brian Stack is banning the pot industry from his town, despite voting in favor of legalization as a state senator (yes, he’s somehow a mayor and a state senator – neither was challenging enough on its own).

Peter Curatolo, the mayor of Lacey (he’s just a mayor), is supporting a pot ban despite 64 percent of voters in his town approving legalization. “They didn’t vote for 17-year-olds to become drug users … They didn’t vote for some overtaxed product so some MS-13 gang banger can come in here and undercut [legal sales],” Curatolo explained in a totally rational and grounded manner.

Aside from overblown concerns about “the children” and outright reefer madness-style panicking, the most common explanation for a town’s opt

Photo by Woodys Media

out is that the state has yet to actually approve regulations for the industry. Many local officials are unwilling to embrace legal pot until they know how it will operate.

In all, the New Jersey League of Municipalities estimates 240 towns across the state have opted out of legal Cannabis. Regulations governing the industry are scheduled for release on August 21 – the same date as the deadline for opting out of the industry. Because nothing makes sense in New Jersey.

METHOD MAN BRINGS POT BRAND TO NEW YORK MARKET

Rapper, actor and Cannabis activist Method Man has announced that he will bring his marijuana brand to New York for the start of legal adult-use sales. While a retail start date is still up in the air for the Empire State, Method Man, who hails from Staten Island, is ready to hit the ground running.

His pot brand TICAL will tackle issues of racial injustice in New York, in part by providing jobs for people in communities disproportionately impacted by the enforcement of prohibition.

“I’m particularly excited about TICAL’s focus and leadership in the Cannabis space in working with Black, women and minority-owned partners from cultivation to dispensaries,” Method Man told the New York Post. “We are going to lead by example and ensure that this newly created market is as inclusive as possible. We can’t right all the wrongs that disparate criminalization of Cannabis has done to our communities, but we most certainly can make a down payment on the way forward with social equity, inclusion and full economic participation.”

TICAL debuted in Colorado, which implemented retail sales in 2014. When adult-use sales launch in New York, the brand will offer a number of Cannabis strains, including Orange Cookie Kush, Sweet Grease, Spazzola, C.R.E.A.M., Gold Tang and Crowd Walker.

The TICAL website states, “We will continue the TICAL legacy by offering premium flower and spreading love throughout the community … We believe it’s important to provide our customers with essential products that offer healing, serenity and peace.”

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IN MEDICAL POT PROGRAMS

As legalization at the state level continues to gain momentum, states across the country – from Virginia to New Mexico – are approving adult-use Cannabis programs. The Northeast in particular is embracing recreational pot. With legalization legislation passing in New York, New Jersey and Connecticut in 2021, the region is down to just two holdouts – Rhode Island and New Hampshire.

Legislators in Rhode Island are currently mulling several marijuana measures that would bring retail sales to the state, but they haven’t been able to reach a consensus on Cannabis to date. Meanwhile, in New Hampshire, legal marijuana remains elusive as lawmakers there appear uninterested in ending pot prohibition.

While these two states have yet to legalize marijuana for adult use, both offer medical Cannabis programs for qualified patients. Rhode Island legalized medical marijuana in 2006 (although it required the legislature to override a veto by then-Gov. Don Carcieri) and established a dispensary system in 2009. New Hampshire approved a medical Cannabis program in 2013 and decriminalized pot possession in 2017.

Despite these medical programs being the only means for residents to legally obtain marijuana, patient enrollment growth is down in both states.

In Rhode Island, total enrollment in the medical pot program dropped for three straight years, from 2017 to 2019. After renewed interest in 2020 – likely related to the coronavirus pandemic – patient numbers have been stagnant through March of 2021.

And while New Hampshire’s enrollment numbers have increased annually, the program’s growth rate stalled in 2019 and 2020. Through May of 2021, the growth rate dropped to just 11 percent.

The residents of Rhode Island and New Hampshire undeniably appear less interested in legally obtaining Cannabis than national trends indicate they should be. The most likely reason for this anomaly is that they’re legally obtaining Cannabis from other states (and then illegally crossing state lines to bring it home).

New Hampshire borders Maine to the east and Massachusetts to the south. Both neighboring states have implemented retail marijuana programs, with Maine closing in on $40 million in sales and Massachusetts surpassing $1 billion in less than two years of their adult-use program.

Massachusetts is a short drive from Rhode Island, which also borders Connecticut, where adult-use sales will begin some time in 2022.

MASSACHUSETTS

Marijuana Industry Soars

The Massachusetts marijuana market is strong. This year, from January through August 12, the state had taken in $755 million in adult-use sales. By the end of 2021, Mjbizdaily projects Massachusetts to clear more than $1.2 billion in recreational Cannabis – that’s in a single year. In 2025, the state is projected to reach up to $2.6 billion in annual sales.

Compare those numbers to the relatively light yearly retail sales figures of $445 million in 2019 and $696 million in 2020.

According to the Cannabis Control Photo by Crystal Weed Cannabis Commission, the state has issued 168 adult-use retail licenses – a massive increase in marijuana storefronts compared to early 2020, when 39 Cannabis retailers were operational.

Massachusetts has faced challenges in creating its marijuana market – most notably, the insidious host community agreements (HCAs) that adult-use businesses must sign.

Under Massachusetts law, a Cannabis business must sign an HCA with the local government of the city in which it hopes to operate. These agreements must be completed before the business can apply for a license from the state. Unfortunately, this pay for play model of business has led to charges of corruption – with former Fall River mayor Jasiel Correia being found guilty of extorting would-be pot businesses through host community agreements and other payouts.

Beyond that, most jurisdictions require marijuana companies to pay three percent of their gross sales – the maximum allowed by law – as a community impact fee. An investigation into this practice, sponsored by the Massachusetts Cannabis Business Association, found that local governments have collected nearly $2.5 million more than allowed by law through community impact fees.

Massachusetts marijuana business owners must also contend with expensive real estate, as the choice retail locations can cost $5-$10 million.

The astronomical costs associated with starting a legal pot business led the Cannabis Control Commission to develop two delivery business license types, which are available exclusively to social equity applicants for the first three years. A delivery business offers fewer startup costs, making it a more realistic entry point to the legal Cannabis industry. Photo by Pixabay