Maine Gov. Paul LePage vetoed the recreational marijuana bill Friday, reversing a 2014 campaign pledge and plunging an emerging industry potentially worth $325 million a year into political limbo.

In his veto letter, the Republican said the legislative rewrite of last year’s ballot-box law puts Maine in conflict with federal law. The bill sets unrealistic time lines for launching the market, fails to address shortcomings in the medical marijuana program, creates a confusing regulatory system, and might not generate enough tax revenue to cover the cost of market implementation or regulation, LePage said. In short, he dismisses the bill as a risky, inconsistent, expensive rush job.

“Until I clearly understand how the federal government intends to treat states that seek to legalize marijuana, I cannot in good conscience support any scheme in state law to implement expansion of legal marijuana in Maine,” LePage wrote. “If we are adopting a law that will legalize and establish a new industry and impose a new regulatory infrastructure that requires significant private and public investment, we need assurances that a change in policy … will not nullify those investments.”

The bill now returns to the Legislature, where supporters will try Monday to get the two-thirds majority needed to override LePage’s veto, which was expected.

The implementation bill passed 22-9 in the Senate and 81-50 in the House during special session votes last month. If those vote margins are the same Monday, the Senate would have enough votes to override the veto, but the House would not. Lawmakers have spent the last two weeks counting votes and trying to flip opponents, especially in the House, with both sides of the debate saying they feel confident they will prevail.

Sen. Roger Katz, R-Augusta, co-chairman of the committee that wrote the implementation bill, is telling colleagues the override vote is about regulation, not legalization.

“The legalization ship has sailed, the people have spoken,” Katz said. “It’s not about whether you voted for legalization. I certainly didn’t vote for it. But that’s not what the bill is about. This bill is about taxing and regulating a market that the majority of Maine voters want, just like we do with alcohol, with tobacco. If we do not pass this bill, if we go back to an unchecked black market, we will go back to chaos. Who could want that?”

He said the proposed regulatory system would more than pay for itself, and when the market is up and running, will add tens of millions of dollars to the Maine treasury every year.

‘NOT THE END OF THE WORLD’

But legislative opponents say sending this bill back to Katz’s committee for more work is “not the end of the world,” and wouldn’t even mean that much more of a delay.

House Minority Leader Ken Fredette is pushing for extending the existing moratorium on the ballot-box law, which will remain the law of the land if the proposed bill does not overcome LePage’s veto. He says the committee needs more time to perfect the bill, especially the provisions that govern municipal regulation of adult-use cannabis, the proposed tax rates and enforcement issues, and that lawmakers needed more time to understand it.

Much of the committee’s work took place in late spring, when lawmakers were preoccupied with the state budget, and summer, when they were on break, Fredette noted.

“It will be close, but we will probably have the votes necessary to sustain a veto,” Fredette said. “It’s still going to happen. We’re not trying to kill legalization, or stall it. We’re back at work in less than two months. But to me, more important than when we’re going to do it is how we’re going to do it. Let’s do it responsibly. Let’s do it right. It’s still a federally illegal drug, after all. If we’re going to go there, let’s do it with a consensus bill.”

If the override fails Monday, Fredette said he will try to revive his moratorium bill, which would push back the start of rulemaking until January 2019. That’s about the time that bill supporters predicted the first retail sales would begin under the implementation bill. Originally, the Legislature had expected retail sales to begin in February 2018, but the committee admitted early in its summer work that it would not hit that deadline.

If the implementation bill fails to overcome the veto, the ballot-box law, officially known as the Marijuana Legalization Act, would remain in effect. But a moratorium on the commercial aspects of that law would remain in effect until February 2018, meaning that Maine residents could continue to possess up to 2.5 ounces of cannabis or grow up to six mature plants, but cannot legally buy or sell it until the moratorium lapses or an implementation bill is adopted.

The regulatory bill is generally more conservative than the voter-approved legislation – its tax rate is two times higher, it prohibits gifting of marijuana, it eliminates license preferences for medical marijuana caregivers, sets a two-year residency requirement for license applicants, and prohibits drive-up windows, online sales and home delivery. It also requires towns to “opt in” to the adult-use market rather than opt out, which observers describe as an obstacle to industry growth.

Advocacy groups that have been following the committee’s work on launching the new market split over the veto. Legalization opponents like Smart Approaches to Marijuana applauded the veto, saying the bill had included “so many gifts to the pot industry at the expense of youth and communities.” Marijuana advocacy groups were split, with some saying the veto gave the committee time to fix the bill and others calling it obstructionism.

Legalize Maine, the group that wrote the referendum law and is made up of many medical marijuana caregivers, withdrew its support for the bill last month, arguing that it had been rewritten at the last minute behind closed doors, and that the last-minute changes had reversed some key parts of the voter-approved law, like stripping license preferences for caregivers and requiring a host town to opt into the marijuana market.

“A poor, rushed process got us to where we are today,” Legalize Maine’s Paul T. McCarrier said on the group’s Facebook post about the veto.

MEDICAL MARIJUANA ISSUE

But LePage’s veto letter hints that his idea of a better implementation bill may venture further into the medical marijuana industry than the committee bill had done. In his letter, he said the committee bill does nothing to address failings of the medical marijuana program. He wants to harmonize regulations so they would apply at least in part to both of the industries. He notes that the two tax rates and regulatory structures will undermine the committee bill’s regulations.

“The two programs must be considered together,” LePage wrote in his veto letter. “Since the passage of the referendum last November, the medical program has seen a significant increase in the number of registered caregivers, as well as the exploitation of loopholes in medical marijuana regulations to broaden the sales base for medical marijuana, which has a much lower tax rate.”

The Marijuana Policy Project, a national advocacy group, called LePage’s veto an ill-advised mistake that will benefit the black market, allowing it to continue operating untaxed and unchecked. The project’s state director, David Boyer, accused LePage of reneging on a campaign promise he made in a gubernatorial debate in 2014, when he said he would support legalization if approved at referendum. Other anti-marijuana governors have respected voters’ wishes, Boyer said.

“Seven other states have passed legalization initiatives over the past five years, and none has seen this type of obstructionism from its governor,” he said.

Maine is one of eight states and the District of Columbia to legalize adult-use cannabis, but only five of them have launched retail markets. Massachusetts voters adopted a recreational marijuana law last fall, at the same time as Maine. Its recently appointed Cannabis Control Commission is crafting its market rules now, with plans to begin sales in 2018.

Penelope Overton can be contacted at 791-6463 or at:

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