New marijuana regulations approved by a state legislative committee Thursday would relax residency requirements intended to prevent out-of-state investors from controlling Maine marijuana companies.

Under the amended rules, Mainers who have lived in the state for at least four years would still have to claim at least 51 percent ownership of a cannabis company to qualify for a state recreational marijuana license. The committee took out language that would have limited out-of-state control over those companies, however.

“We wanted the tools we believed necessary to enforce the letter and the spirit of the law,” said Erik Gundersen, director of the Maine Office of Marijuana Policy. “This law was passed for Maine residents, to help Maine residents. We want to make sure that is happening. I think we still can do that, it will just be harder.”

The Veteran and Legal Affairs Committee voted 7-2 to approve the rules and send them to the House and Senate for consideration. Supporters hope the rules will be approved by the Legislature before it breaks for the summer on June 19. If Gov. Janet Mills signs, Maine could begin accepting license applications by the end of the year.

The Maine Office of Marijuana Policy had added this language to the regulations to help prevent large, out-of-state companies from using complex management contracts to control the Maine recreational market, much like they’ve done in the Massachusetts recreational market and even in Maine’s existing medical marijuana market.

But not everyone thought it was a great idea. Some said the earlier version of the proposed rules that restricted non-resident control would have hurt Mainers who need access to out-of-state capital and expertise to enter the market, especially in marijuana manufacturing, where equipment costs can run into the millions of dollars.

Maine’s largest marijuana company, Wellness Connection of Maine, threatened to sue over the wording and seek an injunction that would have delayed the opening of the recreational market. Wellness claimed those rules would have cut it out of the market because of its out-of-state financial contracts.

“Wellness is exactly the type of business that the state of Maine should want participating in the adult use market,” said attorney Dan Walker. “We have consistently operated by the letter of the law in the medical market for the past eight years, and have been a leading voice for responsible regulation and enforcement.”

Gundersen said the law maintains robust disclosure requirements that should enable his agency to put applications under enough scrutiny to confirm the industry remains rooted in Maine, but if it doesn’t, he can always return to the Legislature to ask lawmakers to restore the restrictive language.

Residency limitations weren’t the only topic of committee debate. It also wrestled with the regulations proposal that all marijuana retailers close their doors at 10 p.m., which state regulators selected as a compromise between a 9 p.m. closure time sought by law enforcement and the industry’s request for longer hours.

Law enforcement didn’t want marijuana stores to close at the same time that bars let out, prompting the state to set the initial closure time at 9 p.m., Gundersen said. But fears that an early closing time would drive consumers to the after-hours black market prompted the office to push the statewide closure time back to 10 p.m.

The committee decided against allowing municipalities to set local hours of operation for marijuana retailers, but if a retailer puts extended hours of operation in its state license application, the Office of Marijuana Policy can approve a later closure time on a case-by-case basis, Gundersen said.

 


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