Mills expected to sign pot rules into law, put Maine on track for retail sales next year

With just hours left until summer break, Maine lawmakers approved adult-use cannabis rules.

The proposed guidelines, which went to Gov. Janet Mills for consideration, passed in the Senate by a vote of 26-9 and in the House without a roll call.

The rules cover the details of how Mainers can grow, buy and sell recreational marijuana. With Mills’ approval, which is expected, Maine will become the eighth state to have a fully legal commercial adult-use cannabis market.

It brings Maine one major step closer to its first legal recreational sales, which regulators estimate could occur in March 2020 – after the state’s tracking and licensing systems are ready, marijuana businesses get state and local licenses and growers have product ready to hit the shelves.

In its budget forecast, Maine is banking on $22 million in adult-use sales in the first three and a half months after the market’s launch. The state is expecting those numbers to grow, from about $84 million in its first full year, fiscal year 2020-21, to $166 million in 2022-23.

With a 10 percent sales tax, and a 10 percent excise tax, Maine is expecting to collect about $4.4 million in taxes from marijuana sales by June 2020, the end of the fiscal year, according to David Heidrich, a spokesman for the Maine Office of Marijuana Policy.

In fiscal year 2023, Maine is banking on $33.2 million in marijuana taxes, based on revenue forecasts.

National consultants believe Maine’s overall in-state marijuana market will be even higher, between $227 million and $396 million a year within a few years. Some of those dollars will be spent in Maine’s $65-million-a-year medical market, while others will end up in the black market, especially in parts of Maine that prohibit local marijuana retailers.

But that doesn’t factor in the 37 million tourists who visit Maine every year, at least some of whom may want to buy and use marijuana during their stay. While Maine voters approved cannabis social clubs at referendum, lawmakers struck that from the law, leaving tourism’s role in marijuana sales up in the air.

Consultants at BDS Analytics of Colorado, which produces cannabis industry market trend reports, say Maine will see its medical sales fall with the launch of its recreational market. In 2018, global adult-use sales overtook medical sales for the first time.

According to a report released Thursday, BDS claims international medical marijuana spending fell to $4.8 billion in 2018, down from the $6.3 billion recorded in 2017. Over that same time, recreational marijuana spending rose from $2.9 billion to $6.1 billion.

“Maine is on trend with the rest of the world,” said Tom Adams, BDS’s managing director.

BDS estimates Maine’s homegrown marijuana consumer base at about 173,000 people, or 13 percent of Maine’s population. Based on its own surveys, it estimates about 25 to 35 percent of adult Mainers have used marijuana at least once in the last six months.

In the early days of the market, Maine consumers should expect to see recreational marijuana prices go up while retailers win licenses and testing labs that must sign off on all recreational products open their doors, Adams said. Prices will peak about 18 months after launch and then begin to fall.

Right now, an ounce of medical cannabis generally runs for $150 to $250, depending on strain, source and if the purchase is made in store or delivered. Black market recreational marijuana is readily available, and openly advertised online, for about the same.

Consultants predict Maine’s adult-use market could employ as many as 5,400 people eventually.

The regulations approved by lawmakers Wednesday spell out how the state’s new recreational market would be launched, monitored and regulated by the Office of Marijuana Policy. Other rules on testing labs and protocols will be adopted later, without legislative approval.

It will be moot, however, to several towns that have enacted local bans on retail marijuana shops. Only a few municipalities have laid the regulatory ground rules to allow retail operations. Currently, about 15 of Maine’s 455 cities and towns have approved some kind of recreational marijuana regulations.

The Office of Marijuana Policy wouldn’t comment on the proposed rules until after Mills acts on them. Unlike her predecessor, Republican Gov. Paul LePage, Mills has been a vocal supporter of a taxed and regulated recreational marijuana market, so insiders expect her to sign the rules bill.

Voters approved legalization of recreational marijuana in November 2016. While limited home grow was allowed within two months, the state has struggled to launch a commercial market, having to overcome a series of legislative rewrites, gubernatorial vetoes and contractual problems.

While voters approved marijuana, the margin of victory was razor thin, with yes voters outnumbering no voters by less than a percentage point. Voters in nine of Maine’s 16 counties voted down adult-use legalization, but 2-to-1 support in Portland, Maine’s most populous city, propelled the measure to victory.