When they first started to hash out local marijuana rules, Portland officials assumed that zoning and setback rules would limit the number of retail shops that could open in Maine’s biggest city.

But running the numbers gave officials a shock. More than 500 medical or adult-use stores could open in the city in areas set aside for marijuana retailers, even after they spaced them at least 250 feet apart and 500 feet from schools.

“Our concern is people flood the market, and the market not being able to support all of the retail stores, and we lose retail stores in large chunks each year,” city attorney Anne Torregrossa said. “That’s not good for the industry, not good for the city.”

To protect the market, and the city economy, the city staff is proposing to cap retail marijuana store licenses at 20, which would be awarded to qualified recreational or medical stores on a first-come, first served basis.

The city’s only state-licensed medical marijuana dispensary, Wellness Connection, would not count against that total number, unless it seeks a city license to open a second adult-use location in Portland.

Torregrossa said small medical marijuana caregiver operations – the kind so small, and so discreet, that you don’t even know they’re there, she said – would not count, but existing medical caregiver shops would, and would have to seek a city license.

That will come as a shock to the handful of medical retail shops that state-licensed caregivers have opened in Portland in the last year believing they obtained all of the city permits needed to open, including certificates of occupancy.

Torregrossa told members of the City Council’s economic development and health and human services committees on Tuesday that she expected a lot of feedback on the staff’s decision to settle on a 20-store cap, as well as its other proposed rules.

“Twenty is not a magic number. I expect there will be a lot of conversations around what that number should be,” she said. “Our goal is to find a number our market will support, that is fair to industry and that is fair to the city.”

Some councilors who attended the workshop expressed reservations about the cap, and the first-come, first-served method of awarding licenses, worried it could shut out local or minority applicants and favor the quick over the highly qualified.

Councilor Brian Batson dismissed Torregrossa’s 500-shop scenario as unrealistic.

“I am not sure how I feel about the cap,” Batson said. “What we have in front of us is a lot of factors that limit the market, from landlord approvals to zoning to proximity to fees. We have some pretty restrictive requirements.”

Portland doesn’t limit the number of local liquor licenses, Batson said. But the city can’t be expected to treat marijuana, an emerging industry, like it does alcohol, an established industry, now, Torregrossa said.

The two council committees sent the proposed rules back to staff for more research, especially around the areas of how other cities of similar size have handled a retailer cap and license distribution, with plans to meet again in a few weeks.

City staff said the city hopes it can be ready to award licenses at the same time that Maine’s Office of Marijuana Policy does, or shortly thereafter. State officials plan to begin accepting license applications in the fall, with retail sales to begin in March 2020.

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