A medical marijuana provider has filed a federal lawsuit seeking to overturn a Maine rule that says only state residents or companies majority-owned by state residents can obtain adult-use marijuana sales permits.

Auburn-based Wellness Connection of Maine, which operates four of the state’s eight medical marijuana dispensaries, says the rule is unconstitutional and makes it harder for companies seeking to operate recreational marijuana stores to raise money.

For example, the lawsuit alleges, Wellness Connection is currently 51 percent-owned by Mainers. If it sought to raise money from out-of-state investors, that could tip the ownership balance and make Wellness Connection ineligible for a Maine recreational sales permit under the rules set up by the state Department of Administrative and Financial Services, which oversees the permit process for recreational marijuana sales.

Maine voters approved sales of marijuana for recreational use in a 2016 referendum. Following a series of delays under the former LePage administration, the state has been establishing rules for the permits since then and sales are expected to begin in June unless they are further delayed by the coronavirus outbreak.

The lawsuit, filed Friday in U.S. District Court in Portland, seeks an injunction barring the state from enforcing the residency rule. Federal courts in Maine have put off most activity until May because of the outbreak, but they will continue to take up emergency measures. That means Wellness Connection could seek the injunction and get a hearing in federal court this spring, said Michael Warner, the lawyer who filed the lawsuit.

Also joining in the lawsuit is Wellness and Pain Management Connection, not affiliated with Wellness Connection, which is predominantly owned by out-of-state companies and individuals and has invested in the state’s medical marijuana businesses. Wellness Connection has applied for a recreational marijuana sales permit, but WPMC has not because of the residency rule and said doing so with the rule in place would be “futile.”


The recreational marijuana business would likely be one of the state’s largest industries, the lawsuit says. Medical marijuana sales last year were $111 million, it says, and the expectation is that adult recreational use sales will be even greater.

Some other states that have adopted adult-use marijuana sales originally put in place residency requirements that favored state residents. But other courts have ruled that such requirements run afoul of the Constitution’s equal commerce provision by unfairly favoring one states’ residents over another.

Businesses could be hurt by “arbitrarily limiting the universe of available investors and business partners available to these businesses,” Wellness Connection’s lawsuit says.

Mainers also could be harmed by the rule, the suit alleges, by hamstringing “smaller Maine businesses that are looking for financial assistance from family members and acquaintances residing beyond Maine’s borders.”

For the purposes of obtaining an adult-use marijuana sales permit, the state defines a resident as someone who has filed income tax returns in the state for four years and lives in the state for at least half the year.

All officers, directors, managers and general partners of a company that owns a majority stake in a marijuana company must be Maine residents to qualify for a permit, the rule says.

A Department of Administrative and Financial Services spokesman said the agency does not comment on pending litigation. It is expected to reply to the lawsuit in court by mid-April.

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