A group of medical cannabis providers is not giving up its fight to keep out-of-state interests away from Maine’s growing adult-use marijuana market.

Last August, a Maine Superior Court dismissed a lawsuit filed by United Cannabis Patients and Caregivers of Maine that would have required the state to enforce a residency requirement that the state attorney general had decided is likely unconstitutional.

The group appealed the dismissal, and on Thursday, attorneys representing United Cannabis, as well as defendants the Maine Department of Administrative and Financial Services and Wellness Connection of Maine, presented oral arguments in front of the Maine Supreme Judicial Court. Wellness Connection is the state’s largest cannabis business and the first company to challenge the residency requirement.

The ongoing appeal is the latest development in a legal battle that has lasted for more than a year.

Last March, Wellness Connection sued the state in federal court over its requirement that only Maine residents may operate a recreational marijuana grow, manufacturing plant or retail store.

As written, Maine law requires every officer, director and manager of an adult-use cannabis business – and most of its ownership – to live and file taxes in Maine for at least four years. The requirement would have given locals a leg up when the adult-use market launched in October, but Wellness Connection argued that it was unconstitutional. 

In its lawsuit, Wellness Connection argued that a residency requirement violates its constitutional right to interstate commerce by explicitly favoring Mainers over non-residents. The company is controlled by multinational corporation Acreage Holdings, whose investors reside outside of Maine.

Maine Attorney General Aaron Frey agreed with the challenge and found that the requirement “is subject to significant constitutional challenges” and would likely not hold up in court. 

Accordingly, state officials announced in May that they would abandon the in-state residency requirement, resolving the lawsuit.

But United Cannabis, a group spearheaded by caregivers Dawson Julia and Christian Roney, argued that the decision hurts small marijuana providers, whom the residency requirement was designed to protect, and asked the Kennebec County Superior Court to compel Maine to enforce the requirement.

The plaintiffs argued that the Maine Office of Marijuana Policy has no authority to abandon a state law that has not been struck down by any court or repealed by the Maine Legislature. It sought an injunction barring the office from awarding marijuana business licenses to out-of-state applicants, which coalition members refer to as Big Marijuana.

Local licensing preference has been at the heart of the Maine Marijuana Legalization Act since voters first approved recreational sales in 2016. It began as a carve-out for existing medical marijuana providers, who must be Mainers, but turned into a four-year residency requirement during legislative overhauls.

The organization’s suit was dismissed last summer on the grounds that, among other reasons, United Cannabis did not have proper standing to challenge the state’s decision because it sells medical cannabis, not adult-use cannabis. The court also said the ruling plaintiffs sought would have infringed on the executive branch’s constitutional powers to determine whether to enforce a statute.

In its appeal, United Cannabis argues that it does have standing in the matter because the additional competition from large, out-of-state providers could cause economic injury to medical providers, as well. The group also contends that under the separation of powers doctrine, it is the judicial branch that is responsible for determining whether a legislative enactment is constitutional.

“If the Superior Court refuses to act, no one else can,” said James Monteleone, the attorney representing United Cannabis, adding that the opinion of the attorney general is just that – an opinion.

Attorney Paul Suitter, representing the state, called United Cannabis’ argument “fatally flawed” and argued that as a medical provider, it has no standing in the matter by not being within the same industry. It may face increased economic competition without the residency requirement, but not economic injury.

In his August dismissal, Superior Court Justice William Stokes wrote, “A mere generalized interest in a problem is not enough to confer standing. The plaintiffs assert that they will suffer an economic injury because of competition from non-residents who are granted licenses under the Marijuana Legalization Act, but that type of generalized harm is speculative at best and is not particularized to these plaintiffs.”

According to that argument, he wrote, “all Maine residents potentially suffer the same ‘injury’ from out-of-state competition.”

The court also said it dismissed the suit out of concern that the litigation “may involve delicate separation of powers considerations.”

On the Thursday, the justices of Maine’s highest court said they would consider the arguments and issue a decision “in due time.”

Meanwhile, two other related lawsuits sit in federal court awaiting action.

United Cannabis filed another suit challenging all out-of-state licenses that have been issued since the adult-use market launched in October. The other case involves Wellness Connection filing a suit similar to the one it filed last year, but this time challenging the constitutionality of Maine’s in-state residency requirement for the medical cannabis industry.

The courts have struck down residency requirements on constitutional grounds before, but not in the cannabis industry, which is still illegal under federal law. The lawsuit Wellness filed in March marked the first time a marijuana company had challenged such a requirement.

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