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Why the Maine Residency Rule Matters

If you’re a small business in the cannabis industry, then you know how important Maine residency rules are.

It’s hard enough finding and keeping real estate in the cannabis space; small and medium-sized businesses who navigate all the red tape and manage to break into the industry need to fight tooth and nail to keep their place in the marketplace. Let’s be clear: the little guys are the underdogs, and bigger businesses are constantly trying to push them out and gain the lion’s share of the market.

That’s where residency licensing requirements come into play; residency licensing requirements are a means to protect homegrown businesses from being pushed out by larger entities whose ties lie in other states. Those larger companies regularly challenge such requirements, as is the case with the  Residency Rule.

What is Maine’s medical marijuana Residency Rule all about? It excludes out-of-state companies from operating medical cannabis dispensaries within the state of Maine. Recently, it has been challenged–and the state is attempting to protect small and medium-sized local businesses. 

Who Is Behind the Maine Residency Rule Challenge?

In the state of Maine, Wellness Connection of Maine–currently owned by 3 Maine residents–already owns and operates 4 of the 8 medical marijuana dispensaries in the state. This is where it gets fishy. Through its parent company, High Street Capital Partners, Wellness Connection of Maine has ties to Acreage Holdings, a New-York based (read: out-of-state) multistate operator. Acreage has its sights set on taking full control of Wellness Connection–meaning it would then have control over 50% of existing MMJ dispensaries in Maine. Wellness Connection of Residency Rule decided to sue the state over the residency requirement–and won in lower court earlier this year.

Wellness Connection had previously sued the state for the same residency requirement issue in the case of the recreational cannabis program in March 2020–and won.

RELATED READING: Our ‘Road Trip’ to Discover the Cannabis Laws Across the Country

Why It Matters

Allowing out-of-state companies to operate medical marijuana dispensaries in the state, opens the door for an influx of investors to pursue medical and recreational cannabis retail licenses in Maine. Without the Maine Residency Rule in place, homegrown businesses will find it difficult to compete with the bigger competitors. Less competition translates to less product diversity and fewer options for cannabis consumers. As homegrown dispensaries are snuffed out, it will spell the end of consumer choice and less product originality on the market. In other words, it’s going to suck for marijuana consumers across the state. 

How We’re Fighting Back

The commissioner of the state’s Department of Administrative and Financial Services, Kirsten Figueroa, and the United Cannabis Patients and Caregivers of Maine are not taking the Residency Rule challenge lying down. They filed briefs with a federal appellate court recently, seeking to overturn the judgment and bring back the residency requirements. While challenges to residency rules have come and gone across the country, this is the first time that a case has reached the federal appellate courts. This case can have major repercussions for cannabis licensing across the country. 

Figueroa’s argument states that since Congress eliminated all interstate commerce for marijuana, states have the authority to regulate residency restrictions on marijuana markets however they see fit. Wellness Connection of Maine, therefore, doesn’t have a leg to stand on by challenging the Residency Rule for interstate commerce reasons.

 


 

Keep your eyes peeled for the decision; it could make all the difference in the quality and diversity of products offered in the state and could also make or break the existing homegrown medical marijuana dispensaries in Maine. Reinstating the Maine Residency Rule would be a major win for small and medium-sized businesses with their roots in the state.

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