Maine: Portland councilors hear criticism of city’s proposed cannabis rules

Speakers question the plan to use a merit-based scoring system to award 20 retail marijuana licenses, saying it favors big businesses and could exclude people who already have invested significant time and money.

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Over the last decade, almost every business move medical marijuana caregiver Dave Stephenson made has been in preparation to join Maine’s adult-use cannabis market – from establishing his grow, Hazy Hill Farm, in Portland to establishing a loyal customer base through a cannabis delivery service.

He has spent the last year and a half hunting for a retail space. Reluctant landlords, exorbitant lease costs, federal mortgage prohibitions and local land-use restrictions proved difficult, but he signed on the dotted line in February to claim his spot after Portland adopted its marijuana zoning rules.

But the undisclosed retail location he has been paying for since February will be worthless if he cannot get the retail marijuana license that he needs to open a marijuana business in the city. With the city calling for a maximum of no more than 20 retail stores, that is looking less likely every day.

“The City Council gave us zoning regulations and as entrepreneurs, we went out and we signed leases and purchased real estate with no warning that we might not be able to open our businesses under these local guidelines,” Stephenson told members of two City Council committees that met on Tuesday.

“Local business owners, myself included, have invested large amounts of money and time into their retail space, and it could all be for nothing if we don’t make the cut,” the longtime Portland resident said. “So I must ask, why limit it to 20 stores? Why limit it at all?”

Stephenson was one of two dozen people who weighed in on the city’s proposed marijuana regulations at a joint meeting of the council’s economic development and health and human services committees on Tuesday. Concerns ranged from the kind of safe businesses must use to whether seating should be allowed.

But the biggest concerns raised by one speaker after the other was the city’s proposed limit on the number of retail stores allowed and the points system it would use to score retail license applications with the highest-scoring applicants being first in line to claim a retail permit.

The city initially proposed a 20-license cap in August, but under the first set of rules, it would have given out the licenses based on a first-come, first-served basis. In October, city staff proposed a change over to weighted scoring, awarding bonus points to encourage diverse, local and successful applicants.

Under the proposed system, the city would award points to women, minorities, veterans and immigrants who have come to Portland over the last decade, those who have lived in Maine for at least five years, and those willing to share 1 percent of their profits with the city, among other conditions.

Speakers complained that the scoring system favors big businesses, awarding a bonus point to those who are able to prove they have at least $150,000 in liquid assets, for example, while giving little consideration to the medical marijuana caregivers who paved the way for the adult-use market.

The proposed scoring system would award a medical marijuana retail store with an established record of compliance in a heavily regulated industry the same consideration as a local barber who had been cutting hair for five years, said Tom Mourmouras, who runs the Fire on Fore medical retail shop in Old Port.

Since opening this summer, Fire on Fore has conducted 28,000 medical cannabis sales, all compliant and tracked, contributed $100,000 in sales tax to Maine state coffers and paid 20 employees a living wage, he said. That ought to be more highly valued by the city than a barber or electrician, he said.

He also accused the city of changing its stance on grandfathering already permitted medical shops. In the fall, when the City Council adopted a moratorium on new shops while crafting its rules, Mourmouras was told Fire on Fore was safe, but now he is being told he will have to compete for one of 20 retail licenses.

“Since then, my business partner and I have invested our life savings into the business,” Mourmouras said. “The city’s current stance on grandfathering would exclude us. Why is my business punished for operating a successful store? I’m up here tonight fighting for my business, my employees and my 50 vendors.”

Andrew Pettingill, a co-owner of Evergreen Cannabis Co., complained about giving a bonus to an applicant who can prove that he has $150,000 in liquid assets, an amount that city staff said a business in this industry will need to have just to get through its first year of operations.

He said anyone in this business could meet that threshold if they were willing to sell part of the equity in their business to outside investors, but it’s not fair to demand that of small operators like Evergreen that already have spent twice that to set up the business, build a brand and fit out a quality grow.

But mostly, the Munjoy Hill businessman said he is impatient for Portland to finally adopt its regulations.

“I’ve been paying $40 a square foot on my retail space since (February) without being able to operate,” Pettingill said. “I’m patiently waiting for the council and the committee to move forward. … I’d just like to express my concerns about the time it is taking.”

Former state Rep. Diane Russell, who helped organize the 2016 state referendum that legalized adult-use cannabis, urged the city to abandon its proposed cap and to consider awarding even more points to those people of color who have been most harmed by the country’s failed drug policies.

“It is not government’s job to make a business successful,” said Russell, who now serves on the board of NORML, the National Organization for the Reform of Marijuana Laws. “It’s the job of the market and the competition. We should let the people and the competition rise up to decide.”

Chris McCabe, a city resident and attorney who practices cannabis law, warned the committees that a city that tips the scale toward one kind of applicant over another is essentially “picking winners and losers,” and opens itself up to costly lawsuits over arbitrary, capricious or wrong-headed regulations.

The city took no action on the proposal Tuesday. The two council committees will meet again to consider particularly controversial aspects of the proposal, especially the retail license cap and the scoring system, but did not set a date for the next meeting.

Maine finally ready to take applications for marijuana businesses

The Office of Marijuana Policy announced it will begin accepting applications for growing, manufacturing and retailing on Dec. 5, one of the few remaining steps before the recreational market opens in March.

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After three years of delays, Maine is just about ready to begin licensing recreational marijuana businesses.

The Office of Marijuana Policy, which will oversee roll out of the adult-use market, will begin taking testing lab applications on Nov. 18, and start accepting cultivation, manufacturing and retail license applications on Dec. 5.

“The Office of Marijuana Policy has worked … to develop and institute regulations that we hope will serve as a model of how to properly regulate marijuana for the rest of the country,” Erik Gundersen, director of the office, said on Monday. “The goal has been to put forth the best rules and regulations possible.”

The state’s nascent marijuana industry has been waiting since the 2016 legalization vote to go operational. The three other states that legalized recreational marijuana that year – California, Massachusetts and Nevada – rolled out there regulatory structures, but Maine stood still.

The start of state licensing will represent a symbolic victory of sorts for some, but in towns that are limiting the number of local marijuana businesses, Dec. 5 marks the start of an all-out sprint.

State law requires local approval before the Office of Marijuana Policy will issue any final marijuana licenses.

In first-come, first-served towns, local marijuana entrepreneurs will have to obtain their provisional state license before they can apply for one of the few local licenses that are up for grabs.

In these towns, a delay in obtaining a provisional state license could derail the applicant’s hopes of setting up shop where they have bought a warehouse, or leased retail space from a marijuana-friendly landlord.

Other municipalities have set no limit on the number of marijuana licenses they will issue, or plan, like Portland, to hand out a limited number of retail licenses based on a scoring system.

Anyone who wants to apply for one of the state marijuana business licenses, or work in a cannabis business, must get a state-issued identification card. The cards require a criminal background check. Applications are now available on the Office of Marijuana Policy website.

Mark Barnett, the owner of Higher Grounds, a CBD coffee shop on Wharf Street in Portland, also serves as a spokesman for the Maine Craft Cannabis Association. He is planning to apply for a marijuana license and says he does not have any issues with the conditions, such as the criminal background check, that are going to be imposed by the states.

The office will use the information gathered in the background checks to decide if an applicant or their employees satisfy the character requirements written into the state law. For example, certain felony convictions would rule an applicant out.

Barnett said most people in the industry believe that marijuana should be a fully legalized substance because it is safer than alcohol or nicotine.

“It hasn’t sat well with anyone that a relatively benign substance is being treated as a public health threat,” he said. “Everyone wishes this could have been a more free and open situation.”

But Barnett said the background checks and ID cards are not catching anyone by surprise since the state has been working on regulations for months.

“It’s a very difficult industry, and it’s being made doubly difficult with all these regulations,” Barnett said. “I would have preferred a lighter-touch approach.”

The state’s new adult-use rules don’t go into effect until December, but the Office of Marijuana Policy wanted to start helping prospective licensees prepare to enter the emerging industry now so it would have more time to respond to applicants’ questions.

The office began the staggered rollout of program applications Monday because that is when it completed final adoption of its adult-use program rules. These rules create the regulatory framework for marijuana licensing, compliance and enforcement.

The state projects it will begin collecting its first recreational marijuana sales taxes in March 2020.

From legalization to legal sales, Maine is inching toward the slowest rollout of adult-use sales in the United States so far. Economists say the three-year wait for stores to open will have cost Maine more than $82 million in taxes and 6,100 industry jobs.

After the legislative rewrites, gubernatorial vetoes and contractual snafus, regulators are saying Maine will record its first adult-use sales on March 15, or 1,223 days after voters narrowly approved full-scale legalization at the polls.

Maine’s recreational cannabis market will top $158 million in sales its first year and almost $252 million in its second, according to research from New Frontier Data, a national marijuana analytics consulting firm.

Burning retail market lights up Canada’s cannabis vape race!

Canada’s major tobacco companies are aiming high in the cannabis e-cigarette market.

by Kristine Owram • Bloomberg
With declining cigarette sales, many tobacco companies are turning to cannabis and vape markets [David Mercado/Reuters]
With declining cigarette sales, many tobacco companies are turning to cannabis and vape markets [David Mercado/Reuters]

Ontario will triple its pot-store count beginning in October, just two months before the introduction of new product formats that are expected to significantly boost sales in Canada’s most-populous province.

While chatter about the next wave of legalization in Canada tends to focus on products like edibles and beverages, many of the biggest players entering the space say consumers will opt for the more conventional format of vapes.

The Canadian market for vapes could be as big as C$600 million ($451 million) by 2021, according to Tim Pellerin, Pax Labs Inc.’s general manager of Canada.

San Francisco-based Pax, which split from e-cigarette company Juul Labs Inc. in 2017 to focus on cannabis, captures about 17% of the U.S. market for pot vape devices. It’s the top seller in the extremely fragmented market, and hopes to capture at least as much share in Canada. Pax has partnered with Aphria Inc., Aurora Cannabis Inc., Organigram Holdings Inc. and Supreme Cannabis Co. to sell their oils in its devices.

“We’ll be disappointed if we’re not able to match or exceed our performance in the U.S. market” in Canada, Pellerin said in an interview.

It’s shaping up to be a fierce fight, with two tobacco giants joining the fray via investments in Canadian pot companies.

Marlboro-maker Altria Group Inc. bought a 45% stake in Cronos Group Inc. via a C$2.4 billion investment that closed in March, while Imperial Brands Plc announced last month that it will invest C$123 million in Auxly Cannabis Group Inc. by way of a convertible debenture.

Imperial decided to invest in cannabis after conducting a strategic review to identify new opportunities to offset declining tobacco sales, according to Chief Financial Officer Oliver Tant.

“It’s relatively obvious to most that the tobacco sector is ex-growth and over the longer term that inevitably presents some challenges,” Tant said in a phone interview. “We looked at caffeine, we looked at high-energy drinks, it wasn’t limited to cannabis, but cannabis seemed like the one we had the most obvious overlap and connectivity with.”

Oxford deal

Imperial dipped its toe into the sector last year with an investment in closely held Oxford Cannabinoid Technologies Ltd. and decided to investigate the Canadian market after it legalized recreational pot in October.

“I think we probably talked to the majority of the larger listed entities” before settling on Auxly, Tant said.

Auxly will be Imperial’s exclusive global cannabis partner and will gain access to its vaping technology and Liverpool-based R&D lab Nerudia, which is already licensed to work with cannabis.

“The vape IP is a huge portion of the non-financial value in this transaction and ensures that Auxly is going to have best-in-class vape devices,” said Hugo Alves, who will replace Chuck Rifici as Auxly’s chief executive officer this week.

Imperial’s technology won’t show up in Auxly’s vape devices when they’re first released on Dec. 16, the day vapes, edibles and beverages will join dried flower and oils on legal Canadian store shelves.

Vape market

“We’ve been at it now for close to a year, so I’m happy to report that our vapes are designed, our oils are formulated, our pens are tuned to our specific oil and the hardware is ready,” Alves said. “Our collaboration with Nerudia is forward looking.”

Tant believes the Canadian market for derivative products like vapes will be worth about C$6 billion by 2025. Although Imperial is taking a go-slow approach for now, he sees future opportunities to expand its investments in cannabis.

“We’re taking a pretty cautious approach to investing in the space, we haven’t spent the $1.4 billion that Altria spent in Cronos,” he said.

Tant said he wishes Canada’s pot regulations were less fragmented across provinces, while Pellerin at Pax said he wishes advertising rules made it easier to communicate with the consumer.

“We continue to be in an environment which I’ll say is the worst it’ll ever be from a category standpoint,” Pellerin said. “It’s still very difficult to talk to the consumer through all the constraints and controls in place right now.”

Maine: Casco’s Kate Hall wins national long jump title

STATEN ISLAND, N.Y. — Casco’s Kate Hall added another title to her trophy case, winning the women’s long jump at the 2019 Toyota USATF Indoor Championships in Staten Island, New York Saturday.

Hall won the long jump with a 6.51m leap.

RELATED: Catching up with newly hired coach Kate Hall

RELATED: Olympic hopeful Kate Hall gets personal about her diabetes

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Congratulations to Kate Hall on winning Women’s Long Jump at ! pic.twitter.com/j3ECwkF1ko

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The Casco native, who had an impressive career start while at Lake Region High School, will be forgoing her senior season at the University of Georgia to train in Maine for the 2019 World Championships and a shot at qualifying for the 2020 Olympics in Tokyo.

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High court to decide if medical marijuana covered by workers’ comp

The Maine Supreme Judicial Court will decide if state law requires Workers’ Compensation Insurance to pay for a millworker’s medical marijuana or if the insurer could be charged as an accessory in a drug deal under federal law.

Justices are set to hear arguments in the case Wednesday at the Capital Judicial Center in Augusta, which will be the first time the state’s highest court has considered the question of insurance reimbursement for the cost of medical marijuana.

The case pits a former Madawaska mill employee, injured on the job, against the company that administers the mill’s insurance for injured workers.

Gaetan Bourgoin, now 58, of Madawaska, in 2015 sought reimbursement for medical marijuana prescribed for pain due to a back injury suffered in 1989 when he was 29 and working at what is now Twin Rivers Paper Co.

Bourgoin tried a variety of opioid-based painkillers over the years without relief, according to briefs filed in Portland.

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Vetoes, bonds and late LePage surprises

The Legislature is back in Augusta on Wednesday for what’s set to be the last official day of the 2017 session.

They’re mostly back to vote on overriding 27 vetoes from Gov. Paul LePage, including bills that would set long-term solar policy, increase Maine’s tobacco-buying age to 21 and prohibit handheld cellphone use while driving.

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