On Monday, the Maine Office of Marijuana Policy (OMP) announced that it would no longer enforce the Maine residency requirement for adult-use marijuana program applicants.
Under the Marijuana Legalization Act (MLA) to date, individual adult-use marijuana license applicants have been required to show that they are Maine residents, and business entity applicants must show that they are exclusively controlled and majority owned by Maine residents. To qualify as a Maine resident, an individual must (a) have filed Maine resident income tax returns for the four years preceding the application, (b) be domiciled in Maine, and (c) reside in Maine at least 183 days out of the taxable year. Following the announcement that the state will not enforce these residency requirements, Maine adult-use marijuana licenses are now available to residents and non-residents alike.
This announcement followed the stipulated dismissal of the lawsuit previously filed by NPG, LLC (d/b/a Wellness Connection) that sought to strike down the residency requirement. Wellness Connection is majority owned by Northeast Patients Group (d/b/a Wellness Connection of Maine), which holds four out of the eight dispensary licenses issued in Maine to date. Wellness Connection alleged that the residency requirement violates the Dormant Commerce Clause (DCC) of the U.S. Constitution. The DCC prohibits laws that discriminate against or excessively burden interstate commerce.
According to the stipulated dismissal, the parties agreed to dismiss the complaint without prejudice following the Maine Attorney General’s guidance to the OMP that the residency requirement was subject to significant constitutional challenges, and is unlikely to survive said challenges.
Thus, the Maine residency requirement, which would have been automatically repealed as of June 1, 2021, will no longer be enforced. The Department of Administrative and Financial Services and the OMP will ultimately introduce legislation to remove the associated language from the MLA.
This announcement comes as welcome news both to large corporations like Wellness Connection, and to smaller local companies seeking out-of-state private or family investors for their adult-use marijuana businesses. The news is less welcome to Mainers seeking to launch adult-use businesses without any assistance from non-residents, and who fear that repeal of the residency requirement will open the floodgates to large out-of-state companies which may out-compete smaller local businesses.
The announcement has spawned at least one petition demanding that the Maine Attorney General continue to enforce the residency requirement.
The provision limiting licensees to no more than three cultivation facilities, on the other hand will remain in effect, as will the limit (which expires on January 1 , 2022) of no more than four adult-use marijuana retail stores.
In the meantime, unless the OMP changes its stance, it appears that – for good or for ill – the floodgates have opened, and Maine’s adult-use marijuana program is now open to everyone, regardless of residency.