Central Maine municipalities have been some of the first to create local regulations on adult-use marijuana.

Shop owners and advocates said a few Maine municipalities are close to finalizing their legislation, but Hallowell and Fairfield were some of the first to finalize setbacks, zoning and licensing rules for adult-use marijuana establishments — even before the Legislature convenes to set necessary state rules.

Maine voters passed the Marijuana Legalization Act in November 2016. In July, the Legislature overrode a Gov. Paul LePage vote and enacted L.D. 1719, “An Act to Implement a Regulatory Structure for Adult-Use Marijuana.” Under that law, municipalities have the option of allowing retail marijuana establishments but are not required to do so.

Hallowell was one of two Kennebec County cities — the other being Waterville — that voted in favor of the 2016 citizen’s initiative referendum on legalizing recreational marijuana.

Though the state must tackle vital rule-making in the next session, City Manager Nate Rudy said Hallowell’s quick movement on its ordinance was a statement about the city’s intent to attract cannabis business.

“I think there was an explicit statement that we welcome the cannabis industry in Hallowell,” Rudy said Wednesday. “We wanted to convey that message as soon as we could.”

Ordinance language was finalized in November and a lottery for two downtown retail store licenses took place Dec. 10.

Hallowell is allowing only two — adult-use or medical marijuana — retail stores in its downtown district. The rest of the city limits establishments by zoning and setbacks, but not by number of available licenses.

Three qualified applicants, all medical marijuana caregivers, applied for the two downtown retail store licenses.

Hallowell’s application does not distinguish between adult-use and medical marijuana establishments. The applicant simply chooses one of four categories from the state’s group of allowed establishments: retail stores, cultivation facilities, testing facility or products manufacturing.

“The application is silent on adult use and medical cannabis establishments,” Rudy said. “It leaves all of that up to the state … by design.”

While the application technically allows adult-use proprietors to apply for a local license, failure to produce a state license would disqualify the application. Rudy said during the Dec. 10 meeting that some applications were not included in the lottery following vetting by city staff because they were for adult-use establishments.

The design of the ordinance, Rudy said, was to defer to the state’s rule-making as much as possible.

“We aren’t in a strong position to devote staff resources to enforcement and other costs associated to running the program,” he said. “We have a part-time code (enforcement) officer, and his time is extremely valuable; he could blow his entire workweek on (the) cannabis business issue if we are not careful.”

Rudy said stores with licenses could even switch to adult-use marijuana without triggering a new lottery.

“We would expect them to produce the proof of (change in) licensing from the state,” he said.

The Cannabis Healing Center, operating at 184 Water St., and newcomer The Frost Factory, to operate at 144 Water St., were given preference to get retail store licenses to operate downtown after a three-candidate lottery. The Frost Factory is a name change from Kennebec Cannabis, which appeared on the winning application.

Homegrown the Offering, a store selling cannabidiol products in Hallowell that is owned by caregiver Catherine Lewis, was the applicant left without a license after the lottery.

Derek Wilson owns Cannabis Healing Center and Allison Michaud owns The Frost Factory, and both are licensed caregivers. They both told the Kennebec Journal, however, that once it is allowed, they plan to transition to adult-use marijuana at their caregiver storefronts to serve more customers.

Owner-operator Derek Wilson poses for a portrait Thursday in The Cannabis Healing Center in Hallowell.

Some councilors didn’t believe holding the lottery before adult-use proprietors could apply properly for licenses was fair. Because the licenses could be held indefinitely, with annual renewal, it is possible under the current city ordinance that no other retail stores could open downtown.

Rudy said the city’s ordinance is fluid and probably will change when rules are set by the state.

“It’s unfortunate that the timing does not allow both types of applicant to apply,” he said, citing the state not moving faster on adult-use licensing. “There’s certainly flexibility for all of that; it’s not the end of opportunities for cannabis businesses downtown.”

Attorneys and marijuana advocates were generally skeptical of a lottery to pick candidates.

Portland attorney Tom Zerrillo, while he would not comment on Hallowell’s ordinance, favored a merit-based choice by cities. He told the Kennebec Journal that liquor licenses in Portland are awarded after officials judge the merits of businesses competing for the license, ensuring the better candidate gets the license.

“If we’re trying to get the best people in there, then probably the random selection is not the way to go,” Zerrillo said earlier this month.

Lewis advocated a scoring system to determine the best applicant after she was not chosen in Hallowell’s lottery. Wilson said he wasn’t worried about not winning the lottery, but it would have been difficult to swallow, as he has been open downtown since January 2017.

“I wouldn’t say I was worried; I thought I’d get it, but there was always the chance of that,” he said. “If I did not get a license, it would’ve been a kick in the nuts, so to speak.”

David Boyer, the Maine political director for Marijuana Policy Project, balked at “merit-based” licensing because it could lead to delays or lawsuits. He also thought a bare-bones lottery could lead to “frivolous applicants … not really able to make a business work getting licensed.”

Boyer said his organization advocates for loose restrictions on marijuana businesses

“We think a free-market system, limited by zoning and other rules, such as setbacks, is the best way for a municipality to regulate commercial cannabis businesses,” he said. “This limits the chance of a lawsuit from a rejected applicant, while also allowing businesses to naturally compete and flourish.”

After reviewing Hallowell’s licensing procedure, which takes into account “good moral character,” securing a state license and health code checks, Boyer said it rode the line between merit-based and bare bones.

The good moral character clause was also questioned by Dufour during a Hallowell City Council meeting. Rudy said the clause is used commonly in state liquor licensing, making it common practice and not a subjective determination of merit.

A few communities have enacted ordinances before Hallowell. Paris and Fairfield finalized their ordinances in June and September, respectively.

Fairfield Town Manager Michelle Flewelling said the town regulated marijuana businesses as it does other businesses in town, charging only a small licensing fee. Adult-use marijuana business licenses can be applied for and approved conditionally, pending the applicant receiving a state license.

Flewelling said the town has issued 21 business licenses for medical marijuana since 2014. She said the town went forward with adult-use regulations under the assumption that the bulk of the medical businesses would make the switch to adult-use marijuana when possible.

Fairfield allows marijuana businesses only in some districts, and it bars them from downtown.

Despite finalizing its ordinance in September, Flewelling said the town was not one of the first to do so.

“I don’t believe we were the trailblazers; a lot of them were done very (quietly),” she said. “The instant (our ordinance) became public, there were lots of (municipalities) who were looking for it.”

Paris Code Enforcement Officer Kingston Brown said that town used Houlton’s ordinance — finalized in July 2017, but overturned by a citizen’s initiative four months later, as reported by The County — as a base and made edits to align better with state law updates.

Brown said Paris’ ordinance does not limit adult-use marijuana businesses in any way other than a setback that bars them from areas around schools.

Sam Shepherd — 621-5666

[email protected]

Twitter: @SamShepME

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