A day after the state released proposed rules for the recreational marijuana industry, some entrepreneurs say they are encouraged to finally see progress on the long-delayed process.

The draft rules for retail sales set out how stores can be established and how the state will monitor and regulate sales.

“I’m excited to see progress,” said Jackson McCleod, an owner of Atlantic Farms Gas ‘N Grass, a gas station and convenience store on Warren Avenue in Portland. A section of the store is dedicated to the sale of medical marijuana, and McCleod and his partners hope to add recreational pot sales once the final go-ahead is given. The state has permitted licensed caregivers to set up shops to sell to people with medical marijuana cards, and many plan to expand to recreational marijuana sales once the process is finalized.

McLeod said nothing in the rules suggested to him either a major breakthrough or significant hurdle to sales of recreational marijuana in shops like his. About 70 percent of his customers buy medical marijuana, he said, and the rest stop in for gas or more typical convenience store items.

“I think people are excited not to have to drive downtown” for medical marijuana, he said.

Dawson Julia, owner of East Coast CBDs in Unity, said the proposed rules suffer from ambiguity in some areas and over-regulation in others. But he said the state seems to have done a good job of limiting many aspects of the business to residents, defined as someone who has filed at least four years of tax returns in the state. Those restrictions will be in place through at least 2021.

“That cleans up a lot of the out-of-state cowboys that would come up here and try to take over the industry,” he said.

Connor Yost, a director with Nucleus One, a cannabis industry consulting firm, agreed.

“It certainly paves the way for local entrants,” Yost said, including those who plan to partner with an out-of-state company.

PUBLIC COMMENT PERIOD 

The new regulations create protocols for how would-be growers, retailers and manufacturers will obtain state licenses to operate in the Maine recreational marijuana market. All applicants must be at least 21 and reside in Maine, and a majority of shares, equity ownership, and membership or partnership interests must be owned by Mainers or businesses made up entirely of state residents.

The rules are expected to be refined and sent to the Legislature in early June, after the state Department of Administrative and Financial Services holds a public hearing and gets further public comment, said David Heidrich, a spokesman for the department, which includes the Office of Marijuana Policy. A referendum to allow legal sales of marijuana for adult recreational use was adopted by Maine voters in 2016, but it has taken state officials more than two years to get to the point of considering rules for how the market will operate.

Massachusetts, which legalized recreational marijuana sales at the same time as Maine, already has about 10 stores operating.

Assuming the Maine Legislature approves the rules before adjourning in early summer, the state expects to begin taking applications for conditional licenses in November or December, Heidrich said. Then proposed retailers will need approval from the town or city where they’re located – municipalities can adopt their own rules and regulations – and then return to the state for a final license before opening. That suggests it will be late next spring or early summer before the first sales are made, Heidrich said.

Julia said he sees several shortcomings in the state’s draft proposal. For instance, he said the rules on what violations would allow the state to revoke or restrict a license aren’t very specific. The state also blocks him from normal retail activities, such as sales or promotions.

He said he’s not permitted to cut prices or run specials, as he would like to do on occasion, such as April 20 (4/20), which is considered a holiday for marijuana users.

“I can see they want to get their tax money and don’t want any loopholes to allow people not to pay their taxes,” he said, but “it will lead to people not following the actual rules. They’re going to push people to do it black market-style. It’s a fine line to balance that.”

‘A POTENTIAL TO HAVE … NONSENSE’

Julia said the rules also require growers – he has a grow operation for his medical marijuana business – to keep track of all the seeds they produce for use in growing plants and also to keep 90 days of tape from cameras set up to monitor the store and growing operation. He said that will require him to more than triple his current storage capacity for video storage.

To illustrate what Julia sees as some of the absurdity of the rules, he noted that the state rules would bar him from making or selling “injectable” marijuana.

“Which nobody on the planet has ever heard of,” Julia said. “There’s a potential to have a lot of nonsense.”

Overall, Yost said, he sees the issuance of proposed rules as a step forward. He said he didn’t see any big surprises in the draft, beyond the strong residency requirements.

“It’s great to finally see this and read them and know they have something in progress,” he said.

Edward D. Murphy can be contacted at 791-6465 or at:

[email protected]

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