Local marijuana businesses are taking the state to court to protect their exclusive right to Maine’s adult-use marijuana market.

In a lawsuit filed Friday, Maine Cannabis Coalition claimed the state Department of Administrative and Financial Services was violating state law by refusing to enforce the residency requirement that lawmakers included in the Marijuana Legalization Act. The law says only Maine residents can run a recreational marijuana grow, manufacturing plant or retail store.

“Maine Cannabis Coalition and its members along with many other citizens fought hard for two years to make sure residency protections were included in the law,” according to a statement issued Monday. “To have it all be ignored after all the hard work and efforts is extremely aggravating to the citizens and policy makers of Maine who expect no one to be above the law.”

The state announced it would abandon the residency requirement last month to resolve a suit challenging its constitutionality filed by Wellness Connection of Maine, which holds four of Maine’s eight medical marijuana dispensary licenses. Wellness Connection has financial ties to international cannabis company, Acreage Holdings.

Maine Cannabis Coalition claims the state’s decision hurts medical marijuana providers such as co-founder Dawson Julia, a Unity caregiver; and Christian Roney of Waterville, who is seeking a state recreational marijuana business license, by increasing the number of rivals competing for limited market share.

In the suit, Julia and Roney claim they relied on the competitive advantage afforded by the Maine residency requirement when developing their business plans, and have an economic interest in making sure the Office of Marijuana Policy enforces it when awarding the state licenses required to operate a recreational marijuana business in Maine.

The lawsuit argues the Office of Marijuana Policy has no authority to abandon a state law that has not been struck down by any court or repealed by the state Legislature. It seeks an injunction barring the Office of Marijuana Policy from awarding marijuana business licenses to out-of-state applicants, which coalition members refer to as Big Marijuana.

“This is a pay-to-play constitutional meltdown scheme being orchestrated by the fat cats of Wall Street,” Julia said.

Local licensing preference has been at the heart of the Maine Marijuana Legalization Act since voters first approved commercial sales in 2016. It began as a carve-out for existing medical marijuana providers, who must be Mainers, but turned into a four-year residency requirement during legislative overhauls.

As written, Maine law requires every officer, director and manager of an adult-use cannabis business, and most of its ownership, to live and file taxes in Maine for at least four years. That mandate would have lapsed in June 2021, but it would have given locals a leg up at the outset of what is likely to be a lucrative new market.

The courts have struck down residency requirements on constitutional grounds before but not in the cannabis industry, which is still outlawed by federal law. The lawsuit Wellness filed in March marked the first time a marijuana company had challenged the constitutionality of the licensing preference.

The Office of Marijuana Policy declined to comment on the Maine Cannabis Coalition suit. In May, when the office announced it would no longer be enforcing the residency requirement, Director Erik Gundersen said his office took the action on the advice of the Attorney General’s Office, which concluded Maine was unlikely to beat the Wellness suit in court.

He said the decision wouldn’t further delay adult-use sales, which remain on hold as Maine navigates the COVID-19 pandemic.

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