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The Maine Department of Administrative and
Financial Services (DAFS) recently released the first draft of proposed rules
to govern the
state’s adult-use cannabis industry, which was legalized via ballot initiative
in the 2016 elections. While there will almost certainly be changes made to the
regulations as they exist currently, below we review some items pertinent to
the state’s nascent wholesale market.

The draft rules lay out four tiers of
cultivation licenses. Tier 1 licenses allow the farming of up to 30 mature
plants or 500 square feet of canopy. Tier 2 licensees will be able to grow up
to 2,000 square feet of canopy space. Tier 3 operations will be permitted to cultivate
up to 7,000 square feet of canopy area. Tier 4 growers may work up to 20,000
square feet of canopy, or nearly a half-acre. A license for nursery cultivation
facilities is also being proposed for operations that can sell clones and seeds
to other licensed growers or consumers.

Importantly, “canopy” is defined in Maine’s
draft rules as areas that contain mature, flowering plants only. Under the
current version of the regulations, licensed cultivators would be able to have
unlimited amounts of immature plants and “seedlings,” or clones.

Cultivation in greenhouses and outdoors, in
addition to indoor growing, will be allowed in Maine’s adult-use market, though
of course security, fencing, and lighting requirements are outlined for each
cultivation approach.

License fees vary according to tier, in
addition to an operator’s cultivation method. Tier 1 outdoor growers will pay
fees of $9 per mature plant or $250, while those in this tier growing indoors
or using a mix of artificial and natural light will pay $17 per mature plant or
$500 annually. Annual license fees for a Tier 2 permit have been set initially
at $1,500 for an outdoor cultivator and $3,000 for other grow methods. Tier 3
licensees will pay $5,000 annually if farming outdoors or $10,000 per year
otherwise. Tier 4 cultivators will see annual license fees of $15,000 for
outdoor growing or $30,000 for indoor or mixed operations. Annual fees for a
nursery license have been set at $350.

The regulations do not include a state-level
cap on the number of cultivation licenses that might be issued. However, all
businesses seeking to enter Maine’s adult-use market will have to secure local
approval before being able to gain a state license, which will likely restrict
the proliferation of such operations somewhat.

The proposed regulations also provide
guidelines pertinent to Maine’s registered caregivers or existing medical
dispensary operations that intend to enter the state’s adult-use market. In
general, plant cultivation and resulting product must be kept separate. The
parallel, impermeable markets laid out in the draft rules echo the situation in
Colorado. Further, cultivation of medical and adult-use plants in Maine must be
“visually and physically” separated, unlike in Colorado where plants tagged for
the medical and adult-use markets may be grown side-by-side

For existing operations, co-location of
medical and adult-use cultivation facilities is allowed. However, the current
rules state that prospective licensees must illustrate areas distinct to
medical and adult-use plants and production in facility and security plans
required in the license application.

Additionally, “If a[n adult-use] cultivation
facility with a marijuana store license (…) or standalone marijuana store is
located adjacent to a registered caregiver or medical marijuana dispensary, it
must have distinctly separate entrances from a public right of way.” Such
requirements could pose difficulties for existing medical cannabis businesses
that might have hoped to simply add additional point-of-sale stations for
adult-use consumers in a currently-operating medical storefront, as is allowed
in some other states.

Relatedly, adult-use operations that intend to
integrate vertically to varying degrees may co-locate cultivation, product
manufacturing, and retail. However, conditions apply, such as a prohibition on
having “inherently hazardous” materials in a product manufacturing operation
that is co-located with a storefront.

While the issuance of the first draft of
adult-use regulations is a significant step toward a functioning commercial
market in Maine, when production and sales will begin remains somewhat
uncertain. A report from the Portland Press Herald
, prior to the release of
the draft rules, stated that final regulations must be approved by state
lawmakers prior to the end of the legislative session in June if sales are to
have a chance of commencing by the end of this year.

Notably, the draft rules currently do not
include proposed regulations for testing labs. Additionally, guidelines that
would permit existing medical cannabis dispensaries or caregiver operations to
begin selling to adult-use consumers, or transfer existing inventory into the
new market, are not included in the regulations as they are constituted