Maine has been a leader in the legalization of cannabis. It was the fifth state to approve the use of medical cannabis, in 1999. Since that time, cannabis growth and sales have been limited to approved patients and authorized caregivers, as well as eight cannabis dispensaries statewide. Maine’s cannabis market is about to change drastically, however, as the state moves to implement legalized recreational cannabis.
Maine’s recreational cannabis timeline
Maine voters approved the legalization of recreational cannabis in November 2016, and since Jan. 30, 2017, Mainers over the age of 21 have been allowed to use recreational cannabis and possess up to 2.5 ounces of the drug. However, laws regulating recreational cannabis sales have yet to be established, meaning those using recreational cannabis in Maine have to grow their own.
According to the Portland Press Herald, Maine’s legislature is due to release details of a bill Sept. 26 that will lay the groundwork for recreational cannabis sales in the state. The Press Herald reported that the bill would establish a 20-percent tax on retail sales of recreational cannabis. The bill also would allow medical cannabis dispensaries to be run as for-profit, rather than nonprofits, entities. The bill also would legalize internet sales and deliveries of cannabis; drive-through sales of cannabis, as permitted by local communities; and cannabis sales by social clubs, beginning in June 2019. Under the bill, the regulation of the cultivation, manufacturing, testing, packaging and labeling of recreational cannabis would be overseen by the Maine Department of Agriculture, Conservation and Forestry.
Medical cannabis sales in Maine have been steadily rising, and recreational cannabis stands to strengthen the state’s overall cannabis market. Combining medical and recreational cannabis sales, Maine’s cannabis sales are expected to top $321 million by 2020, according to projections from cannabis industry reporting firm New Frontier Data.
Maine has robust participation in its medical marijuana program. While patient registry is voluntary — meaning there are no solid statistics on medical cannabis users in the state — it’s estimated that nearly 4 percent of Mainers are certified medical cannabis patients. That puts participation in Maine’s medical cannabis program at double the average for enrollment in state’s whose medical cannabis have similar qualifying conditions. Typically, states see participation between 1 and 2 percent of the population. Despite already high enrollment, the number of participants in Maine’s medical cannabis program is on the rise. According to Maine regulators, Maine medical providers issued 51,324 patient certifications for medical cannabis in 2016, an increase of 36%.
With that high population of participants, the number of licensed MMJ caregivers has been steadily on the rise, according to statistics from the Press Herald. In 2016 alone, the number of MMJ caregivers in Maine increased from 2,277 to 3,244. That increase is especially dramatic when compared with figures in 2011, when there were 211 licensed growers and caregivers in the state.
Medical cannabis sales figures also have risen with increased caregiver and patient participation in the medical marijuana program. Statistics from the state’s revenue department show $24.8 million in sales of non-edible marijuana products at the state’s eight dispensaries in 2016, a 5.3 percent increase over 2015 sales, the Portland Press Herald reported, and authorized caregivers sold an additional $27.3 million in medical cannabis in 2016, according to estimates by advocacy group Medical Marijuana Caregivers of Maine.
Cannabis edibles have shown to be a lucrative market in Maine. The state’s medical marijuana patients purchased $2 million of edibles products at dispensaries in 2016, making edibles the fastest growing segment of Maine’s medical cannabis industry. Edibles sales accounted for approximately 7.4 percent of the overall $26.8 million spent at Maine’s eight dispensaries in 2016, according to the Press Herald. Edibles sales in 2016 increased nearly 70 percent over the previous year, when Mainers spent $1.2 million on edibles at medical marijuana dispensaries. In 2015, edibles accounted for about 5.4 percent of total cannabis dispensary purchases. Those figures do not include sales by Maine’s 3,200 caregivers, some of whom are large enough to produce wholesale infused products for the caregiver and dispensary market.
Edibles are expected to continue to gain market share of the medical cannabis sales in Maine. Tim Smale, the head of the Maine Dispensary Operators Association and co-founder of Remedy Compassion Center in Auburn, estimated that edibles will account for about 20 percent of all of the state’s dispensary sales by 2018.
Licenses, fees and taxes for Maine’s cannabis market
Since medical cannabis sales were approved in Maine, the state’s dispensaries have been extremely limited. Only eight medical dispensaries were permitted one in each of the state’s predefined geographic areas. The dispensaries were required to obtain permits and licenses and cultivate their own cannabis, with production caps set by the state. Every aspect of the dispensaries’ operations is regulated, and the facilities are subject to state inspections. Much of Maine’s medical cannabis sales have been carried out by a large number of caregivers, many of whom profit by growing cannabis for patients.
The laws regulating recreational cannabis in Maine are still in draft form. Under those draft regulations, here are the types of licenses that would be allowed in the medical cannabis industry:
- Cultivation facility licenses
Cultivation facility licenses will be broken into three tiers, based on the size of the facilities. To obtain a license, cultivators must submit applications along with operating and cultivation plans.
Facilities with Tier 1 licenses will be allowed to cultivate no more than 30 mature marijuana plants and an unlimited number of immature plants and seedlings, or less than 500 square feet of plant canopy; Tier 2 cultivation facility licenses allow the growth of up to 3,000 square feet of plant canopy; Tier 3 cultivation facility licenses allow the growth of up to 10,000 square feet of plant canopy; and Tier 4 cultivation facility license, allowing the growth of up to 30,000 square feet of plant canopy.
Not more than once every 2 years, an applicant seeking renewal of a Tier 4 cultivation facility license may apply to increase the allowed maximum amount of plant canopy by 10,000 square feet.
- Testing facility licenses
- Products manufacturing facility licenses
- Marijuana store licenses
- Marijuana social club license, beginning June 1, 2019.
|Application||$15,000||Retail store: $250
Testing lab: $250
Marijuana social club: $250
Change of location – $4,000
|Retail store: $2,500
Testing lab: $1,000
Marijuana social club: $2,500
|Taxes||5.5% state sales tax on all marijuana transactions at dispensaries and 8% for edibles||10% excise tax on retail sales|
Opportunities in Maine’s cannabis market
Until now, opportunities for new cannabis businesses in Maine have been limited, with all of the state’s limited number of medical cannabis licenses already awarded, but the legalization of recreational cannabis has opened the door for cannabis industry entrepreneurship. With recreational cannabis sales expected to begin in 2018, businesses looking to enter Maine’s medical marijuana market should be ready to begin the permitting process.
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