Maine Sued Over Cannabis Business Residency Requirement

Maine cannabis company Wellness Connection is suing regulators over the residency requirement included in the adult-use legalization law, contending the rule is preventing them from expanding into the recreational market, the Bangor Daily News reports.

The company argues the requirement violates the commerce clause of the U.S. Constitution which forbids restrictive, discriminatory commercial regulations between the states.

The lawsuit seeks a preliminary injunction against the Maine Department of Administrative and Financial Services, which includes the Office of Marijuana Policy, from enforcing the residency requirement in the law. The law requires Maine cannabis companies to be majority-owned by in-state individuals or businesses.

The lawsuit was filed by Wellness Connection and Wellness and Pain Management Connection of Delaware, subsidiaries of High Street Capital Partners of Delaware which owns 49 percent of Maine Wellness Connection.

Wellness Connection board member Ron MacDonald said the residency requirement hampers the company’s ability to raise money.

“The natural consequence of Wellness Connection being undercapitalized at the launch of the adult-use market is that we will not be able to capitalize on the opportunities that will only be available in this new market in the same way we could if we were fully capitalized. Wellness Connection’s return on investment will certainly be lower, as a result, when the market launches.” – MacDonald to the Daily News

The lawsuit argues that there is legal precedent for their argument in a 2019 Tennessee case in which the U.S. Supreme Court ruled against that state’s two-year residency requirement for anyone seeking an initial license to operate a liquor store. Maine’s law requires a four-year residency for recreational cannabis business operators.