AUGUSTA — Emile Clavet calls himself a serial entrepreneur, having made millions selling Maine real estate and electricity. The Harpswell businessman wants to jump into the recreational marijuana market next, but there is only so much he can do until he knows the rules.
He has purchased warehouse space in Portland and is mapping out retail shop locations around the city. He joined Maine Professionals for Regulating Marijuana so he could follow, and possibly hasten, the rule-making process.
“Marijuana is an economic freight train, and we can either jump on or let it pass us by,” he said. “It is a good fit for Maine. It’s tied to our agriculture, our entrepreneurial spirit. It’s unique and a little difficult, like us. Maine can be a leader in this market, if we want it.”
He is hoping for clarity Monday. The Maine Legislature is meeting in special session to take up two marijuana bills. One bill launches the regulatory market, setting specific tax rates, license tiers and rules, while the other postpones licensing until January 2019.
The regulatory bill has supporters among those who want to launch the market – investors like Clavet and marijuana consumer groups like the Marijuana Policy Project. Those who wrote the bill advertise it as more conservative than the law voters approved last fall.
“With an issue like this, which was decided by such a narrow margin, I think you have to show both sides of the debate a lot of respect in the final legislation,” said Sen. Roger Katz, R-Augusta, co-chairman of the Legislature’s Committee on Marijuana Legalization Implementation. “It legalizes, but it goes slow.”
Some marijuana advocacy groups, like Legalize Maine, prefer the referendum law because of its lower tax rates, statewide cultivation cap, and a licensing preference for medical marijuana caregivers, and have pulled their support for the regulatory bill.
They don’t like last-minute additions to the bill that require towns to pass affirmative local laws allowing marijuana businesses, which they say will make it harder for industry to break into an area than earlier language that allowed towns to pass “opt out” ordinances.
“This is the opposite of what the voters of Maine approved,” said Legalize Maine spokesman Paul McCarrier.
On Thursday, House Minority Leader Ken Fredette, R-Newport, joined with Gov. Paul LePage, a marijuana opponent, to introduce a bill that would give state lawmakers a third option Monday – extending an existing moratorium on the voter-approved law until 2019.
While investors like Clavet want to jump in now, while interest rates, land prices and electricity prices are favorable for marijuana start-ups, others say something this controversial cannot be rushed and that one more year of waiting isn’t the end of the world.
“There will still be plenty of money to be made off Maine marijuana in 2019,” Fredette said last week. “We can’t let the promise of money, whether it’s new businesses opening up or even tax revenues, rush us into something we aren’t ready for yet.”
There is a lot of money, jobs and political power riding on these votes.
Industry analysts peg Maine’s recreational market at $325 million a year. State analysts predict $20 million to $27 million a year in new tax revenues. Job estimates vary widely, but Alaska, Colorado, Oregon and Washington have added 58,000 marijuana jobs since legalization.
The Maine Chamber of Commerce and Maine Retailers Association signed a letter Sunday that urged lawmakers to pass the regulatory bill. In the letter, they say the regulatory bill would close existing loopholes that allow big collective grows and marijuana gifting.
“If the statewide moratorium is extended, there will be clear winners,” reads the letter. “The winners will be individuals profiting from the licensed and unregulated marijuana market, who are taking advantage of loopholes, which is creating mass confusion.”
Katz and his co-chairman, Democratic Rep. Teresa Pierce of Falmouth, are more pointed. They claim the big winners under a continued moratorium are black market dealers, who are getting rich from filling the increased demand for marijuana created by the legalization vote.
The recreational market could take a bite out of the state’s $26.8 million a year medical market, however, as some of the state’s 3,200 caregivers and 51,000 medical patients could migrate to adult use to expand their client base and avoid doctor certification fees.
Some caregivers support the regulatory bill, but others are against it.
It prohibits co-operative growing, which allows small operators like caregivers to pool resources to cut costs. It eliminates a statewide cultivation cap on how much pot could be grown in Maine, which could flood the market, drive down prices and bankrupt all but the richest investors.
A delay could benefit caregivers who have opened up medical marijuana shops across Maine.
These shops are not regulated by the state’s medical marijuana law, because no one expected caregivers who are limited by law to treating no more than five patients at a time to need them. But some caregivers have learned to cycle hundreds of patients through their five slots.
That is one of the reasons why medical marijuana dispensaries support the new regulatory bill.
“Gray market stores will continue to open because of this confusion,” said Tim Smale, president of the Maine Association of Dispensary Operators and co-founder of Remedy Compassion Center. “Delivery scams and ‘gifting’ of cannabis will continue, as they are arguably legal.”
This will undercut the regulated legal marketplace, cut into state tax revenues and cause Maine dispensaries to lose revenues and shed jobs, Smale said. Patients will leave to seek lower-cost alternatives from sellers that do not have to comply with tight regulations, he said.
The moratorium will also drive at least some marijuana investors who want to come to Maine to other alternatives, such as Massachusetts, California and Nevada, which are further along than Maine in crafting their regulations, offering investors detailed rules and timelines.
“Delaying the market rollout is likely to encourage potential investors to explore other options,” said Hannah King, a lawyer who represents clients who want to get into the Maine marijuana market. “Particularly with Massachusetts anticipating first sales in the summer of 2018.”
A delay is bad enough, she said. Uncertainty about the rules eventually could be worse.
“Out-of-state investors who were considering investing in Maine are taking a harder look at Massachusetts and California, where the law has been finalized and they can make informed business decisions,” King said.
While groups like Legalize Maine have accused the regulatory bill of neglecting the marijuana caregivers that have served Maine since 2009, bill supporters like King say the bill was written specifically to give all Mainers, not just caregivers, a licensing advantage.
The bill requires license applicants to have lived in Maine for at least two years. And a majority of board members and investors must also meet that residency requirement. That requires out-of-state investors to partner with Maine companies to enter the market, King said.
“It will be a huge loss to the state if folks decide to take their money somewhere else,” she said.
Clavet has been talking with investors from all over the country who are interested in diving into the Maine marijuana market. As a lifelong Mainer, Clavet said he will wait around to invest here, even if sales can’t begin until 2019, but his would-be investment partners might not.
“The time is right now,” Clavet said. “Interest rates are low. Land prices are low. Electrical rates, low. It’s really the perfect time to do a start-up, if you have money. We have people with money, ready to invest in a legal market in Maine. Why would we want to send them away?”
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