Maine insists on preserving its cannabis business ownership requirement. The dispute has now entered uncharted legal territory.

Let’s start with some history. Officials in the Pine Tree State “originally required all medical and recreational cannabis businesses to be owned by residents,” as the Portland Press HeraldAn article explains it all. 

But that requirement was challenged last year by Wellness Connection of Maine, the state’s largest chain of medical cannabis dispensaries that had sought a license for a recreational cannabis dispensary in Portland, the capital city of Maine.

Wellness Connection is a Delaware LLC that owns it. The lawsuit was filed against Portland by the LLC after the council approved an ordinance that limited the number of adult marijuana dispensaries licenses and established a system giving preferential treatment for local applicants.

Matt Warner, an attorney for Wellness Connection, argued that the requirement was unconstitutional, saying that as “a matter of constitutional law, states and cities can’t discriminate against citizens of other states based purely on residency.”

“More than 25 percent of the points awarded through Portland’s competitive licensing process are based on residency, so we’re automatically disqualified for those points, based purely on our owner being from Delaware,” Warner said at the time.

The company argued in its filing that limiting “the opportunities for (Wellness Connection) to create a brand, build a reputation and establish customer loyalty in Portland at the adult-use market’s inception would harm them in ways that cannot be reduced to a monetary damages award.”

In August, Wellness Connection won a victory in federal court. The ruling overturned the state’s residency requirement for marijuana dispensaries. 

The U.S. District Judge Nancy Torresen’s decision has set the scene for the latest round of dispute between Wellness Connection (Maine seeking to keep its law that dispensaries must be owned by citizens).

The Press Herald reported that it “appears the case is the first of its kind to reach a federal appeals court, where the opinion could have ramifications in other states,” with the central question hovering over “whether the residency rule violates the U.S. Constitution by restricting interstate commerce.”

In her ruling back in August, Torresen said that the “notion that the medical marijuana industry in Maine is wholly intrastate does not square with reality.”

“I recognize that none of the courts that have confronted this specific constitutional issue have rendered final judgments, and it also seems that no circuit court has addressed it,” the judge wrote, as quoted by the Press Herald.

“But given the Supreme Court’s and First Circuit’s unmistakable antagonism towards state laws that explicitly discriminate against nonresident economic actors, I conclude that the Dispensary Residency Requirement violates the dormant Commerce Clause.”

Maine Cannabis Coalition is supporting the requirement of residency.

The 1st U.S. filed briefs in support of the state. Circuit Court of Appeals, the state says that “the dormant Commerce Clause does not apply to Maine’s intrastate market for medical marijuana.”

“Nor do the residency requirements in the Maine Medical Use of Marijuana Act burden interstate commerce more severely than Congress, because Congress has already eliminated that market,” the brief said, as quoted by the Press Herald. “Because striking down Maine’s residency requirements at issue in this case would do nothing to expand legal interstate commerce in the United States, they should stand.”