Portland wants to use a weighted lottery system to decide who gets its 20 marijuana store permits, awarding points to women, minorities, veterans, and new immigrants, those who have lived in Maine for at least five years and those willing to share one percent of their profits with the city.
The proposed scoring matrix also would award a point for every year an applicant has operated a state or city-licensed business, one point for every year an applicant has owned or leased the proposed retail spot and a point for each additional 1,000 feet the location is beyond the 500 feet it’s required to be from a school.
If approved, Portland would be the first municipality in Maine to use a scoring system to award its marijuana licenses. Of the 21 other Maine towns that have voted to allow some kind of recreational cannabis businesses, all have chosen to allocate licenses by a straight lottery or by a first-come, first-served system, or have not capped licenses at all.
It would also be the first municipality to find a way to earn a direct profit from the 2016 referendum that legalized recreational marijuana. Other states have allowed city to collect local marijuana taxes, or direct payments from would-be applicants, but Maine’s new marijuana law does not allow it.
The city had originally proposed handing out its limited number of coveted cannabis retail licenses on a first-come, first-served basis, which did not allow for any consideration of what the city considered to be “favorable attributes,” when it unveiled its initial proposal in August.
In defense of a first-come, first-served policy, city staff had warned that towns using lotteries, such as Hallowell, had faced criticism for not giving licenses to the most qualified applicants, while those who used a merit-based system in other states had faced costly lawsuits from those who failed to win a license.
In an August memo, city staff suggested a weighted lottery system could be a compromise, favoring high-quality applicants and allowing the city to keep its 20-store cap while minimizing its exposure to lawsuits that could run up city costs and delay the licensing process in court.
At the time, councilors questioned the need to cap retail licenses at all, but staff said it was necessary to avoid flooding the local market and triggering a wave of marijuana shop failures. Zoning alone wouldn’t work, they said – land-use rules approved in February allowed up to 500 stores.
In an Oct. 7 memo, city staff defended the cap again, noting that Portland uses them to limit short-term rentals at 400. The Portland International Jetport caps its number of taxi licenses at 42 to avoid market saturation. The Bureau of Alcoholic Beverages limits the number of agency liquor stores in the city to 11.
“Staff did consider the feedback and questions, and still stands by its recommendation of a 20-store cap as the most prudent way to implement not only a new ordinance, but also a completely new industry in the city,” the memo reads.
Staff compared Portland’s marijuana store cap to those in other host towns, ranging from Lowell, Massachusetts, which allows five, which works out to 0.04 stores per 1,000 residents, to Poland, Maine, which will allow up to 10, or 1.79 stores per 1,000 residents. Portland’s cap represents 0.3 stores per 1,000 residents.
The city is adding “grandfathering” language to its proposal that would allow medical marijuana retailers with an approved change of use permit or site plan approval to not count against the cap, so long as they don’t apply to go recreational. That could increase the total number of stores above the proposed 20.
Industry advocates have opposed the cap, saying the free market should determine which stores succeed and which fail. They had hoped the city would lift its cap while reworking the proposed regulations, but were disappointed to see they had stayed, and to learn about the new scoring matrix.
David Boyer, the former director of the state chapter of the Marijuana Policy Project, said the system will make it nearly impossible for a young resident to break into this new industry. They would not be able to compete with a 75-year-old plumber in one of the city’s industrial parks for a retail license, he said.
The matrix won’t help small, craft cannabis operators that have paved the way for legal sales, Boyer said.
“Imagine if the city had capped the number of breweries in Portland and smothered them with onerous regulations?” asked Boyer, who now works as a private consultant to cannabis start-ups. “The city needs to adopt smart licensing regulations, not arbitrary ones.”
The city was slated to unveil the proposed changes to the economic development and health and human services committees Tuesday, but an internet outage prompted the city to cancel the presentation until it could livestream the meeting. A new hearing date will be announced later this week.
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