Maine voters approved a ballot initiative in 2016 that legalized adult-use cannabis. Four years later, the industry is still waiting to launch sales after a series of legislative and regulatory hurdles, compounded by the COVID-19 pandemic.
Significant bureaucratic delays of program implementation in other states—such as neighboring Massachusetts, whose 2018 adult-use rollout that had taken two years, by comparison—had been and still is widely criticized by consumers and the industry for myriad reasons.
In Maine, however, while JAR Cannabis Co. Co-Founder Joel Pepin anxiously awaits for adult-use to come online, he’s giving Office of Marijuana Policy (OMP) regulators credit.
“They’ve been able to basically hit every single timeline they’ve set out for themselves,” he says in an interview with Cannabis Dispensary. “I believed we were right on track to have a June or July launch, which was what was on the table before COVID. That gives me confidence that [the adult-use market will launch] as soon as social distancing guidelines are understood and everyone feels comfortable about having these stores open.”
Although Maine voters approved adult-use legalization in November 2016, it wasn’t until February 2019 that the incoming administration of Gov. Janet Mills established the OMP within the Maine Department of Administrative and Financial Services, according to OMP Director of Engagement and Community Outreach David Heidrich.
The OMP then announced three main public goals, Heidrich says: complete rulemaking before the legislature adjourned its 2019 session, begin accepting adult-use applications by the end of that year and launch the adult-use program in the spring of 2020.
Regulators indeed met these goals, Heidrich adds, as Gov. Mills signed LD 719, An Act Regarding Adult Use Marijuana, into law in June 2019, the OMP launched its process for accepting adult-use applications in November and December 2019, and regulators spent early 2020 working with adult-use testing facilities to ensure a lab would be available when the market launched.
JAR Cannabis Co. has operated in the Maine’s medical cannabis market since 2012. The company runs a medical dispensary in Windham, a town just outside Portland in the southern part of the state. (JAR is also a cultivator and processor with two 15,000-square-foot facilities in Androscoggin and Cumberland counties.) When the state issued conditional adult-use licenses for retailers, cultivators and processors back in March, JAR nabbed five adult-use conditional licenses.
Like many of the uncertainties of the moment—Pepin, his team, and the rest of the state’s adult-use conditional licensees don’t know how long they’ll need to wait to formally begin recreational sales. OMP decided in April that the launch of Maine’s adult-use market, which was expected for June, would be pushed back indefinitely as a result of social distancing concerns stemming from the COVID-19 pandemic.
In addition to the health crisis setback, there’s yet another hurdle for conditional licensees: They must now obtain local authorization before they can receive a final active license from the state, which so far hasn’t been easy.
Many local governments have not yet opted in or out of hosting cannabis businesses, let alone drafted their local ordinances to outline how they will regulate the industry within their borders. In May, OMP Director Erik Gundersen told the local media outlet Bangor Daily News: “Even though 87 conditional licenses are out there, the local authorization forms aren’t coming back at a volume where we can actually start the program.”
Each community must opt in to hosting adult-use cannabis businesses and must then adopt an ordinance. Heidrich says that at least 42 have done so; however, Gundersen wants to ensure that there will be enough adult-use dispensaries to meet consumer demand before the market launches.
For example, Portland—Maine’s largest city—approved its local ordinance on May 19, which caps the total number of medical and adult-use dispensaries at 20 and establishes a point system to award the limited number of retail licenses. (The license cap has drawn criticism from advocacy groups.)
Council also voted to issue temporary cannabis testing lab licenses in April to ensure a quick launch of the market after the COVID-19 pandemic, as there have been industry worries of a potential testing bottleneck that could cause even further delays.
But here, too, Pepin is optimistic on the progress made with cities.
“The towns have been moving the work on marijuana forward,” he says. “A lot of these towns have [spent] one, two years or more crafting their ordinance . It’s a process, so for all the work that’s gone into it, it’s not something that’s just tossed to the wayside.”
Windham, where JAR has current medical operations, voted to approve its ordinance on May 26.
A recent lawsuit filed by Maine Cannabis Coalition on May 29 has the potential to put yet another snag into the rollout. The suit, filed against the state’s Department of Administrative and Financial Services, claims the department is in violation of state law by not adhering to rules of the Marijuana Legalization Act, which includes a residency requirement for licensees, according to The Portland Press Herald. After Wellness Connection of Maine (which has current medical licenses and ties to international cannabis operator Acreage Holdings) sued the department for the rules’ constitutionality, the state abandoned that requirement, the Press Herald reports.
Pepin’s predicting a launch date sometime in the fall as the best-case scenario. “I’d say September, October, November is what the hope is right now,” he says. “Again, anything can happen to push that back. It’s been pushed back so many times, so we all understand that’s a possibility, but that’s what it seems like right now.”
Lessons Learned from a Pandemic
Pepin says many of the changes that JAR has implemented as an essential business in response to the COVID-19 global pandemic will serve the company well as it expands its business to serve the adult-use market.
“We’ve completely transitioned our business model to online orders and phone orders. We never really had an emphasis on this before. We’ve obviously seen a big uptick [in sales] and it continues to grow every week since COVID started, on the medical retail side,” he says.
“It’s a giant ramp-up in demand, production, personnel and management. We’ve been working with our staff, and our staff is all charged with reading the new adult-use rules. Everyone is familiar [with] what is going to need to happen in terms of compliance [to expand to] adult-use operations.”
-Joel Pepin, Co-Founder, JAR Cannabis Co.
This recent shift in consumerism has certainly impacted operations as well. “We’re learning how to do transactions in a shorter amount of time,” he adds. “It’s forced us to prep on how to handle a larger demand on the same POS terminals. We’re walking away from this with plans to remodel the stores, we’re adding POS terminals to accommodate adult use, and additionally, we’ll have terminals dedicated to online orders [and] phone orders for returning customers and patients who don’t want to wait in line on a busy Friday afternoon. They can bypass the line and pick it up and we’re not losing a customer because there’s a 15-minute wait.”
Adult-use markets usually involve “organized chaos,” he adds, so he’s confident in JAR’s ability to handle what (he hopes) is around the corner.
“It’s a giant ramp-up in demand, production, personnel and management,” he says. “We’ve been working with our staff, and our staff is all charged with reading the new adult-use rules. Everyone is familiar [with] what is going to need to happen in terms of compliance [to expand to] adult-use operations.”
Customer service remains JAR’s first priority, Pepin adds, and he doesn’t want his team to lose their dedication to the customer during the transition.
“We’ve always focused on great products and a great retail staff that can go above and beyond with serving customers,” he says. “We’re always trying to improve on that interaction and that process, and we’re very proud of the team we’ve put together and the way our patients get treated—their service and the product quality when they come visit us. For us, it’s scaling those small processes, from the branding to the packaging to the product quality to amazing staff.”
Even with that confidence, Pepin expects meeting demand in the early days of the rollout is going to be a tough challenge. Not only will state residents be lining up for access—but tourism is also a strong part of the state’s economy, and he expects to see out-of-state customers, too.
“A lot of companies like us, we want to go adult-use, and we’ve long been hopeful for this opportunity, but at the same time we recognize, what good is it going to do for customer experience if you go live on day one or week one, only to be running out of products and to not offer the same service that our customers are already attuned to?” he says.
Recognizing that potential, he says that depending on when the market launches and how much production space JAR has at that time, he’s willing to wait a little longer, even months beyond the state’s launch date to come online because when the doors open, he wants to be ready.
JAR is also leveraging its existing relationships with other retailers and cultivators so they can form partnerships and rely on one another’s supply as the market finds its balance. However, some of JAR’s third-party vendors are located in towns that have not yet opted in to the adult-use cannabis industry, Pepin says, so it’s possible some of those vendors and their products may not be available to JAR when the market opens.
“We’ve identified who those vendors are, what products [we will not] be able to have on the adult-use side, and we’re coming up with contingency plans and making new relationships with other people who can help fill some of those voids,” he says.
When the state works out its initial kinks, Pepin believes Maine’s recreational market will have a bright future. “Once that supply catches up, I think Maine is going to be recognized by all the tourists as a state with extremely high-quality cannabis products with a lot of passion and love behind them, that are very affordable.”
What he’s most looking forward to, however, is the spotlight this will put on the people who comprise the state’s cannabis industry.
“Maine’s got some extremely talented operators,” he says. “There are some really impressive cultivation companies. There are some product manufacturers and processors that just do a really good job. There are just a ton of people who have a lot of experience in the industry, operating medically, so I’m just excited about all the hard work, all the dedication that’s been put into everyone’s craft, for them to be part of this moment in Maine’s history, to be part of the rollout."
