A bill that would let Maine’s small medical marijuana providers form cooperatives is running into resistance from opponents who say it could result in large operations that would be exempt from local regulations.

Proponents, however, believe the bill would level the playing field for sellers of Maine’s most valuable cash crop and put the industry more in line with other economic drivers such as farming, lobstering and aquaculture. 

The bill, sponsored by Rep. Charlotte Warren, D-Hallowell, would overturn a prohibition on cooperatives in the medical cannabis industry that was established to prevent racketeering and cartels within the medical program. 

The language of the proposed bill was not available Monday.

In a public hearing Monday, many medical marijuana patients and individual providers, known in the industry as caregivers, spoke in support of the bill and said it would improve access to capital and resources for small business owners, offering protection against unfair competition from larger corporations.  

Marijuana caregivers have long worked with “an economic deck stacked against them,” Warren told the Veterans and Legal Affairs Committee, without many of the same benefits provided to other industries such as banking and insurance. 

Even so, the industry has managed to become the state’s most valuable crop in 2020, raking in an estimated $266 million. The numbers include sales from Maine’s eight medical marijuana dispensaries and a network of almost 3,000 registered caregivers who serve about 65,000 certified medical marijuana patients. 

Cooperatives of up to five caregivers would allow members to address issues related to insurance, land acquisition, hiring, recruitment, security, management, branding and marketing, among others, while providing a defense against larger corporations, Warren argued.

“Cooperatives promote sustainable businesses” and encourage self-reliance and self-help, “hallmarks of Maine small businesses,” she said. 

Under current state law, medical marijuana caregivers must register as individuals and can cultivate a maximum of 30 plants. Dispensaries, on the other hand, are registered as a business entity and can grow an unlimited number of plants.

Existing statute prohibits “collectives,” defined as “an association, cooperative, affiliation or group of caregivers who physically assist each other in the act of cultivation, processing or distribution of marijuana for medical use for the benefit of the members of the collective.”

There are some workarounds, Catherine Lewis, head of the Medical Marijuana Caregivers of Maine trade group, told the committee.

For example, cultivators could file as employees of one another, she said, but it’s a headache and is based around rules and concerns that are no longer applicable.

“We’ve proven ourselves as responsible and able to work together,” Lewis said.

Cooperatives would help small businesses compete with larger operators, medical marijuana patient Nicholas Evans said. Already limited by minimal access to banking, working together would “help take the financial burden off small businesses” and give them the ability to expand, he said, which would allow caregivers to add more products to the market.

Caregiver Eric McMaster expressed a similar sentiment.

“We’re just trying to level the playing field,” he said.

However, the bill’s opponents worry that allowing cooperatives would open the door to large, hard-to-regulate operations.

Kate Dufour, speaking on behalf of the Maine Municipal Association, said that while she had not been able to see the exact language of the proposed bill, she was concerned that it would “circumvent municipal ordinances,” allowing large, “industrialized operations” in towns that would not otherwise allow them.

She asked that if the committee passes the bill, it also would extend regulatory authority to municipalities.

Hannah King, an attorney with Drummond Woodsum in Portland, expressed similar concerns.

The medical cannabis program intended for caregivers to be smaller operations and therefore subject to fewer regulations, she said. If the Legislature expands their scope, it should also look at other policy decisions that were originally made based on their small size.

Erik Gundersen, director of the Maine Office of Marijuana Policy, believes the dispensary model addresses business entity concerns. In fact, he said, the department’s proposed changes to the medical program, an updated version of which will come out this week, lower the dispensary registration fee significantly for those who want to form partnerships.

The proposed update to Maine’s medical cannabis rules released in January has raised concerns for many in the industry, who believe the changes, especially the proposed adoption of a track-and-trace system, are an attempt to merge the medical and adult-use industries.

The committee also heard testimony on two other marijuana-related bills, including one that would double the number of marijuana plants a medical cannabis caregiver may grow from 30 to 60. 

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