Maine’s mom and pop weed scene sweats corporate ‘gentrification’

HALLOWELL, Maine — Eddie Dugay’s cannabis dispensary in this town of less than 2,500 people along the Kennebec River could not exist in most states that allow medical marijuana.

The outside of the shop looks like a typical New England home, with white siding, a pitched roof and dark, faded shutters. The inside has the same homey feel despite the menus advertising everything from marijuana flower to infused gummies. The wallpaper doesn't quite match the floral-patterned couch or the bold colors of the blanket draped over a chair.

It’s exactly the vibe of shops like Dugay’s 4Twenty that medical cannabis advocates in Maine say makes their program unique and sets it apart from the polish of corporate marijuana chains that increasingly dominate the market in many states and make weed advocates skittish of the burgeoning industry.

Now, the state is in the process of introducing more stringent regulations that would treat all medical marijuana businesses — from small mom and pops to billion-dollar behemoths — nearly the same. Many of these small businesses, known as “caregivers,” fear the proposed rules will quickly push them out of the market in favor of corporate cannabis.

“They’re trying to over-regulate us because they really don’t want us around,” Dugay said. “I call it medical marijuana gentrification.”

Maine’s network of mom-and-pop marijuana shops has grown rapidly over the three years since state law was changed to allow them to expand their operations to become more competitive with larger dispensaries, which were not limited in the number of plants or patients they could serve. The caregivers were allowed to open retail storefronts, grow more plants, wholesale up to 75 percent of what they grew and hire more than one employee.

There are now more than 3,120 caregivers licensed in the state, employing more than 5,200 people. Marijuana has become Maine’s No. 1 agricultural commodity and a $200 million industry. Caregivers like Dugay account for more than 75 percent of those sales. But the slate of proposed regulations include stricter security requirements, stiffer fines and mandatory seed-to-sale tracking of all marijuana products. State lawmakers are also pushing to expand mandatory testing for contaminants to the medical marijuana market.

Many of these caregivers are now banding together in a fight against the new rules, which they say threaten their existence. The battle in Maine over new market rules is an extreme example of what’s happening across the country as the quasi-legal cannabis industry morphs into a massive business that generated $20 billion in sales last year. Caregiver advocates scored a win last week in the waning days of a special legislative session when the House and Senate overwhelmingly voted to pause the proposed rules, which were supported by one of the country’s biggest cannabis companies.

In March, Maine’s Office of Marijuana Policy conducted a marathon public hearing on the draft proposed regulations where most caregivers voiced their vehement opposition over the course of seven hours.

One of the few people who testified in their favor was a lobbyist representing Curaleaf, a behemoth company with cannabis operations in 23 states and sales projected to top $1 billion this year. Caregivers argue that big corporations and their lobbyists are unduly influencing the rules.

OMP Director Erik Gundersen said his agency isn’t being improperly swayed. “We have rule-making consultants who have been incredibly helpful along the way with the adult-use program,” he said in an interview. “But the rules are drafted [in Maine] by OMP staff.”

For Dugay, becoming a medical cannabis caregiver was the obvious next step in a career that took him from the Navy to the halls of Maine’s Capitol as a state representative. After being termed out, he became a lobbyist and consultant who helped people open up cannabis businesses before it clicked: "What am I doing?” he recalled thinking when he decided to start his own shop. “I know how to do this."

A cottage industry grows up

California sparked the modern marijuana legalization movement when its voters approved a medical cannabis law in 1996. Maine voters followed suit in 1999, part of a second wave of states embracing medical marijuana.

In the early days of Maine’s medical marijuana program, there were few rules.

Over the years, both voters and lawmakers have tweaked the program, allowing caregivers for patients, nonprofit dispensaries and patient ID cards. Laws passed from 2010 to 2014 clarified the regulatory framework and introduced pesticide restrictions aimed at protecting patient safety.

But it was 2018 that marked the biggest shift in the program. Up until then, caregivers were limited to serving six patients and many were barely squeaking by financially. But with only eight dispensaries scattered across a state with more than 1.3 million people, advocates say caregivers were essential in providing medical cannabis access to patients.

Becoming a caregiver became a more viable business instead of a daily fight for survival. Medical marijuana sales totaled nearly $222 million in 2020, compared to $184 million for potatoes and $26 million for blueberries — the two food crops the state is best known for.

State Rep. Patty Hymanson, a neurologist and chair of the House Health and Human Services Committee, remembers the day in 2018 when lawmakers put various “stakeholders” of the cannabis program into a room to come up with a deal on a revision of the medical marijuana program. Everyone from representatives of larger dispensaries to smaller caregivers worked for two days on a deal.

In the end, “the Legislature agreed to expand the business of the caregivers so that they were able to develop a business that was larger than before,” she said in an interview. “In exchange for that, it was very clear that they would be regulated more.”

Tracking and testing controversy

With the start of recreational sales in October 2020, the market is poised for another big shakeup. Adult-use sales topped $5.3 million in May, a nearly fourfold increase from the first month of sales. State regulators are trying to thread the needle between preserving the caregiver market while bolstering public safety as the recreational market grows rapidly.

OMP made many changes from the draft rule that initially stirred outrage, but it paused its rulemaking when the Legislature returned for a seven-week special session and competing bills were introduced to address the controversy. One measure, which has the support of many small business owners, would pause the rules and require the OMP to consult with caregivers, patients and medical providers earlier in the process. A competing bill would delay the implementation for "home-based caregivers."

In the past week, the caregiver-backed bill succeeded in both chambers with a 117-25 vote in the House and a 32-2 vote in the Senate. "This is the most consensus they've had on anything this year," said Mark Barnett, who owns a caregiver storefront called Higher Grounds in Portland, Maine.

But passing the bill is just the start of a longer collaborative process. "This is not about not having rules," he said. "We're all in the same state, we all have the same interests [and] we have to find places where those can overlap."

One of the biggest concerns caregivers have is implementing a mandatory seed-to-sale tracking system. The program would be run by Metrc, a Florida-based software company that operates similar programs in 15 other states and Washington, D.C. Tracking marijuana plants with radio-frequency tags as they move through the supply chain is designed to help governments ensure compliance in the legal marijuana market.

But skeptical caregivers point to cannabis businesses in other states who have found implementation costly. Oklahoma medical cannabis businesses are trying to stop the implementation of Metrc in a legal challenge against the state. And a Missouri court recently ruled against the company when it determined that medical marijuana businesses would not have to pay for plant tags.

Caregivers worry that the system will be plagued by spotty internet and electricity access in more rural parts of the state. But most of all, they fear the potential labor expenses rather than the cost of the software or plant tags. Some in the industry have proposed exempting small caregivers from seed-to-sale tracking entirely.

Caregivers like Calvin Akers and Jim Dube, co-founders of Wisely Cannabis in Sanford, already hired a dedicated staffer to specialize in data and compliance. The pair both started growing cannabis in grow tents at home, before expanding into a more commercial operation.

The affable co-founders endured local government meetings where angry residents accused them of trying to peddle drugs to children. The city used to prohibit cannabis businesses from advertising with signage, so the only indication of their dispensary is a big sign on the building that says "OFFICE." But that's set to change soon, thanks to a shift in municipal rules.

Business is going well for Wisely, which has carved out a niche producing solventless extracts in the Maine market. The process involves concentrating the resin of the plant without the use of solvents like butane or carbon dioxide.

Akers and Dube have combined their two caregiver entities under one roof, allowing them to have 1000 square feet of cultivation between the two of them, instead of the individual limit of 500 square feet each. They have 10 employees and a retail storefront, with another storefront in the works.

Metrc says the tracking system is designed to be accessible. The company offers free onboarding classes and webinars, as well as complimentary support.

"Farmers are not necessarily using software during their day to day [operations]," said David Urbanowicz, director of external affairs at Metrc. "Our [user interface] is super user friendly ... [and] designed to mimic the workflow."

Urbanowicz says that while larger businesses might opt to hire a dedicated compliance staffer, it may not be necessary for smaller businesses who grow fewer plants.

Testing is another major area of concern for caregivers. Hymanson introduced a bill this session that would require mandatory testing of all medical cannabis products. Although it was voted down in the Veterans and Legal Affairs committee last month, there almost certainly will be continued efforts to impose testing requirements for caregivers.

While most mom-and-pop operators acknowledge the need for some scrutiny of marijuana products, they worry that overly stringent rules will create problems for them.

Susan Meehan is a caregiver who works exclusively with pediatric patients, in honor of her daughter who suffered from a rare form of severe epilepsy and found relief from using cannabis oil. Meehan works with a laboratory that tests her products for free. She is heavily involved in her patients’ treatments, working with doctors and family members to figure out the most effective formulation.

Meehan is concerned that mandatory testing will back up the labs in Maine so much that it will make it difficult for individual patients and caregivers to test their cannabis as labs focus on serving commercial clients.

While proponents of the legislation say that Maine has plenty of lab capacity, Meehan points to other states like Colorado where the growth of the marijuana market eventually led state regulators to prohibit labs from testing private samples. Medical marijuana patients and caregivers who grew their own cannabis could no longer get their medicine tested, even if they wanted to.

“Patients or parents being able to bring a product into a lab and put their mind at ease — it’s a huge factor for me,” said Meehan, whose daughter passed away when she was 13 years old.

Regulators say they’re listening to these concerns and that they want the rules to be flexible.

“We incorporated a lot of feedback to right-size the [proposed] regulations,” said Gundersen, the state marijuana policy director.

But caregivers like Randall Look, known as Mr. Roots in the Maine cannabis world, are still anxious. Look operates a medical cannabis cultivation business called Alight for Health, located in the island town of Georgetown. He specializes in outdoor, organic cultivation at his own home and has one employee.

Look believes if the rules were to go into effect, many smaller caregivers would opt to go back to the illicit market. Indeed, in California, the high cost of compliance is cited as one of many factors that has helped the illicit market — which accounts for 80 percent of the weed business in the state by some estimates — to thrive.

"The regulations … are going to cause small growers certainly to accrue further costs that none of them are prepared for," he said. "It just makes it so you have to then find investors."

Public safety vs. accessibility

Supporters of the proposed rules say the goal is to protect public health and safety, and to bring accountability to the program.

“It’s very mixed,” said Patricia Callahan, a longtime medical marijuana patient who favors mandatory testing. In more affluent areas, she said caregivers charge more but do more voluntary testing, she explained. But in central Maine, where she lives, she could only find one caregiver storefront that tests its products.

“There shouldn’t be any difference for me going to a pharmacy and assuming everything I buy at the pharmacy is safe,” Callahan said. “I shouldn’t feel any different when I buy medicine on the medical marijuana market.”

States across the country have struggled to figure out how to ensure that minority communities disproportionately impacted by criminal enforcement are able to reap the financial benefits of legalization. Many are creating micro licenses to foster small businesses.

Akers and Dube are prime examples of how market accessibility has helped them create the business that they have today. Anyone can start in a grow tent with a few hundred dollars for the licensing fee.

“I tell [other people of color]: Come to Maine. It’s pretty inclusive here,” said Akers, who is Black. “Maine has been the best place to be. The barrier to entry is really low.”

With the passage of their bill, caregivers are hopeful that the market will stay that way.

"We are the line in the sand — the first that has been drawn in the national fight over how to regulate cannabis,” Barnett, the Portland-based caregiver, said. "I hope people in other states will be inspired by what we have done."