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New England Update: Recreational Stalls, Complications in Medical Persist

Two lawyers from the regulated substance practice group of New England law firm Drummond Woodsum, Hannah King and Edward “Ted” Kelleher, presented their findings in an informative session “Where legalization stands in New England” at the CBEConnections industry conference held at the Revere Hotel in Boston on September 12.

In their presentation, they addressed general themes about legalization in New England – New Hampshire, Vermont, Rhode Island and Connecticut working on medical marijuana regulations, while Massachusetts and Maine are working on both medical and recreational.

Most states are actively considering regulations for recreational marijuana, according to King. “As you can imagine there is an enormous opportunity in ancillary businesses,” King says. “It’s been pretty amazing to watch. Now we are seeing companies working on consumer software getting involved in the industry. So we are seeing this industry mature. The creativity is astounding.”

Among their findings are the following: There are still no legal commercial recreational sales anywhere in the New England states. “The legal market in Massachusetts is in the process of being stood up,” Kelleher says. “They are saying that licenses are being issued and sales will begin in July, 2018, and probably six months later, in Maine. There are six silo markets in New England states, each with their own rules. There is a lot of regulatory detail.”

The residency requirements may dampen the ability to participate in more than one state market. And local control in the recreational market will create complications for all licensees.

“Investors who want to invest in Massachusetts need to know that there is a lot we don’t know,” King says.

Massachusetts is expected to be at least a half billion market in recreational alone by 2019. When that happens, the medical marijuana regulations will be merged with the regulations of the adult use system. “The regulation act contains a process for the Department of Health to hand over the transfer of the regulatory authority to the Cannabis Control Commission, and that process will be ongoing,” Kelleher says.

The commission, by a certain deadline, will take all of the applications that they have and put ones from dispensaries that have provisional conditional registrations (PCRs) on top of the stack, process them first and grant licenses to them first, Kelleher says.

The new recreational bill in Massachusetts is “a really complicated bill” Kelleher says. “The regulatory mandate to the cannabis commission is extensive, and gives them a lot of areas to regulate, and a lot of guidance about how they should regulate it.”

In Maine, where medical marijuana has been legal since 1999, the first licensing for adult use is expected to begin in the summer or fall of 2018 after decisions are made about the reworking of the legalization act in a special session of the Maine legislature, which may happen in late October, 2017. As with alcohol sales, municipalities can vote on whether or not to be a “dry town” regarding marijuana retail establishments and social clubs.

draft bill released on September 11 would let Maine’s eight licensed medical marijuana dispensaries apply for a license to sell recreational cannabis, but they could not sell medical and recreational products at the same counter, said Sen. Roger Katz, R-Augusta, co-chair of the state marijuana committee tasked with crafting new adult-use regulations.

Like Colorado, Maine would require separate medical and adult-use entrances to a dual-licensed dispensary.

Connecticut’s medical marijuana market – with limited edibles and no state sales tax – is expected to be around $25 million in 2019. It is a pharmacologically-oriented model, which means that there will be requirements for very technical product labeling. License holders for dispensaries need to be pharmacists.

Legislation issues related to adult use in the state has been kicked down the road for now. “The list of qualifying conditions is extremely strict in Connecticut,” Kelleher says. There is no chronic pain and no nausea as listed conditions. “It is tied to discrete medical diagnosis,” he says.

Plus – doctors have to register with a central registry as working with a cannabis patient. “That has chilled the willingness of a lot of doctors to get involved,” Kelleher says. “It’s a very regulated system, and just a very slow moving recreational process.”

New Hampshire’s medical marijuana program, legalized in 2013 with first sales happening in 2016, is expected to be $12 million in 2019. A commission was created to study adult use in July, with a report due sometime in November, 2018.

In Vermont, adult use marijuana is predicted to be a $30 million business in 2019, then skyrocket to over $60 million in 2020, while medical stays relatively flat at around $10 million.

Vermont’s adult use bill was approved by the state’s legislature, but vetoed by the new Republican Governor Phil Scott in May. The issue is on hold until January, 2018. “I anticipate that Vermont will legalize adult use sometime in the relatively near future,” King says.

Initially Vermont required dispensaries to organize as non-profits, she says, and the dispensaries are now in the process of reorganizing from non-profit to for-profit organizations.

There are also very narrow qualifying conditions in Vermont, which were expanded in 2017. In Vermont, a medical patient can get cannabis to treat PTSD but has to prove that they are actively engaged in therapy.

Rhode Island’s medical marijuana program should hit $55 million in 2018, then inch up another $10 million by 2019.

On adult use there, a Senate bill, SB420 “Adult Use of Cannabis Act” introduced in March, would have created an adult use system. “The Senate passed it and the House did a debate on it and decided to create a committee to study the issue,” Kelleher says. “That commission is due to report back sometime in 2018 on their recommendations for adult use legalization,” he says.

The good news is that the governor of Rhode Island, Gina Raimondo, is an advocate of adult use, he says.

So as the industry gets its ducks in a row in New England, there is a lot to consider – including the local culture. “A lot of these states have a suspicion of outside money, or as we say in Maine: ‘People from away’,'” Kelleher says. “There is a political impulse to want to preserve those jobs and those opportunities for Maine residents. And I believe that there will be similar views about that in Vermont and New Hampshire.”

David HodesDavid Hodes

David Hodes

David Hodes is based in the greater Washington DC metropolitan area. He is the former editor of seven different business magazines, and has contributed feature articles to several business/lifestyle publications and national cannabis magazines. Hodes is also a former field producer for CBS News, NBC, NFL Network, ESPN and other media outlets; worked as a news promotions producer for two network affiliates; and was the morning news editor for a third network affiliate.

He is member of the National Press Club, and deputy booking agent for the National Press Club Headliners Committee.

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