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Mainers love their freewheeling medical marijuana market. The state has no idea what to do with it.

Regulators go back to the drawing board after caregivers fight off tighter oversight

Wisely Hash Factory in Sanford, Maine.Fred J. Field for the Boston Globe

Of the dozens of US states that have legalized some form of medical marijuana over the past several decades, one towers far above the others in its enthusiasm for cannabis: Maine.

More than 105,000 Mainers registered for medical marijuana certificates last year, representing nearly 8 percent of the state’s 2020 population of 1.36 million. In Massachusetts, by comparison, a much more typical 1.4 percent of residents are card-carrying patients.

But a key factor behind the popularity of Maine’s medical program — a very hands-off approach by regulators — is also its most controversial.

Maine marijuana officials and law enforcement leaders have repeatedly pressed to impose tighter rules on the freewheeling sector, saying its lack of testing, tracking, and labeling requirements leave patients vulnerable to contaminated cannabis and make it easy for producers to divert inventory out the back door.

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The state’s thousands of tiny, locally owned medical operators and their legislative allies, however, have so far blocked all attempts to act on those concerns, most recently pushing through a law requiring Maine’s Office of Cannabis Policy to run any regulatory changes by the State House.

Now, frustrated regulators at the agency are going back to the drawing board for the third time in two years, announcing this week that they will launch a statewide “listening tour” to gather input before embarking on yet another attempt to write new medical marijuana rules.

“When we tell regulators in other states that we have testing for [recreational] but not medical, you get an odd look,” said Erik Gundersen, Maine’s pot czar. “It’s a weird, gray space to be in. But we understand the fear and trepidation out there about change, and we also want a thriving medical program that allows operators to continue doing what they’re doing.”

At stake in the fight is one of the country’s most unusual legal marijuana markets, which is dominated not by investor-backed dispensary firms but so-called caregivers: small, informal growing and manufacturing operations that were originally intended to provide medical cannabis to just a handful of nearby patients.

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While caregivers in Massachusetts and most other states are not permitted to make a profit and typically work with a few seriously ill patients they know personally, many of Maine’s 2,800-plus caregivers have evolved over the course of several statutory changes into pseudo-dispensaries that stand alongside a much smaller number of more traditionally-regulated retailers selling both medical and recreational marijuana.

State law allows caregivers to accept out-of-state medical marijuana cards, and the storefronts they were permitted to open beginning in 2018 quickly became beloved by patients around New England for their grassroots vibe, dirt-cheap prices, and wide variety of craft products. As a result, business has boomed, with marijuana surpassing potatoes and blueberries as Maine’s most valuable crop.

Caregivers and their proponents are fiercely defensive of the sector, saying it embodies Maine’s locavore, artisanal ethos and stands as a counterpoint to the needless over-regulation of cannabis in most other states.

The recent laws forcing regulators to back down were “a complete repudiation of the desire to regulate this industry as if we’re a bunch of dangerous, ne’er-do-well drug dealers who can be swept under the rug,” said Alysia Melnick, an attorney for the Maine Craft Cannabis Association. “The state can’t take our tax money and all the jobs we create and then sell us out to big out-of-state corporations — we weren’t going to stand for that.”

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Larger corporate operators in Maine’s newer and more heavily-regulated recreational sector are less impressed. They’ve cheered efforts to bring caregivers to heel, arguing that the disparity in regulations endangers the public and unfairly eats into their business, including their outlets in nearby states such as Massachusetts.

That leaves regulators stuck in the middle. Gundersen told the Globe in an interview he is hopeful a compromise could still emerge, even as he insists that lab-testing and product-tracking are pillars of any well-run marijuana market.

A December study commissioned by the Maine Office of Cannabis Policy suggests that despite the turmoil, the state has eroded more of its illicit cannabis market than most, with 64 percent of all cannabis consumed coming from a legal source.

To Gundersen, that proves it’s possible for marijuana businesses to succeed while also complying with mandated testing and tracking. He noted that most recreational operators in Maine today are locals who got their start as caregivers, defying fears that stricter rules and a federal court decision striking down a residency requirement would let larger out-of-state companies dominate the space.

Caregivers have drawn the opposite conclusion, saying the report shows that an affordable, convenient, and lightly-regulated industry with low up-front costs for entrepreneurs is the shortest path to stamping out unlicensed sales.

“Competitive legal operations are the most effective way to combat illegal drug sales and make cannabis commerce in our communities safe,” said Matt Hawes, the founder of cannabis firm Novel Beverage Co. and a director of the Maine Cannabis Industry Association. “Policymakers need to support the people who chose the legal but more difficult road in our battle for market share. . . We’re on the same team.”

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Similarly, many caregivers argue that market forces will eventually resolve the debate over testing, as more patients ask caregivers to provide lab results.

“Consumers need to demand any changes they want through purchasing power,” said Calvin Akers, co-founder of the Wisely Hash Factory in Sanford, a medical provider that specializes in concentrates and voluntarily tests its products. “I’m not opposed to regulation at all, but the way [the state] wants to implement this would create an unsustainable cost burden.”

Akers said a one-size-fits-all approach is a mistake in Maine, with its mix of urban and extremely rural areas. Some communities, for example, lack ready access to the internet, meaning a requirement to install security cameras that stream footage directly to government inspectors might necessitate running pricey new utility lines. Making those more remote operations cost-prohibitive would only drive patients and caregivers underground, he contended, while also shattering the personal, community-oriented touch that the market is known for.

“If we had the regulatory structure and cost of Massachusetts, 90 percent of these popular craft marijuana brands wouldn’t exist,” he said. “Maine is a place where you don’t need a lot of money to chase a dream — you can create generational wealth through hard work. I don’t want to see people regulated out of that opportunity.”

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Then again, Akers and others conceded, the uncertainty created by repeated start-stop attempts at tighter regulation is itself starting to take a toll. For example, a number of caregivers who began buying plant identification tags and inventory-monitoring software in anticipation of a new product-tracking requirement found themselves out thousands of dollars when the state put the regulation on hold and then switched to a different vendor.

That has some operators thinking ahead to palatable compromises as the state again hits the reset button on its rulemaking process.

“To be honest, there should probably be some level of regulation that extends beyond what’s currently enforced in the medical program but falls far short of what’s currently enforced in the [recreational] market,” Hawes said. “We want a uniform but right-sized approach that serves as a model.”


Dan Adams can be reached at daniel.adams@globe.com. Follow him on Twitter @Dan_Adams86.