Beyond Massachusetts, states struggle to limit marijuana behemoths
Massachusetts is not the only state struggling to limit the dominance of large marijuana companies.
Maryland bars companies from owning more than one store, but several companies have publicly said they have multiple outlets there.
In what seems like an open defiance of the spirit of rules designed to level the playing field, Green Thumb Industries and iAnthus Capital Holdings Inc. both claim three outlets in the state. Wakefield-based Curaleaf Holdings, which already runs a medical marijuana dispensary near Baltimore, said last month that it plans to have three additional stores operating there under its brand.
Meanwhile, Harvest Health and Recreation Inc., a cannabis company with one store in Maryland, unveiled plans to buy Verano Holdings, which has two more.
A Green Thumb attorney told the Baltimore Sun last year that the company believes the Maryland rules only block companies from submitting more than one application for a new license from the state — and doesn’t bar companies from obtaining additional licenses from others. An investor presentation says the company acquired two of its three Maryland licenses.
Also, the current Maryland law only focuses on ownership, in contrast to the broader language in Massachusetts law that also limits the number of stores companies can “control.” The Maryland focus on ownership has allowed firms to argue they are legally permitted to operate additional stores if they run under management agreements. An iAnthus spokesman said the company runs all three of its stores in Maryland, but does not own them.
In December, the Maryland Medical Cannabis Commission expressed concern about a “proliferation” of management agreements, saying it had objected to at least a half-dozen that appeared to skirt regulations. But the commission announced in January it will wait for guidance from the state’s Legislature before acting.
Los Angeles attorney Barry Weisz said there is much ambiguity in state and local restrictions nationwide, because the rules are so new and generally haven’t been tested in court.
Weisz, a partner in Thompson Coburn’s Los Angeles office and founder of the firm’s cannabis practice, predicted the laws will be refined in the next few years, eliminating confusion about limits. But in the meantime, companies will continue to test the limits.
“It’s like the wild, wild west,” he said.
The issue is playing out on the local governmental level, too.
In the New York state market, MedMen recently announced plans to buy another multistate marijuana operator, PharmaCann, which would give MedMen control of eight stores in New York if regulators approve the deal. Each company currently operates four stores in New York, the maximum permitted.
A MedMen executive said they are transparent in their dealings, and work to be in compliance.
In another method of monitoring companies, Colorado bars publicly traded companies from investing in licensed marijuana businesses there at all.
But MJardin Group, whose stock trades publicly, told investors it operates seven stores in Colorado under the name Buddy Boy. A spokesman for MJardin said a separate entity actually holds the licenses, even though MJardin operates the businesses.
Marijuana companies also have tried to thwart caps in another state.
Earlier this year, Trulieve Cannabis persuaded a Florida judge to strike down state rules capping the number of dispensaries each company can own there. The state has appealed the court ruling, but the cap is slated to expire next year.