Maine marijuana company sues state over residency requirement

Wellness Connection filed a lawsuit in federal court Friday against the Maine department that oversees marijuana policy, claiming that residency restrictions on owners of recreational cannabis businesses violate the U.S. Constitution.

The Auburn-based company said the residency requirement is delaying its entry into the adult-use market because it needs more capital investment, which it said is more available outside of Maine. It also said the requirement may stymie job and economic growth for recreational marijuana businesses and for the entire Maine economy.

“We as an industry can’t work within the confines of the residency requirement,” said Matthew Warner, an attorney at Preti Flaherty who is representing Wellness Connection, which is 49 percent owned by a Delaware investor. “We still don’t have the money we need to execute our business plan.”

He said that because marijuana is illegal on a federal level, banks cannot provide loans. And Maine doesn’t have large investors, so the company has had to search for money out of state.

The lawsuit seeks a preliminary injunction that would keep the Maine Department of Administrative and Financial Services, whose Office of Marijuana Policy oversees both medical and marijuana businesses in the state, from enforcing the residency requirement in the recreational marijuana law.

The law requires that a majority of the ownership in the company be held by persons or businesses whose owners are Maine residents. It also states that every officer, director, manager and general partner of the marijuana business must be a Maine resident.

Spokespersons for the Department of Administrative and Financial Services and the Office of Marijuana Policy were not immediately available for comment.

The lawsuit was filed by Wellness Connection and Wellness and Pain Management Connection of Delaware. Wellness and Pain Management Connection has been an investor in Wellness Connection. The defendants are the Department of Administrative and Financial Services and Kirsten Figueroa, in her official capacity as commissioner of the department.

While the federal court has suspended many activities until May 1 because of the coronavirus outbreak, it will hear cases it deems to be emergencies.

“This emergency motion asks for preliminary injunctive relief, which means we need to show irreparable harm that cannot be paid back in a fixed amount,” Warner said.

Wellness Connection, which plans to sell recreational marijuana, is owned 51 percent by Wellness Connection of Maine, a medical marijuana business that runs four of the eight licensed medical marijuana dispensaries in the state. High Street Capital Partners of Delaware owns 49 percent of Wellness Connection.