Portland officials unveiled a proposed licensing regime for adult use and medical marijuana operations on Friday that would cap the number of retail stores at 20 citywide and possibly lead to more restrictions on medical marijuana dispensaries.

The proposed rules, which recommend a $10,000 a year annual license for marijuana retail stores, will receive an initial review by City Council’s Health & Human Services and Public Safety and its Economic Development committees on Tuesday. No votes or public hearings are expected and it’s unclear when the committees will make a recommendation to the full council.

“This is the first time councilors will have a chance to weigh in on what staff has put together,” said City Councilor Justin Costa, who leads the Economic Development Committee. “I think we’ll have some open discussion and try to come to a general agreement on what our process will be moving forward.”

Voters approved legalizing recreational marijuana for adults aged 21 and older nearly three years ago. In June, Gov. Janet Mills, who previously served as the state attorney general, signed a set of state rules, which take effect in September, that spell out how much marijuana Mainers can grow, buy and and sell. Recreational sales could begin as soon as March.

The recreational law allows cities and towns to decide if they will opt into the market, and set local rules. So far, at least 14 of the state’s 455 municipalities have opted in.

Portland, however, is creating its own rules. Maine’s largest city passed zoning rules for adult use marijuana in February. Retail stores, dispensaries and small-scale marijuana caregivers are allowed to operate in several business zones, including downtown, West Bayside and along the Forest Avenue corridor, as well as inner Washington Avenue and the St. John-Valley Street area, among other pockets. But those zoning rules only take effect if the city passes a set of licensing regulations.

As with zoning, city staff is trying to regulate adult use and medical marijuana a similar way, according to a memo from the staff working group.

“The challenge in doing so is that the state has adopted extensive regulations for adult use marijuana uses, but not for medical uses,” the staff memo said. “The regulations for medical uses are significantly less comprehensive, leaving what staff feels are gaps in protections for consumers, the city and neighbors. For that reason, the proposed licensing tries to address those gaps.”

A spokesperson for the Wellness Connection, which operates four medical marijuana dispensaries in Maine, including one in Portland, could not be reached Friday night for comment.

The proposed licensing rules would establish five categories of licenses, including three tiers of cultivation based on canopy size, two tiers of manufacturing and two types of retail operations – medical and adult use.

Application fees range from $50 for a small scale caregiver to $500 for all others. And annual license fees range from $250 for a small-scale caregiver to $10,000 for an adult-retail-use license or a Tier 3 Cultivation license with a plant canopy of up to 7,000 square feet.

Portland’s retail license is twice as much as Auburn’s $5,000 fee and more than seven times South Portland’s $1,400 fee, according to city staff.

Staff proposed allowing up to 20 medical and adult use retail stores in the city and a 250 foot buffer between each store or between a store and a dispensary. They’re recommending awarding retail licenses on a “first-qualified, first-licensed basis.”

Those granted licenses would have one year to open a store, or else they would forfeit their license. Staff considered, but did not recommend, other methods for distributing licenses, such as weighted lotteries for when applicants are competing for the same storefront, a general lottery for all licenses or a merit-based process similar to the state’s process for choosing medical marijuana dispensary operators.

Mark Barnett, the owner of Higher Grounds coffee shop on Wharf Street who plans to apply for a retail license, said he was surprised by the number of requirements and the 20-store cap that are included in the preliminary staff proposal. He believes some of the requirements are redundant and would be burdensome on city staff and applicants, since the state already requires much of that information. He also questioned the proposed fees, as well other financial requirements.

But, as with the zoning, Barnett said city staff is likely giving councilors a menu of regulatory options to kick around and that the final set of rules could evolve throughout the review process.

“There’s a lot to chew on,” Barnett said Friday night, adding that he looks forward to hearing the rationale for their preliminary recommendation. “This is a complex area of policy.”

City staff proposes requiring 10 specific requirements for applicants, including a community relations liaison, written permission from a landlord and plans for security, waste disposal, operations and quality control. Applicants would also have to disclose all chemicals being used in their operation and products.

Applicants would be required to provide the city with a performance guarantee, so if a business folds, there will be sufficient funding to safely and responsibly wind down operations.

Additional requirements for labeling, fire safety and food inspections would also be set. It would prohibit making edible marijuana in shapes that appeal to children or adding marijuana to existing brand name products like Coke or Keebler cookies. Manufacturing of marijuana and non-marijuana food products would have to be done in separate kitchens.

And the ordinance prohibits mobile sales, deliveries, mail order sales or other remote sales, though small-scale caregivers could still deliver medical marijuana to patients.

Tuesday’s joint meeting between the Health & Human Services, Public Safety and Economic Development committees is scheduled to begin at 5:30 in Room 209 at City Hall.

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