Maine Predicts 1st Recreational Cannabis Sales By End Of Year

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Mainers should be able to buy legal recreational marijuana by the end of the year.

The state Office of Marijuana Policy delayed its planned June launch of the adult-use market because of the COVID-19 pandemic but now expects to allow the first wave of recreational marijuana testing labs, grow facilities and manufacturing labs to open by the end of the first quarter, which ends in September, director Erik Gundersen said Wednesday.

Licensing supply-chain businesses will give the state’s recreational cannabis industry time to grow, test and manufacture the products that will stock the shelves of Maine’s first stores, he said. He told state budget analysts grappling with the fiscal impact of COVID-19 to expect the first adult-use sales taxes sometime in the second quarter, which ends in December.

Gundersen told the Legislature’s Revenue Forecasting Committee the launch would be more measured, and less robust, than planned.

“Our intentions are to start the system,” he said. “But it’s going to be a slower start than we originally intended, pre-COVID.”

The late start means the market will fall short of the $84 million in fiscal year 2021 retail sales that Maine were expecting in the spring, said tax economist David Gunter of the Maine Department of Administration and Financial Services. But the volume of license applications suggest it will hit its predicted $118 million in sales in fiscal year 2022, its first full year of operations, he said.

Gunter also stood by the 2023 adult-use marijuana forecast, which predicts the industry will hit $166 million in sales.

As of Tuesday, the Office of Marijuana Policy had received 342 marijuana business license applications, Gundersen said. Of them, 27 are in the final phase of licensing, having obtained a conditional state license and local authorization. These are now undergoing a final state review, which includes state approval of security and operational plans and an on-site inspection.

The rest of the applicants are divided into two camps: the 151 that have made it to phase two, with a conditional state license in hand but awaiting local approval, and the 164 still in phase one, awaiting word on whether they can get the conditional state license needed to ask their host municipality for permission to do business there.

“I don’t know when, but we should get to where we expected to be pre-COVID,” Gundersen said.

Gundersen also offered a glimpse of another economic consequence of the industry’s launch – job creation. Every person who works in the adult-use marijuana industry in Maine must get a state-issued employee identification card. So far, Maine has issued 871 cards, with another 396 card applications under review.

Maine won’t issue final retail marijuana licenses until it has a testing lab ready, with all its licenses and certifications, to run the health, safety and potency tests required under state law, Gundersen said. Four labs are considering whether to enter the Maine market, but only two are close to obtaining all the permits required to begin testing adult-use cannabis.

Gundersen wants the industry, and the state, to be prepared for the high demand expected when the market opens.

In March, when it released its last economic forecast, state budget analysts were predicting brisk opening day sales. Given the retail cannabis tax of 10 percent, and a June opening, forecasters were banking on $5 million of marijuana sales in the two weeks of the fiscal year that remained.

The latest economic forecast did not directly address how the pandemic might shape public demand for marijuana products.

While $5 million in two weeks of sales may sound like a lot, compare it to the $3.2 million that Illinois collected on its opening day of marijuana sales last month, or the $440,000 spent at Massachusetts’ two recreational retail shops on opening day there. The number of retail shops has risen in the Bay State, and it now has a million-dollar-a-day market.

While Maine is a smaller market, medical marijuana is already a brisk business here. In 2019, medical marijuana sales averaged about $10 million a month, according to state tax revenue data. And that is a market with a customer base restricted to card-carrying patients; recreational marijuana will be open to anyone 21 years of age or older.

National marijuana consultants predict that many of Maine’s medical marijuana patients will move into the recreational market once it goes live, as has happened in other states where both kinds of marijuana are legal, but state budget forecasters here aren’t considering that factor yet.

From legalization to legal sales, Maine is inching toward the slowest adult-use marijuana rollout in the United States, with economists saying the four-year wait from the 2016 legalization referendum until stores open sometime this year will have cost Maine tens of millions of dollars in lost sales and excise taxes and delayed the creation of thousands of industry jobs