Maine isn’t just known for its picturesque coastline. After attending a recent cannabis expo—NECANN Maine, my team and I learned about the unique complexities of the local cannabis and CBD industry. Specifically, as we spoke with attendees and exhibitors, we gained insights into the nuances of Maine’s cannabis regulations, which may help other states as cannabis legalization becomes increasingly prevalent.
Maine’s approach to regulating the cannabis sector is fascinating particularly when it comes to understanding the surprisingly significant differences between medical and adult use licenses. But what does it mean for businesses and investors eyeing the potential goldmine that is the adult-use sector? And from an accounting perspective, how can we ensure that businesses remain compliant while also maximizing their growth potential?
I’m diving deeper into these questions, specifically with regard to the unique considerations Maine businesses must think about, and what other states can learn from cannabis in the Pine Tree State.
Maine’s Medical Cannabis Conundrum
Maine’s reputation in the cannabis community has evolved significantly over the past few years, distinguishing itself by some surprisingly relaxed regulatory requirements for medical use.
What does medical use mean? Access to medical use cannabis is driven by a health requirement. Patients with medical cards can purchase cannabis products to relieve a wide variety of health issues, from chronic pain to anxiety disorders.
On the other hand adult use, often called “recreational,” is more like the alcohol industry, where anyone can walk in and purchase cannabis products.
In Maine, the distinction is muddied, with cards relatively easy to obtain for the low cost of $50. This, understandably, presents challenges for dispensaries considering making the move from medical to recreational cannabis. Where the medical side enjoys more relaxed reporting requirements, adult use comes with the more stringent protocols used by other states.
Transition Troubles: Medical to Adult Use
Moving from medical to adult-use cannabis isn’t as simple as changing a storefront sign or expanding a product line. Especially in Maine, where it becomes a complex question for dispensaries of whether or not making the switch is worth the headaches that come along for the ride.
Because it’s relatively easy for Maine residents to get a medical card, dispensaries may question whether or not they have a market with adult-use consumers. However, focusing exclusively on medical may reduce access to a huge segment of people.
What’s more, while getting a medical card isn’t difficult, it does create a record with the state, which could be problematic for people in specific jobs or sectors, which could include federal and state employees, as well as those in professions demanding high levels of security clearance or public trust. The appeal of legal cannabis is overshadowed by the potential risks to their careers. While those don’t go away with adult use, recreational purchases do not leave a record.
Maine also has a potency paradox. Many of their medical offerings were 10x more potent than what people can buy under adult use, due in part to tolerance building that may occur with daily cannabis use for medical reasons. While potentially attractive to some clientele, it would be significantly more difficult to sell in a non-medical setting.
Understanding the Regulatory Differences
Does adult use represent a broader horizon for cannabis companies? In short, yes. It leads to a much wider potential customer base. However, I touched on more stringent reporting requirements above, so let’s explain that further.
Recreational cannabis in Maine, like many other states, requires meticulous attention to detail from seed to sale. Many states use METRC, or software like it, which helps them track the correct data and generate regulatory reports. In Maine, this isn’t a requirement for medical use, at least, not yet.
Both business models are subject to 280E because cannabis is, as of this writing, a Schedule I substance. However, sales tax amounts and requirements may vary between medical use and adult use.
When comparing medical with adult use, the difference is more than just the clientele or purpose. It can represent a shift in business models, regulatory landscapes, and operations. And businesses pursuing adult use must learn how to navigate this gap.
Looking to the Future
While the current landscape may be vastly different for medical and recreational cannabis businesses, the truth is I don’t see less reporting likely. In fact, it’s my opinion that required reporting regulations will grow more stringent is a matter of when, not if.
Whether or not it makes sense for medical dispensaries to shift to adult use licenses, they should prepare for increasingly stringent reporting requirements, whenever they come down the pipe.
Like all cannabis businesses, new and established, taking the time to set up a strong financial foundation for your company will set you up for success in the long run. It’s better to do it right the first time than face the headaches that come with fixing something that’s improperly configured. And that’s where Accounting for Green comes in.