Can the Town Do That? Municipal Regulation of Cannabis Businesses

June 20th, 2020, Cannabis Law, Local/Municipal, Zoning & Land Use

There is a lot of confusion about the extent to which Maine municipalities can control medical marijuana cultivation and sales within their borders. Towns must affirmatively “opt-in” (pass an ordinance or adopt a warrant article) in order to authorize certain categories of medical marijuana businesses (dispensaries, caregiver retail stores, manufacturing facilities, and testing facilities), but they cannot prohibit or limit the number of registered caregivers in their communities. 22 M.R.S. § 2429-D.  This means that a certain level of standard, state-authorized caregiver activity must be allowed, even if a town decides to block all other medical marijuana and adult use marijuana businesses.

Standard registered caregiver activity generally includes cultivation of the allotted number of plants/canopy tied to the caregiver’s state registration, sales to qualifying patients, wholesale transactions with other caregivers and dispensaries, and certain limited manufacturing activities. 

While a town cannot place an outright ban on caregiver operations or say that only four registered caregivers will be allowed to operate within the municipality, for example, municipalities do have home rule authority to regulate caregiver activity within their borders. 

Municipalities are taking varied approaches to regulating caregiver activity, and legal questions as to whether they are exceeding their home rule authority remain untested. Some municipalities are restricting medical marijuana cultivation to certain zones (usually commercial/light industrial zone, with medical marijuana cultivation in residential zones expressly prohibited).

Other municipalities treat caregivers as home occupations instead. This alternative allows for medical marijuana cultivation and authorized transactions in an owner occupied residence by the registered caregiver, but subjects this activity to certain performance standards that apply to home occupations as a whole.

Some towns ban outdoor cultivation and/or limit the allowable square footage of an indoor grow as well (Windham is one recent example).  A municipality may regulate caregivers by imposing performance criteria that they would impose on other similar businesses and may prohibit a specific caregiver from operating for failure to meet standards.

The chart below provides a high level overview of situations in which local regulation is or is not allowed, for both medical and adult use marijuana land uses. 

There is a possibility that a registered caregiver could continue cultivating medical marijuana in a location where this activity is currently prohibited by the town if their operation constitutes a legally non-conforming use (often referred to colloquially as “grandfathering”), but that determination would require fact-specific legal analysis.

This is a complicated area of law.  If you have questions, we can help navigate the nuances of local ordinances that may impact your business.

Malina Dumas is a member of Drummond Woodsum’s regulated substances practice group and municipal law group. She advises a diverse array of clients on complex regulatory issues facing the cannabis industry. She is knowledgeable about state and local laws and ordinances that govern medical and adult use marijuana as well as regulatory frameworks that impact hemp and CBD markets across the country.