A dozen folks scattered round council chambers at Kittery City Corridor watched quietly as Maryann Place cranked a shiny bronze raffle drum round 3 times, then reached inside to seize a ping-pong ball.
The retired city clerk held the ball as much as present the black quantity written on it: 8. She repeated the method twice, selecting two extra random winners. Then she drew the remaining balls one by one to arrange a ready checklist of companies keen to use for the city’s three retail marijuana enterprise licenses, one in every of three totally different business zones.
The October lottery, a primary for the southern York County city, was created to find out who might apply for these three out there licenses after Kittery opted in to the state’s adult-use marijuana market.
However the lottery has turned out to be controversial and 4 months later, a neighborhood hashish firm that didn’t win a coveted invitation to use continues to query the legality and equity of the method and is threatening to take the city to court docket. Candy Grime, based mostly in Eliot, says the system was simply gamed by firms with deep pockets that would afford to purchase tons of of possibilities to win.
In the meantime, the Workplace of the Maine Legal professional Basic seems to be investigating to find out if the city carried out an unlawful sport of probability with no license from the state.
City officers have defended their lottery and city boards are within the technique of reviewing plans from the three companies granted the chance to use for licenses to open adult-use marijuana shops.
Michael Strauss, an lawyer for Candy Grime, despatched a letter to Kittery officers in December, asking them to rethink the lottery system.
“Although ping-pong balls could have been randomly chosen from the raffle drum, the lottery was rigged earlier than the drum’s first spin as a result of the city allowed entrants to pack the drum with entries prematurely,” Strauss wrote. “The city knew its lottery could possibly be gamed and it interpreted the ordinance in a approach that assured it could be.”
Below the system adopted by city officers, a enterprise proprietor who wished to use for a license needed to submit a pre-application at a value of $750. The city’s guidelines mentioned that any enterprise submitting a pre-application needed to have a legitimate Maine tax identification quantity, and that just one pre-application for every of the three zones could possibly be submitted per tax ID. But it surely didn’t block the best way for a single enterprise to submit many pre-applications by organising separate entities with their very own tax IDs.
Candy Grime alleges that the best way Kittery arrange the lottery allowed it to be simply gamed by savvy companies that would afford to pay for tons of of entries.
Greater than 700 pre-applications had been submitted, netting the city upwards of $535,000 for its common fund.
Brandon Pollock and Nick Friedman, co-founders of Principle Wellness, a medical and leisure hashish firm with areas in Maine and Massachusetts, every received a possibility to use for a enterprise license. They every submitted pre-applications for varied enterprise entities, a mixed whole that accounted for greater than half of the entries within the lottery and value upwards of a quarter-million {dollars}.
Mitchell Delaney, proprietor of the Indico medical marijuana retailer in Kittery, spent $7,500 for 10 pre-applications. As one of many first three picks, he additionally acquired a possibility to use for a license and he plans to open a retailer on State Highway.
Jim Henry says he can’t simply stand by and watch the city create coverage that negatively impacts residents and companies. Candy Grime “has the power to say that is improper and rise up for it,” even when meaning suing Kittery, he mentioned. Ben McCanna/Employees Photographer
Candy Grime submitted 12 pre-applications at a value of $9,000 for the zone that encompasses the world alongside Route 236. Its first ball was drawn fifteenth, putting the corporate far down the ready checklist. Jim Henry, CEO of Candy Grime, mentioned the pre-applications had been submitted utilizing tax identification numbers for current entities throughout the firm.
“It’s like spending a substantial sum of money on a ticket for a lottery that you simply really feel such as you’ll by no means win,” he mentioned. “Those that paid essentially the most acquired essentially the most. Those that paid essentially the most had been those with a variety of out-of-state cash. That resulted of their success. That’s irritating.”
MUNICIPAL LICENSES
Below Maine legislation, leisure retail shops can function solely in cities that opted in to the state’s adult-use program. Municipalities have the facility to restrict the variety of marijuana companies inside their borders and to require them to get municipal enterprise licenses.
The Kittery City Council started discussing marijuana companies shortly after the state legalized adult-use marijuana in 2016. Over the subsequent three years, it developed a framework for potential licensing and positioned a non-binding referendum on the poll, in response to a memo final 12 months from City Supervisor Kendra Amaral to the city council.
In 2019, the council requested workers to draft an ordinance for adult-use marijuana shops, however pandemic issues quickly put that work on maintain. In November 2020, the city acquired an authorized petition from Josh Seymour, proprietor of North Berwick-based medical marijuana enterprise Inexperienced Truck Farm – signed by almost 500 residents – that referred to as for the city to enact a licensing ordinance for marijuana companies. However the petition had a “deadly flaw,” Amaral wrote in her memo, as a result of it didn’t restrict marijuana companies to sure zones.
The city labored with Seymour to develop an alternate licensing ordinance and corresponding land use ordinance that went by the traditional city approval course of reasonably than being put earlier than voters.
Because it ready to approve the brand new ordinances final summer season, the council requested workers to take a look at a lottery to let folks apply for marijuana enterprise licenses reasonably than a first-come, first-served system, which is used extra generally.
Amaral instructed the council that workers felt they might “safely handle” a primary come, first-served system, which “limits the areas for human error and unintended delay,” however that in addition they had come up with a plan for a lottery “that could be workable.”
In August, the city council voted to go ahead with a lottery system.
That got here as a shock to Henry, of Candy Grime, who had been sitting in on municipal conferences all through the method. City officers had twice visited his firm’s 32,000-square-foot greenhouse and medical marijuana retailer in Eliot as they had been shaping the native ordinances.
“You’ve got a city council that put in place a course of that primarily was an illegitimate lottery that amounted to a money seize,” Henry mentioned.
Candy Grime, which operates adult-use shops in Portland and Waterville, had hoped to open a retail retailer in Kittery, however Henry mentioned he additionally wished to see native cities undertake sound coverage for the burgeoning hashish business.
“We actually wished to see a profitable rollout of this system,” he mentioned.
Quickly after the lottery drawing in October, Candy Grime’s lawyer wrote to the city to object to the method it used. Strauss mentioned the corporate was disadvantaged of a good alternative to acquire a license to conduct enterprise in Kittery and would contemplate taking authorized motion in opposition to the city if it didn’t institute a good process.
Candy Grime additionally requested the Workplace of the Legal professional Basic to look into whether or not the lottery was authorized.
In a letter despatched in January to city attorneys, Assistant Legal professional Basic Katie Johnson requested the city to clarify why its lottery system didn’t quantity to an unlawful sport of probability, on condition that it was achieved with no license from the Playing Management Unit. Johnson mentioned that it appeared that Kittery’s lottery constituted illegal playing.
The Workplace of the Legal professional Basic wouldn’t reply questions in regards to the letter or about its interactions with Kittery. The letter despatched to city attorneys isn’t thought of a public file below the Intelligence and Investigative Report Act, in response to a spokesperson.
However the letter was launched publicly by city officers, together with a response from the city defending its lottery system and saying Kittery’s actions don’t meet the weather of a lottery prohibited by state legislation. Kristin Collins, an lawyer from PretiFlaherty who represents the city, mentioned the city’s precedence choice course of didn’t contain a prize or pecuniary consideration for taking part.
Collins mentioned the pre-application course of was used to preliminarily consider the eligibility of every applicant to function a marijuana retail retailer in accordance with state and native guidelines. The pre-application payment was imposed to cowl the prices incurred by the city to overview the functions, she mentioned.
“To the extent the City acquired substantial utility charges, this was as a result of some candidates’ makes an attempt to control the licensing course of by the submission of dozens of separate functions by a number of enterprise entities and was not a foreseen or supposed consequence of the City’s chosen procedures,” Collins wrote in a footnote to the letter. “The City is comfy that the charges as assessed replicate a superb religion estimate of its precise prices to overview and make sure every utility.”
Collins identified that functions chosen within the lottery weren’t assured enterprise licenses.
“Moderately, they had been allowed to submit a accomplished utility containing the knowledge mandatory for the city to conduct a full overview of the applying in accordance with the ordinance and state legislation,” she wrote.
Rockland, Lebanon, Damariscotta, Poland, Southwest Harbor and Hallowell, she mentioned, have used random choice as a part of the marijuana enterprise licensing course of.
“A lottery or random drawing is a pure and truthful technique of distributing a restricted variety of licenses or, within the City’s case, ordering the overview of functions, whereas avoiding allegations of bias or impropriety,” she wrote.
Amaral, the city supervisor, referred questions in regards to the lottery to the city attorneys.
“There isn’t a good method to tackle the excessive demand for a restricted variety of licenses, and the Council selected random drawing from among the many out there choices,” Collins mentioned in an e mail Friday. “This has been a technique utilized by the state and different cities for allocating a restricted variety of licenses or permits. We consider it’s absolutely in compliance with Maine legislation.”
RETAIL STORE PLANS MOVE AHEAD
The result of the lottery has come up at a number of city conferences since Candy Grime first publicly objected.
Barbara Jenny, proprietor of the Mural Constructing on the Route 1 bypass, wrote a letter to city officers in January asking them to discover a method to redraw the invites to use for licenses for the C-1 and C-2 zones, which went to the 2 co-founders of Principle Wellness, in a lottery that’s “really just one ‘ticket’ per enterprise/particular person.” Jenny mentioned she initially supported the lottery technique however was “upset within the chaos and inequity brought on by a big loophole that the city uncared for to foresee, after which to handle as soon as revealed.”
“We accredited what we thought was a good system with an understanding that there are generally unintended penalties,” mentioned City Council Chairperson Judy Spiller after she learn Jenny’s letter into the file at a gathering final month. “Every little thing was reviewed by city counsel and we see no cause to vary something within the course of.”
Regardless of questions from the lawyer common’s workplace and the specter of a lawsuit, Kittery is transferring ahead within the licensing and approval course of for the city’s first three leisure marijuana companies.
Delaney, the proprietor of Indico, was chosen from amongst 11 pre-applications in zone C-3 and is in search of approval for a store on State Highway. Friedman and Pollock, the co-founders of Principle Wellness, had been chosen in zones C-1 and C-2, respectively. Pollock plans to open a retailer on Route 236, whereas Friedman is transferring ahead with plans for a retailer in a shopping mall on Dexter Lane. Not one of the three lottery winners responded to e mail and telephone requests to reply questions in regards to the lottery.
Their plans for the shops nonetheless have to be accredited by the Kittery Planning Board. Earlier this month, the board held a preliminary web site plan overview of the three,150-square-foot adult-use marijuana retailer proposed by Pollock for 41 Route 236, below the corporate title Effectively Area 44 LLC. The board additionally has began reviewing plans for the retail retailer proposed by Friedman in an current shopping center complicated on Dexter Lane.
Earlier than a Feb. 10 planning board assembly that included a presentation about plans for the shop on Route 236, Candy Grime and Strauss despatched letters to the town saying it was “totally improper” for a city committee to take motion on a marijuana retail enterprise license utility whereas the lawyer common’s investigation is ongoing. They requested the city to pause the overview course of till the investigation was over.
City lawyer Stephen Langsdorf of PretiFlaherty mentioned in an e mail to the city supervisor on Feb. 9 that the lawyer common’s workplace had not responded to the city’s reply to its queries. He mentioned there have been no pending injunctions or stop and desist letters that will impression the city course of outlined within the ordinance and that there was no authorized cause to not proceed the Planning Board’s overview of the license functions.
For his half, Henry mentioned he can’t simply stand by and watch the city create coverage that negatively impacts residents and companies. Candy Grime “has the power to say that is improper and rise up for it,” even when meaning suing Kittery, he mentioned.
“If this had been advantage based mostly or this had been achieved based mostly on having the ability to get proper title to a location, we might have understood and we’d have moved on,” he mentioned.
The corporate’s lawyer, Strauss, mentioned they’re watching to see what occurs with the lawyer common and “whether or not the city will come to its senses and pause to determine a greater approach ahead.”
“Candy Grime doesn’t need to be an adversary to the city,” he mentioned. “It needs to be a collaborator in resolving the issue the city created.”
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