A strain of cannabis called LA Chocolat sits in a sample jar at the Wellness Connection in Portland in 2019. The jar allows customers to sniff the buds before buying. Credit: Troy R. Bennett | BDN

PORTLAND, Maine — The city’s attempt to prioritize locally owned cannabis businesses when doling out recreational licenses has fallen flat.

On Friday, a U.S. District Court judge sided with Wellness Connection of Maine, a cannabis retailer owned by a Delaware corporation, who claimed that the city’s retail use certification system was “discriminatory” and “unconstitutional” because it gave priority to businesses run by Maine residents.

Wellness Connection of Maine filed a federal lawsuit against the city of Portland in June.

U.S. District Judge Nancy Torreson determined that there was “sufficient threat” that Wellness Connection would be at a disadvantage when competing for retail use licenses. Although the city’s points matrix had not denied the dispensary a license, “their alleged injury is not the denial itself but the disadvantage they face in obtaining a license due to the city’s points matrix,” according to court documents.

The order could effectively end a legal battle over retail use licenses between state and local governments and the Wellness Connection of Maine that has lasted since 2016, when Mainers approved recreational cannabis in a ballot initiative.

Wellness Connection alleged that the “points matrix,” a set of socially desirable criteria for retail-use cannabis applicants established by city council, discriminated against operations with non-resident ownership by violating the 14th Amendment of the U.S. Constitution, which bars overly restrictive commercial regulations between states.

Portland devised the points matrix to determine 20 retail cannabis outlets from a larger pool of applicants in what is expected to be a strong retail market. A referendum question to remove the city’s cap of 20 retail businesses will be on Portland’s municipal ballot in November after a citizens’ initiative gathered enough signatures last month.

The city of Portland moved to dismiss the Wellness Connection’s challenge on the grounds that numerous other events would need to happen for the dispensary to be denied a license. A city attorney argued that “residency is not an absolute bar but instead one of many factors determining who is awarded retail use licenses,” according to court documents.

Wellness Connection of Maine, which operates dispensaries in Portland, Brewer, South Portland and Gardiner, and High Street Capital Partners, a Delaware investor, filed a civil lawsuit in U.S. District Court against Portland in June.

It mirrored a lawsuit filed against Maine in March that was dropped after the state said it would not enforce its residency requirement. The dispensary chain has dominated the medical marijuana market and is primed to be a major player in the state’s adult-use cannabis market.

After a four-year delay, retail cannabis sales are slated to begin statewide on Oct. 9, with the state issuing adult-use and manufacturing licenses to businesses in September.