A Maine man was arrested and held without bail last week for allegedly operating an unlicensed cannabis operation in a rural area about 60 miles north of Bangor, according to law enforcement officials and court records. Police seized 40 pounds of processed marijuana from a house in Passadumkeag, Maine and arrested Xisen Guo, who is accused of drug trafficking and turning the property into a sophisticated cannabis cultivation operation. 

Maine legalized recreational marijuana in 2016 with the passage of a ballot measure that also established a regulated market for adult-use cannabis. The Maine Office of Cannabis Policy said that Guo has not been licensed to cultivate marijuana and was operating the site illegally, court records show.

Guo was ordered held without bail on the federal charges on Friday, making him the first person in Maine to face such accusations. Two other individuals who were at the site when it was raided in February were released without charges being filed against them.

The grow site was raided after deputies reviewed electricity bills for the property and identified a significant increase in electricity usage. After the rural home was purchased for $125,000 cash, the electricity bill went from about $300 per month to almost $9,000 per month. Investigators said the electricity usage is consistent with the lights, HVAC equipment and other apparatus used in sophisticated cultivation operations.

Federal Investigation Encompasses 20 States

The arrest of the suspect, a naturalized U.S. citizen who was born in China, comes in the midst of a federal investigation spanning several years and 20 states into illegal pot grows being operated by foreign interests. In 2018, police arrested a Seattle woman and seized thousands of weed plants during an investigation of cultivation sites linked to China. In Oklahoma, law enforcement officials determined that groups from Mexico and China started growing pot in the state after medical marijuana was legalized in 2018. Instead of remaining in Oklahoma for use by registered patients, however, the weed was diverted to states where it is still illegal.

Last week, U.S. Attorney General Merrick Garland told the Senate Appropriations Committee in response to a question from Republican Senator Susan Collins of Maine that the Drug Enforcement Administration is investigating international criminal groups that are operating illicit cannabis cultivation operations in about 20 states including Maine. 

In February, a bipartisan group of 50 lawmakers including Collins wrote a letter to the attorney general asking him to answer questions about reports that China may be connected to illegal marijuana cultivation operations in the United States.

“We are deeply concerned with reports from across the country regarding Chinese nationals and organized crime cultivating marijuana on United States farmland,” the lawmakers wrote in the letter, CBS News reported over the weekend.

100 Illicit Grow Sites in Maine

In Maine, the Internal Revenue Service, the Department of Homeland Security, the FBI, DEA and local law enforcement are working together to investigate unlicensed cannabis cultivation operations, Garland told lawmakers. Federal officials say that there are currently about 100 illicit pot grow sites in Maine similar to the one in Passadumkeag. Since June, approximately 40 search warrants have been issued for unlicensed cultivation operations in the state.

U.S. Attorney for the District of Maine Darcie McElwee said that dismantling unlicensed cannabis operations with connections to international crime groups is a priority for law enforcement “and we will continue to marshal every tool at our disposal in this effort as appropriate.”

So far, state and local police and federal law enforcement agencies including the DEA and FBI are beginning to see success at dismantling illicit cultivation sites, she said, with “dozens of operations” shut down over recent months.

“The possible involvement of foreign nationals using Maine properties to profit from unlicensed marijuana operations and interstate distributions makes it clear that there is a need for a strong and sustained federal, state and local effort to shut down these operations,” McElwee said, according to a report from the Portland Press Herald.

Raymond Donovan, the former chief of operations for the DEA, told CBS News earlier this month that unusually high electricity bills are one of the easiest ways to identify an illegal cannabis cultivation operation.

“These locations consume huge amounts of electricity,” he said. “In order to accommodate that amount of energy, you need to upgrade your electrical infrastructure — and significantly. We’re getting into specialty electrical equipment that is very scarce and hard to come by, especially in the state of Maine.” 

Another illicit grow site in Machias, Maine was raided in December after police noticed unusual electricity usage. After the raid, which yielded 2,600 plants and about 100 pounds of processed and packaged cannabis, Machias Police Chief Keith Mercier said that the cultivation site was using about four or five times as much electricity as a typical residence would.

“Once we subpoenaed the power records from the power company, [it] was pretty hard to explain why somebody anywhere would be using that amount of power,” he told CBS News.

Among the many states currently looking to enact measures to investigate psychedelic regulation and increase psychedelic research, Maine is one of the latest to throw its hat in the ring. 

Lawmakers supporting the initial reform bill were hoping to usher in a new era of psychedelic drug regulation for therapeutic use, though the amended bill would pump the breaks and instead set the groundwork to potentially legalize and regulate at a later time.

The legislation would establish a commission to study and make recommendations on psychedelic regulation and related services, specifically examining what a legal framework “for the therapeutic use of psychedelic drugs, including but not limited to psilocybin,” may involve, Marijuana Moment first reported. The bill now heads to the desk of Gov. Janet Mills (D).

A Legislative Compromise: The Original Bill

The legislation, LD 1914, was approved by the House via voice vote on Tuesday just days after the Senate approved it. While the current language focuses on studying the proper pathways to potentially legalize and regulate psychedelics in therapeutic settings, the original legislation would have legalized psilocybin in therapeutic contexts.

It’s a disappointing turn of events for those pushing for urgent access to psychedelic medicines and treatments, though Maine lawmakers in favor of psychedelic reform, like Rep. David Boyer (R), still recognized that the bill “represents progress,” albeit not as much as many lawmakers and advocates had hoped for. 

In an email exchange with Marijuana Moment, Boyer cited evidence brought to the committee regarding how psilocybin can help a variety of different people with a wide range of conditions and needs. Still, he said it “seemed like” his Republican colleagues, and even many Democrats, were not ready to vote for the previous measure.

“Hopefully, they do good work and we have a little bit more of a starting place” for the next session, Boyer said. Lawmakers considered other options to amend the bill, like removing provisions that would have allowed for personal possession outside of the regulated program, though Boyer said that route “seemed to cause more problems than solutions.” 

So, if Mills gives the final OK, what exactly would the updated legislation entail?

Maine Psychedelic Commission Could Pave the Way for Future Reform

If passed, the bill would create a 13-member panel comprised of legislative appointees, health experts, a military veteran, academics and folks experienced in psychedelics policy. 

Similar to other states that have created investigative groups to research psychedelic medicine and regulation, the Maine commission would review “medical, psychological and scientific studies, research and other information on the safety and efficacy of psilocybin in treating behavioral health conditions.”

It would also look to other states and their approaches to psychedelic regulation. Additionally, the commission would be responsible for laying out a plan detailing how Maine could establish its own regulatory framework for psychedelic substances, psilocybin and otherwise in the future.

Specifically, the commission would be tasked with developing a “long-term strategic plan for ensuring that psilocybin services will become and remain a safe, accessible, and affordable therapeutic option for all persons who are 21 years of age or older and for whom psilocybin services may be appropriate.” It would also be responsible for advising and making recommendations to the legislature surrounding a legal framework for the therapeutic use of psychedelic drugs.

Luckily for psychedelic reform advocates, the turnaround time to report findings is relatively quick, with the commission required to meet six times and deliver its report to the legislature by Nov. 6, 2024. Still, it’s uncertain if and how quickly findings would lead to the regulation of psychedelic assisted therapies in the state.

Psychedelic Reform: An Ongoing Local Push, Growing National Trend

Maine has made related efforts in recent months, including a similar bill that would have originally decriminalized drug possession and invested in treatment resources. It was since amended to create a task force to study the proposed reform measures instead.

However, Portland, Maine — the state’s largest city — made waves last year when city council voted to pass a resolution to deprioritize prosecution for possession of psilocybin and other psychedelic drugs. It is not a decriminalization measure but rather “sets official city policy to put those crimes at the lowest priority for prosecution.”

While the latest bill may not immediately result in therapeutic access for psychedelic medicines in Maine, it represents one of many active bills around the country regarding psychedelic research and reform — a topic that was hardly even mentioned only a few years ago — and serves as another reminder that this momentum surrounding psychedelic access across the U.S. is unlikely to slow any time soon.

Curaleaf, one of the world’s largest cannabis companies, is exiting the adult-use cannabis retail market in Maine with the sale of its licensed dispensary in South Portland. The company’s sole recreational marijuana shop is being sold to Foliage Cannabis Co., which has already begun operations at the retail location, according to a report in local media.

Online news source Mainebiz reports that Curaleaf and Foliage Cannabis have agreed to the transfer of ownership of the South Portland dispensary, although the terms of the deal have not been released. The retail site will be the second dispensary in Maine for Foliage Cannabis, which operates its original shop in South Portland less than a mile from the new location. Curaleaf continues to operate medical marijuana dispensaries in Bangor, Auburn, Wells and Elsworth, Maine, according to a listing for the state on the company’s website.

A company spokesperson for Curaleaf confirmed the move, writing in an emailed statement that “We exited adult use, but remain in the medical market with four stores and have no plans to exit medical.”

Curaleaf mentioned the transaction on March 6 when it reported results for the fourth quarter of last year. The announcement had few details, saying only that the company had “entered into an agreement to sell our Maine, adult-use store.” In a press release, the company reported it had generated $345 million in revenue in the fourth quarter of 2023, representing an increase of 4% quarter-over-quarter.

Curaleaf’s fourth-quarter financial also reporting shows that the company’s revenue for the year totaled $1.35 billion, up 6% from 2022. Profitability was elusive, however, with the firm showing a 2023 net loss of $281.1 million, the equivalent of 39 cents per share. Curaleaf owns and operates 145 retail cannabis locations in 17 states. Worldwide, the company employs about 5,600 people.

Alexis Soucy, a spokesperson for the Maine Office of Cannabis policy, said that Curaleaf will complete the sale of the retail location once the business has been approved for an active license. The conditional license the shop is operating under is scheduled to expire in October. Until the active license is approved, the two companies have arranged for Foliage Cannabis to use its name and branding at the dispensary to be transferred. 

Curaleaf Entered the Maine Rec Market Three Years Ago

Three years ago, Scott Reed, Curaleaf’s general manager in Maine at the time, said that the company had big plans for the state as it entered the recreational market in April 2021.

“We have been proudly serving the Maine medical market with top-quality, locally grown flower, and exceptional customer service for nearly a decade, and we look forward to expanding those offerings to our adult-use customers,” Reed said at the time, according to the report from Mainebiz.

Reed left Curaleaf in July 2022 when the company went through a round of downsizing. He is now the co-owner of Foliage Cannabis Co. with his partner Scott Lever. Together, they’ve been able to independently raise the money needed to open the two retail locations, giving the partners far more flexibility than many other cannabis companies.

“We’re self-funded, so we’re different from a large company with lots of investors,” Reed said. “We can be nimble.”

Earlier this month, the Office of Cannabis Policy released data showing that the state’s retailers rang up $18.01 million in recreational marijuana sales last month, a figure that was up 28.3% from the $14.05 million in sales in February 2022.

Despite the success of Maine’s adult-use cannabis industry as a whole, the picture isn’t as rosy for some companies in the market. A total of 20 licensed businesses including 11 cultivation sites, four manufacturing facilities and five retail dispensaries exited Maine’s recreational marijuana market in 2023.

Overall, however, the industry is still growing. Despite the shuttered companies, the number of cultivation sites in Maine remained stable from 2022 to 2023, while the number of retailers increased by 27 and the number of manufacturers rose by 13.

Curaleaf’s exit from Maine is not the first time the company has left a state’s recreational cannabis market. In January 2023, Curaleaf announced that it was leaving the mature markets of California, Oregon and Colorado. That announcement was followed by the company’s exit from adult-use cannabis markets in Michigan and Vermont.

Curaleaf executive chairman Boris Jordan said during a third-quarter investor conference call in November that the company is exiting “low-margin, low-growth” markets it now serves in a bid to improve profitability. 

“Throughout 2023, the company’s been focused on improving efficiency metrics and dialing in operations to maximize its existing base,” Jordan said, according to a report from Cannabis Business Times. “We have taken significant steps to eliminate redundancies, strategically reduce headcounts [and] exit unprofitable markets. Most of these actions occurred in the first half of the year. And in the third quarter we took the final steps in our asset optimization plan.”

Maine’s regulated adult-use cannabis industry generated more than $200 million in sales last year, an increase of 36% over 2022, according to information from the state Office of Cannabis Policy. But cannabis business owners who feel that Maine’s cannabis market is becoming oversaturated say that the numbers obscure the challenges licensed operators will face in the not-too-distant future.

Maine’s licensed recreational marijuana retailers rang up 3.7 million transactions in 2022, raking in about $217 million in the process, according to information released by state regulators on Monday. The yearly total represents a 36% increase over the $159 million in sales recorded in 2022.

John Hudak, director of the Office of Cannabis Policy, said the 2023 numbers do not tell the whole story about the health of Maine’s cannabis industry.

“The sales numbers are up almost 40%. That’s a strong testament to how the industry continues to grow,” Hudak told the Portland Press Herald. “But hidden in these numbers, too, is a pretty significant decrease in price.”

Cannabis prices decreased by about 16% overall in 2023, Hudak said, a drop that indicates that Maine’s cannabis growers are producing too much weed. While consumers appreciate the lower prices, the drop in profits can be bad news for producers and retailers.

“Even with the increases in overall sales, the decreased prices do make it harder to operate,” Hudak said. “Eventually we’re going to see business closures.”

The Maine legislature legalized recreational marijuana sales in 2018, with licensed sales of adult-use cannabis beginning in October 2020. Earlier legislation that legalized personal possession and home cultivation of cannabis went into effect in 2017.

Prices Dropped More Than 50%

The early days of regulated recreational marijuana sales in Maine saw limited supply, resulting in high prices for consumers at the state’s retailers. But as more licensed operators ramp up their businesses, oversupply has become a significant issue for Maine’s legal cannabis industry.

The average price of a gram of smokable cannabis flower was $16.68 when recreational marijuana sales began three years ago. In December of last year, the price had dropped to $7.53 per gram.

Mark Benjamin, owner of the Botany cannabis dispensary in Rockland, said foot traffic has climbed steadily since he opened the shop in late 2021. But with falling prices coinciding with an increase in licensed retailers, he and his staff have created new incentives to encourage customers to spend more. 

“There may be tens of millions of dollars flowing into (the market), but it is certainly spread out across more stores,” said Benjamin.

With his business thriving, Benjamin is set to open a new Botany shop in Belfast, Maine in the next few days. But he acknowledges that some business owners have had a more difficult time succeeding, particularly those who do not have ready access to capital.

“Everyone was dropping and dropping their prices in order to get enough cash in the door to cover their costs,” he said. “The weaker players are starting to drop out of the market,” he said.

Hayden Stokes and Zach Dolgos are the owners of The Happy Canary, a cannabis cultivator that has been supplying Maine’s medical cannabis industry for the last six years. In December, they opened their Blue Lobster dispensary in Casco, Maine, the town’s first recreational marijuana retailer. Stokes said they hope to gain the license needed to grow for the adult-use market soon, seeing vertical integration as the key to the company’s success.

“Having our own retail is a big part of the solution,” he said.  “When you have your own retail, you can set your own fate.”

Hudak said that he believes that Maine’s cannabis industry will see a few more years of sales growth before the yearly total begins to plateau. David Vickers, owner of Origins Cannabis Company in Augusta and Manchester, said that he believes much of the industry’s growth will come from southern coastal towns.

“You’re going to continue to see people flocking to Maine,” he said. “I don’t think we’ve hit the summit yet, but I think we’re certainly getting there. There are only so many people in Maine.”

Vickers, Stokes and Benjamin all operate businesses that serve or will soon serve both the recreational and medical cannabis markets. They believe many medical marijuana businesses will soon either switch to recreational marijuana or end operations completely.

In April, the Office of Cannabis Policy released a report warning about a “mass exodus” of the industry’s medical caregivers. In 2016, the number of caregivers hit a peak of about 3,250. By December 2023, the number had fallen to 1,763.

“I’m seeing the medical side suffering as the recreational side increases,” Vickers said. “That to me, long term, may not be a good thing for Maine. We have so many small farmers that may very likely lose their livelihood.”

The city council in Portland, Maine “voted 6-3 to pass a resolution deprioritizing prosecution for possession” of magic mushrooms and other psychedelic drugs, according to local news outlet News Center Maine, and NBC affiliate.

The outlet noted that the resolution does not decriminalize such psychedelics, as has been reported elsewhere.

Instead, it “sets official city policy to put those crimes at the lowest priority for prosecution,” News Center Maine reported.

The outlet reported: “When reached for comment Wednesday, Maeghan Maloney, district attorney for Kennebec and Somerset Counties and president of the Maine Prosecutors Association, wanted to warn Mainers not to get a false sense of security if they chose to use psychedelics in Portland moving forward.”

“If someone interprets that [resolution] to mean… this criminal statute will no longer be enforced, that would be a wrong interpretation,” Maloney said, as quoted by News Center Maine.

Decriminalize Maine interim director Aaron Parker said that the resolution was a good foundation for broader reform.

“If we already have at least some element of the city government saying, ‘OK, we don’t want to waste our time and resources criminalizing people for these things,’ it makes it that much easier to, next time, be like, ‘Alright,’ and we’re gonna re-write the ordinances,” Parker told the outlet. 

Decriminazlie Maine, which describes itself as a “grassroots organization that promotes the decriminalization of cultivation, possession, and adult use of plant and fungal medicines,” was one of the groups that championed the resolution. 

“In our work, we recognize the importance of practices rooted in decolonization, sustainability, and intentional community building, consciousness expansion, and transformative justice. Decriminalize Maine cultivates community through educational opportunities on decriminalization and risk reduction; in this work, we enthusiastically partner with complementary organizations. Additionally, we support, encourage, and disseminate professional and academic research. Our work relies on the financial support from foundations and from the community,” the organization says on its website.

On Monday, the group celebrated the resolution’s passage on its Instagram account, but also noted that it is essentially a good starting point.

“The city council wants to treat drugs as a public health issue (good), but it’s only an opinion. Ending the war on drugs and using the savings to offer voluntary support to drug users is a policy that is supported by lots of bits of evidence and the success of national adoption in Portugal (the country),” the organization said in the Instagram post. “Hopefully this statement by the council can be used by advocates of harm reduction (or risk reduction if you prefer that term) to leverage support for such things as safe consumption sites, permanent supportive housing and maybe even a safe supply program.”

Parker said that it will ultimately be up to the Maine state legislature to decriminalize psilocybin.

“The resolution I don’t think really adequately decriminalizes anything in Portland. While we do want to protect people from potential criminal penalties, we are also looking to reduce the stigma around these substances which is an important part of harm reduction for this type of material,” he told Maine Public Radio.

According to Maine Public Radio, state lawmakers will “will debate a similar bill in January which would decriminalize psychedelic plants and fungi as well as create a regulated framework for legalization.”

A bill to decriminalize and regulate psilocybin in the state was introduced in the Maine legislature earlier this year, but was tabled.

Lawmakers there held a hearing in May, when they heard testimony in support of the legislation.

Spectrum News reported on the hearing at the time, highlighting testimony from Army veteran Nicolas Hamlin.

“I stand before you today as living proof of the healing ability psilocybin has to offer and plead for the approval of [the bill],” he told the Veterans and Legal Affairs Committee, as quoted by Spectrum News.

“This has helped me and many others maintain productive lifestyles,” he added. “I wish that psilocybin as a treatment option be available to those that will benefit from it.”

Spectrum had more details on Hamlin’s testimony and the proposed legislation:

“A Portland native, [Hamlin] joined the military in 2000 and completed multiple deployments to the Middle East. After his service ended, he suffered from post-traumatic stress disorder, anxiety and ‘my own demons’…Hamlin was one of many people who testified Monday in support of the bill, which would direct the Maine Department of Health and Human Services to create regulations that would allow physicians to recommend its use at designated facilities for those who are 21 and older.”

The bill’s sponsor, Democratic state Sen. Donna Bailey, modeled the proposal “on laws in Colorado and Oregon, where the substance has been legalized,” according to Spectrum.

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Adult-use cannabis sales soared last year in Maine, nearly doubling the total for 2021.

The local news outlet Masthead Maine, citing data that was released by the Maine Office of Cannabis Policy, reports that the “state’s licensed adult-use retailers reported nearly 2.5 million sale transactions, totaling $158.9 million [in 2022],” which was up from the $82 million of sales generated the year prior.

“(The growth) reflects the significant economic impact that legal cannabis continues to have in the communities that have opted into the system,” said John Hudak, the director of the state’s Office of Cannabis Policy, as quoted by Masthead Maine. “The system is creating jobs, helping revitalize communities, and having a positive economic impact on businesses that help the industry function.”

Maine voters approved a proposal legalizing recreational cannabis use for adults in 2016, but the law took years to finally materialize. 

That is because former Maine Gov. Paul LePage, a Republican, repeatedly stood in the way of the law’s implementation. 

But voters there elected a new governor in 2018, the Democrat Janet Mills, who immediately went to work in upholding the will of the people and getting the new marijuana law up and running.

In the summer of 2019, Mills signed a bill that made changes to and enacted the new cannabis law. 

“Over the course of the last several months, my Administration has worked quickly to implement the law regarding Maine’s adult-use recreational marijuana market as Maine voters asked the state to do two and a half years ago,” Mills said at the time. “The rule development demonstrates what can be accomplished when state government works with lawmakers, industry stakeholders, and the public to accomplish a shared goal. With this law, we are one step closer to honoring the will of Maine voters.”

The governor’s office said at the time that the legislation signed by Mills made “several changes to the [marijuana law] including an amendment to the Maine Food Law to no longer consider edibles produced with recreational marijuana as adulterated, allowing the entry of certain vendors into the limited access areas of licensees, and authorizing the department to impose an administrative hold on a licensee,” while additionally authorizing both the Office of Marijuana Policy and the state Department of Administrative and Financial Services “to complete final adoption of their adult use rulemaking.”

“OMP consulted with seven different state agencies consisting of the Department of Agriculture, Conservation and Forestry; Department of Health and Human Services; Department of Labor; Department of Public Safety; Department of Environmental Protection; Department of Professional and Financial Regulation; and DAFS’ Maine Revenue Services when completing their rulemaking work,” Mills’s office said at the time. “The office also coordinated closely with the Office of the Attorney General, Department of the Secretary of State and the Legislature’s Office of Policy and Legal Analysis.”

Legal adult-use cannabis sales officially kicked off in Maine in October of 2020, nearly four years after voters approved the legalization ballot measure. 

The months and years that have followed have seen the fledgling marijuana industry grow and prosper. In May 2021, the state reported more than $5 million in recreational pot sales, which at the time made it the highest grossing month.

That is a modest figure compared to the more recent monthly sales totals. Masthead Maine reports that the state “set a new record each month through August 2022, which brought in over $17 million.”

Last month brought in $15.2 million in recreational marijuana sales, according to the outlet, and the 2022 sales “also earned the state roughly $16 million in tax revenue.”