By John Schroyer
Seattle warns that some medical cannabis businesses won’t be able to get licenses, Connecticut prepares to boost its dispensary permits by 50%, and Illinois MMJ companies sound the alarm over the state’s small market.
Here’s a closer look at several notable developments in the marijuana industry over the past week.
Too Few For Too Many
Reality is beginning to set in for many medical cannabis business owners in Washington State, and particularly in Seattle.
There was a flurry of activity this week after the Washington Liquor and Cannabis Board (LCB) sent a letter to 47 dispensary owners in Seattle that have applied for new licenses under the revamped state regime. The letter warned that there are too many applicants and too few licenses available within the city.
“If you choose to proceed with your proposed location in the City of Seattle, it is highly unlikely that your license application will be processed and that you will be issued a license,” the letter reads. It then gave the applicants 14 days to notify the LCB if the business intends to relocate outside Seattle city limits and try to obtain a license elsewhere.
After King 5 News reported on the matter, an LCB spokesman called the report “misleading,” and said the letter was intended as a “courtesy” to applicants, since there are only 21 licenses available and two have already been issued.
If no businesses decide to leave Seattle, there are ultimately going to be 26 applicants that will be forced to close come July, when a requirement to have a state license goes into effect for dispensaries. (Countless other existing dispensaries in the city that didn’t apply for a license will also have to close.)
“What we were really trying to do is as a courtesy give people an indication,” said LCB spokesman Mikhail Carpenter. “What you don’t want to do is issue all 21 of those licenses and then have 20-plus other applicants say, ‘Well, I had no idea this was happening. You never communicated this to me.’”
That, however, isn’t the whole story, said Jeremy Kaufman, co-founder of Seattle dispensary the CPC. Rather, he said, the cannabis board picked an “arbitrary number” of licenses to hand out in Seattle, instead of following the intent of a law passed last year that rolled MMJ businesses into the I-502 regulatory system that oversees rec businesses.
“The intention of (the new law) was to ferry through existing medical businesses,” Kaufman said. “They are going to close down a lot of medical businesses for no good reason.”
One of the smallest MMJ markets on the east coast – Connecticut – announced this week that it has approved three more dispensaries, which will open later this year.
The move means the state will increase its MMJ retail footprint by 50%, as there are currently six in operation.
That’s no small development, even though nine dispensaries for an entire state may seem like small potatoes in a bigger market.
For one, the fact that the state increased the number of licenses indicates that officials are comfortable with how the industry has evolved. Fears from communities and neighborhoods over the arrival of MMJ businesses – common in new markets – once again proved unfounded.
Secondly, Connecticut has some of the strictest regulations for medical businesses in the entire country, including a rule that only licensed pharmacists can open and run dispensaries.
Lastly, the state’s medical conditions list doesn’t include chronic pain or several other ailments that many patients suffer from, so the market is on the lower end of the spectrum when it comes to potential.
Despite these challenges, Connecticut’s MMJ companies appear to be doing well, underscoring that businesses can find success in a small and tightly regulated market.
The state approved more dispensaries to meet a rapid increase in demand. A year ago, there were just over 3,000 registered patients, and now there are 8,228, according to a press release from the Connecticut Department of Consumer Protection.
The quickly growing patient pool means that the new dispensaries – as well as existing ones – will almost certainly have enough business to keep them busy.
Patient Problems Persisting
It’s the same old story in Illinois: The state’s patient count remains lower than many expected.
Now, it’s becoming a big concern for MMJ businesses across the state. This week, an Illinois paper reported that unless the number of registered patients jumps by roughly 600% over the next year, many businesses may wind up closing down.
“Some won’t make it, for sure,” if the qualifying condition list isn’t expanded, said Tim McGraw, the CEO of Revolution Enterprises and co-founder of the Medical Cannabis Alliance of Illinois.
McGraw and others hope that Gov. Bruce Rauner and his administration will sign off on a recommendation by a state board to add eight new conditions to the existing 39 on the list. Rauner’s administration has until Feb. 1 to make a decision, but his health commissioner already last September declined to increase the number of conditions.
If the same thing happens again, it could spell big trouble for some Illinois businesses. While 39 approved conditions sounds like a lot, they are not widespread ailments.
But Brad Zerman, whose Chicago suburb dispensary is slated to open in March, says he’s not worried. If the state doesn’t bolster the condition list this time around, then there will be another push to do so. And another after that, if necessary.
“Baby steps, if need be,” Zerman said.
He’s doubtful the state can reach between 20,000 and 30,000 patients in 2016 anyway, even if all eight new recommended ailments are added to the list.
McGraw, however, noted that the number of patients shot up after dispensaries began opening and serving patients late last year, and he said there was a 12% increase in the number of patients just in December. He also cited new polling data that found that 80% of Illinois residents back MMJ if recommended by a doctor.
“Hopefully the administration gets that message loud and clear and does what’s right,” McGraw said.
John Schroyer can be reached at [email protected]