Few Business Opportunities in Cuomo’s Plan for Medical Marijuana Legalization in New York

Politicians and marijuana advocates have been quick to praise New York Gov. Andrew Cuomo’s plan to legalize medical marijuana in the state, which he will formally unveil on Wednesday.

But the plan effectively prevents a free-market medical cannabis industry from cropping up in New York. The result: There will be very few opportunities for entrepreneurs, and the overall market could be relatively small.

Under the plan, Cuomo will use his executive powers to allow 20 hospitals – rather than dispensaries formed by entrepreneurs – to distribute medical cannabis. The hospitals will have to apply to the State Health Department to participate in the program. Only patients with life-threatening ailments as well as those with illnesses that affect the senses, such as glaucoma, will qualify for an MMJ card.

Cuomo will reportedly sidestep the state Legislature, which has failed to pass medical marijuana bills in the past, and invoke a 1980 law that allows research into marijuana therapy.

If the MMJ program does indeed follow the 1980 law, there will be absolutely no opportunity for industry involvement in New York, said Rob Kampia, director of the Marijuana Policy Project (MPP). Marijuana distributed by hospitals would come from federal cannabis farms in Mississippi, and it would be shipped across state lines under DEA supervision, he said.

“It is a devastatingly bad plan for the medical marijuana industry,” Kampia said. “There are no opportunities, unless [entrepreneurs] wanted to break federal law.”

Whether Cuomo’s plan would allow for the distribution of edible marijuana or infused products is not known, but Kampia said the chances are slim.

The patient base in the state will also be limited. Hospitals would decide who qualifies on a case-by-case basis – with the understanding that Cuomo does not want marijuana to be available for “run of the mill” complaints, such as chronic pain. It’s unclear if the state will come up with a list of qualifying medical conditions or if that will be left completely to the hospital. Either way, the program is much more restrictive than the ones in other states.

One official previously estimated the size of New York City’s medical marijuana patient population at 105,000, which puts the state’s customer base at around 200,000.

But given the limits of this particular program, the patient numbers could come in much lower. A lawmaker who has spearheaded medical marijuana legislation in  New York said perhaps just “tens of thousands” of patients would qualify under Cuomo’s program, which represents a fraction of a percent of the state’s entire population. As a result, the market could be in the tens of millions of dollars rather than in the hundreds of millions.

Kampia said the MPP will likely oppose Cuomo’s plan after it is made public on Wednesday, choosing instead to support the existing medical marijuana bill that is currently being debated in the state Legislature. That bill creates a more traditional medical marijuana framework, which would allow for independently owned businesses to cultivate and sell medical marijuana.

“If even a few state senators say ‘this plan looks good,’ we could be screwed,” Kampia said, referring to the governor’s plan. “Our plan is to explain to them that they should not be distracted, and to push the [original] bill through.”

, Few Business Opportunities in Cuomo’s Plan for Medical Marijuana Legalization in New YorkKampia said a major problem with Cuomo’s plan is that it would require FDA-approved appropriations to pay for the marijuana as well as the framework to run the program. The DEA would also need to lend its support, which would rack up additional bills.

The tight restrictions on which ailments could be treated by marijuana would mean there wouldn’t be enough patients in the program to generate substantial tax revenue.

“It requires the state to lose money instead of generating money from marijuana sales,” Kampia said. “It could be the first time a state found a way to lose money by legalizing medical marijuana.”