First Massachusetts Dispensary Opening Renews Hope for Entrepreneurs, Investors

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By Tony C. Dreibus

The first dispensary in Massachusetts opens today, kicking off a medical marijuana industry that’s been nearly three years in the making and could eventually generate tens of millions of dollars in annual sales.

Alternative Therapies Group (ATG) in Salem received a three-month waiver from Gov. Baker’s office last week to forgo testing requirements.

The dispensary, which didn’t return e-mails seeking comment, announced on its website that it will begin serving registered patients today by appointment only after receiving approval on Tuesday to being operations. Unlike in other states, patients will not see marijuana on display in the converted factory, instead they will make choices by viewing products on a computer screen, Salem police chief Mary Butler told the Boston Globe. The city will receive 1.25% of ATG’s sales in its first two years and 2% each year after that, the newspaper reported.

The opening of ATG has given renewed hope to business owners and investors who wondered whether the industry would ever get off the ground due to years of delays and political and regulatory wrangling.

“The people who are getting ready to open, because this dispensary in Salem has carved out a path, are much more confident, and the people backing them are much more confident,” said Robert Carp, a Newton, Massachusetts-based attorney and executive director of the Massachusetts Medical Marijuana Dispensers’ Association.

Slow Rollout

Several dispensaries are expected to open in the next six to 12 months, but it may be a very slow rollout.

The state has awarded provisional permits to just 15 companies, even though it’s allowed to issue as many as 35. Of the companies given tentative approval, only four – including ATG – have been given the green light to cultivate medical cannabis.

New England Treatment Access is lining up to launch dispensaries in Brookline and Northampton, but those might not be ready until September. Another company – In Good Health – is in the final stages of receiving approval to sell medical cannabis, though it’s unclear when it will open its dispensary in Brockton.

The Marijuana Business Factbook estimates that MMJ sales in Massachusetts could hit between $10 million and $30 million in the first full 12 months after dispensaries opens. Revenues could come in lower, however, if dispensaries hoping to open soon experience additional setbacks.

Massachusetts’ cannabis industry has been delayed numerous time since 63% of voters approved a bill legalizing medical marijuana in November 2012. Several companies that weren’t awarded licenses initially filed suit, claiming the selection process was flawed. The state also rescinded some of the licenses it initially awarded.

Ups, Downs For Alternative Therapies Group

Kris Krane of 4Front Advisors, a consultancy that works with cannabis companies in Massachusetts, said ATG will have a monopoly for a short time, given that it’ll be the only dispensary in the state.

It also will have sole access to the market: More than 9,000 patient registrations have been reviewed and approved, according to the state.

While that will likely be good for sales, it also means the company will effectively be the only one suffering from growing pains so often associated with a newly opened cannabis market.

“Being the only dispensary in the state, they’re going to sell out of medicine,” Krane said. “It’s going to be a rocky start, of course, but that’s the case almost every time a program starts. There’s always a limited number of stores and product and prices are going to be through the roof.”

Additionally, many locals may not sign up for their medical marijuana card right away thanks to the relatively high cost and an abundance of sellers on the black market, Krane said.

In Massachusetts, being caught with less than an ounce of marijuana is punishable by a $100 fine while obtaining a medical marijuana card costs about $400.

You have to get busted four times for that to be a break-even prospect,” Krane said. “Unless somebody is constantly possessing 10 ounces, there’s really no financial reason to get a card.”

As time passes, however, more cultivators and dispensaries will start growing and selling, which will bring down prices, Krane said. That, in turn, will mean more patients migrating to the legal market and away from black market sellers.

Renewed Optimism

Regardless of how long Massachusetts’ medical marijuana industry takes to get off the ground, companies that invested millions of dollars and the patients they serve are finally able to breathe at least a small sigh of relief, said Adam Fine, managing partner of the Boston office for law firm Vicente Sederberg.

Business owners who have been waiting for more than two years to see their company finally open its doors are excited again, something he hasn’t seen in a long time.

“The folks that have come this far are the survivors,” he said. “There’s a lot of underlying optimism in the industry here. The thought is that once one opens, the next one will open, and the next one, and patient numbers will go up as people realize it’s available. People here are seeing that this is the beginning of an industry, and I think there’s a lot of renewed hope.”

Tony C. Dreibus can be reached at