By Michael Mayes
With the passing of medical marijuana laws in Illinois comes specific challenges for entrepreneurs looking to start an MMJ business in the state.
Officials are just starting to develop regulations on the industry, so it will be a while before detailed rules are released. But the four-year pilot program created under the law is unique in many ways, creating a different business climate than in other medical cannabis states.
Here are a few of the most important issues entrepreneurs should keep an eye on as the rule-making process plays out and the market develops this year:
1. Supply-Chain Management
Unlike other states, Illinois has chosen to keep a strict cap on the number of licensed facilities. Only 22 cultivation centers – one for each state police district- will be allowed to grow for the 60 potential dispensaries.
This means that if just one of the centers has issues, it could easily affect the supply for everyone, resulting in higher prices. Growing must be done on a very professional and commercial level to meet the demand of all dispensaries. The plants themselves have to be well-cared for in order to cultivate the high cannabinoid content necessary to cure the symptoms associated with the roughly 33 qualifying medical conditions.
2. Testing and Licensing
Laboratory testing is going to be a large part of the upcoming rules and regulations due out in 2014. There will likely be required testing on cannabis cultivation, and a third party may come into play. So the question becomes more about getting this third-party testing facility licensed – will there be a separate application for laboratory testing or will it land in the category of cultivation center/dispensary? In case of the latter, there will be one fewer license available for a facility, as laboratories don’t supply or sell product. Going back to supply-chain management, this could also drive up prices.
3. Access to Medicine
Every state has cities and counties that are not very friendly to medical cannabis, and Illinois is no different. The law can’t prevent you from setting up shop in any county. But don’t let that fool you: Zoning laws can make it extremely difficult to open in a particular area if local officials are opposed to medical cannabis.
Additionally, dispensaries can’t be located within 1,000 feet of a school, and cultivation centers have to stay at least 2,500 feet away from schools or residential areas. That will be problematic in dense cities. So you may find a lot of patients – particularly ones in downtown Chicago – who have to travel an hour or more in order to access the medicine they need.
4. Debilitating Illnesses
Illinois has authorized around 33 qualifying medical conditions that allow patients to receive a written certification and register for legal status as a medical marijuana patient. Unlike other states, chronic pain is not one of them. This excludes a number patients who could otherwise receive medicine if they lived in another state, which will in turn limit the market’s size.
So adding to that list is going to be a priority in the coming years. For example, post-traumatic stress disorder is a condition that people from around the country want to see on the list. Veterans in particular are receiving a tremendous amount of symptom relief from medical cannabis, and we could see a huge collective effort from the veteran population to get PTSD approved.
Last, but certainly not least, is politics. Illinois is pretty well known for its “who you know” political system, and strategic alliances are starting to form. But what’s truly of note here is the three-body system Illinois has designed to regulate medical cannabis: The Department of Public Health, the Department of Agriculture and the Department of Finance and Professional Services will all be working in concert to develop rules and regulations moving forward.
Why is this significant? In most states, there are one to two regulatory bodies hashing out the details, and it’s difficult because they don’t communicate well. They tend to develop separate opinions themselves, and only when the laws are published does the other party find out. Having three regulatory bodies could make the process extremely messy, and delays are a possibility. We might also see some concessions as the three bodies work together on unrelated issues. The question is: Where does the overlap start and stop?
The biggest challenge for entrepreneurs could be the gap between federal and state law. Yes, every state has to deal with this issue, but as entrepreneurs we must all take a step back and ask ourselves how this will work and whether we are willing to take on the risks involved.
Michael Mayes is chief executive officer of Quantum 9, a Chicago-based medical marijuana consulting firm.