Despite tight timeline, New York’s medical cannabis industry launches on schedule

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New York’s medical marijuana industry officially launches today, less than six months after the state awarded MMJ business licenses.

Eight of the 20 dispensaries allowed in the state will begin serving patients, while the remainder will open on a rolling basis over the rest of the month, according to the New York Health Department.

Despite the symbolic significance of a large state like New York rolling out a medical marijuana program, the market opportunity is tempered by a relatively narrow list of qualifying conditions and bureaucratic hurdles to getting patient cards.

A prohibition on smokable cannabis could also limit the size of the market, as dispensaries are only able to sell capsules as well as oils and tinctures that can be vaporized or used in inhalers.

Slow start expected

The 2015 Marijuana Business Factbook forecast sales of between $40 million and $65 million in the first full 12 months after dispensary openings, but the tally could come in much lower or higher depending on how the first few months play out.

Ari Hoffnung – the CEO of Vireo Health New York, one of the five companies that won licenses to grow and sell medical marijuana in the state – acknowledged that business might be slow at first.

He should know: Vireo Health’s parent company operates a grow facility and dispensaries in Minnesota, which also bans smokable cannabis. That market has gotten off to an extremely sluggish start (though there are other factors as well, as Minnesota’s program is more limited than New York’s).

But Hoffnung is confident the industry will eventually take off in New York.

“I think what we learned from our experience in Minnesota is that the program is likely to start out small, in terms of patient count, and will expand over time as awareness increases both on the physician side and on the patient side of the program,” Hoffnung said.

He added that New York is a big state with almost 20 million people, a significant number of whom have cancer, epilepsy, HIV/AIDS and other qualifying conditions.

“Over time the patient population will grow,” Hoffnung said.

New York has not made public how many patients have registered so far.

Fewer than 150 physicians have registered to be eligible to prescribe medical marijuana, but Hoffnung said he is confident their numbers will also grow. In the meantime, he urged marijuana businesses in New York to reach out to physicians and the public to raise awareness about the program.

“The most important thing going forward will be public education,” Hoffnung said.

Education and publicity will also be the priority for Etain, another licensed MMJ company.

“We’re not expecting a high amount of patients,” Etain spokesman Steve Stallmer said. “For us, a successful first day would be getting all of our last minute cosmetic details taken care of, and making sure that we get the message delivered to the public that we are open.”

Tight timeline

New York launched its MMJ program relatively quickly, as it often takes states two years or more to launch dispensaries after medical cannabis is legalized. The state’s governor signed the medical marijuana legalization bill into law just 18 months ago.

While some states have launched just as fast – or even faster – very few have been able to get their industries up and running just a few months after awarding licenses.

New York’s law requires licensed companies to open their first dispensaries this month – a timeline that seemed in jeopardy at one point.

The state’s governor “gave us an extremely ambitious timeline to get the medical marijuana program up and running, and I am pleased that we have met his goals,” Dr. Howard Zucker, New York’s health commissioner, said in a statement.

Getting to this point hasn’t been easy.

“There have been a lot of challenges in the program,” Stallmer said. “I think it’s fair to say everyone has been stressed out.”

While Hoffnung called the day “historic,” he also said the marijuana business and regulatory landscape need improvements, most notably in regards to banking solutions for marijuana businesses.

“New Yorkers don’t like putting up with nonsense. And I think some will be frustrated to a degree when they come into dispensaries and are told that their MasterCard or Visa won’t work,” Hoffnung said.

Rollout plan

Last summer, New York awarded five companies licenses that allow them to open one cultivation site and up to four dispensaries. Businesses will have to reapply every two years to keep their permits. License fees are $200,000, but will be reassessed.

Three of the license winners – Bloomfield Industries, Etain and Vireo Health of New York – opened two dispensaries today, all of them in upstate New York. The other two license winners are starting with just one dispensary.

Columbia Care will open a dispensary in Manhattan’s famed Union Square, while PharmaCann will open its dispensary in White Plains, a suburb just north of the Bronx.

Once all of the dispensaries are open, New York City will have four – two in Manhattan and one each in Queens and the Bronx – while four will be in its suburbs. The other 12 dispensaries will be scattered across upstate New York.

“Over time, New York will emerge as an industry leader,” Hoffnung said. “Economically we have a thriving pharmaceutical industry. We have expertise in agriculture, expertise in healthcare. We have a very strong platform to make significant contributions to the future of this industry.”

Omar Sacirbey can be reached at