By Omar Sacirbey
Some of the highest fees in the medical marijuana industry did little to deter scores of entrepreneurs from applying for business licenses in Maryland, suggesting that the state could become one of the most lucrative MMJ markets in the country.
Maryland’s Medical Cannabis Commission received roughly 350 applications by the Nov. 6 submission deadline for licenses to cultivate, process or dispense medical marijuana. The state will release the official full tally later this week.
“We knew Maryland would be one of the most competitive application processes, and that’s proven to be true,” said Kris Krane, president of Boston-based cannabis consultants 4Front Advisors, which assisted six companies with their Maryland license applications. “It won’t be as good as Massachusetts, but it’ll be better than Illinois.”
So what’s the attraction in Maryland? A broad set of qualifying conditions that will make for a large patient population – one that needs to be served by a small number of cultivators.
An annual growing license costs $125,000, while a dispensary license is $40,000.
Green Rush Consulting recommends on its website that “$250,000.00 or more in starting capital could be necessary to pay the expenses involved with development of your dispensary business plans, securing site locations, any consulting fees accrued, and paying all state financial requirements for ONE Dispensary Center or Cultivation Center license.”
But that’s small change to most of the applicants, said Kayvan Khaltabari, principal of Denver Relief Consulting, a dispensary and consulting firm that advised two applicants who each filed for cultivation, processing and dispensary licenses in Maryland.
Khalatbari said Maryland’s medical marijuana market will be similar to Colorado’s, which has about 109,000 medical marijuana patients. Like Colorado, Maryland includes chronic pain as a qualifying condition.
“Chronic pain is a catch-all,” Khalatbari said.
If one considers that about 90% of Colorado’s medical marijuana prescriptions are for chronic pain, it’s reasonable to expect that Maryland will have about 125,000 medical marijuana patients.
“That’s a large market for 15 growers, even for 94 dispensaries. The fees are a drop in the bucket to most of these people,” said Khalatbari. “And it’s only a matter of time before recreational marijuana is approved.”
According to state guidelines, Maryland medical marijuana patients are permitted to possess up to 120 grams of cannabis flowers at a time and can consume up to 36 grams of THC extract per month.
While a list of applicants has yet to be made public, Khalatbari said it includes some big names in the cannabis industry, such as Cresco Labs, PharmaCann and Green Thumb Industries, all based in Illinois.
“Most of the people who applied have the experience and money to be successful,” said Khalatbari. “Maryland has a nice pool of applicants to choose from. Whoever does win these licenses will be among the most capable people in the industry.”
Krane agreed that many of the applicants are companies that have already applied for licenses and other states. “They’ve set up the application infrastructure and don’t want it to go to waste.”
Medical cannabis could become available to patients in the second half of 2016, according to the Maryland Medical Cannabis Commission.
Whoever gets a “stage one license” will have one year to acquire real estate, raise capital, hire employees and take other steps to request a final inspection and obtain a “formal” license.
“We’re very pleased not only with the number of applications we received but also the geographic diversity they represent,” said Maryland Medical Cannabis Commission Executive Director Hannah Byron, in a statement. “The strong response generated indicates the State will have a sizable pool of well-qualified candidates to consider for licensure, thus ensuring the medical cannabis industry is self-funded by highly experienced operators as envisioned by the state legislature.”
There were some jurisdictions, like Washington County, where no companies applied for dispensary licenses.
The Towson University Regional Economic Studies Institute will evaluate the applications, with names of applicants redacted, then forward its findings to the commission for a final decision early next year.
In 2013, Maryland lawmakers approved a medical marijuana program that envisioned academic institutions distributing the cannabis, but no university volunteered to participate. State legislators revised the program in 2014.