By Omar Sacirbey
Maryland’s medical marijuana program – likely to become one of the largest on the East Coast – is moving forward in fits and starts and may undergo more changes before launching.
That’s thrown the actual start date into uncertainty, frustrating wannabe cannabis business owners anxious to win a license.
The slow start has boosted costs for some aspiring business owners, underscoring the risks entrepreneurs face in states where a medical cannabis program is slow to take off.
In Maryland, for example, some business license applicants already are paying rents on buildings they had thought would have been generating revenue months ago. Hundreds of applicants have applied for licenses and have been awaiting a decision since November.
In addition, potential rule changes governing financial disclosure and testing labs have generated more uncertainty.
But the potential rewards of what could be a major market are helping people stay patient – for now.
“I feel like they’re developing what’s going to turn out to be the most well thought out medical cannabis program in the country,” said Philip Goldberg, owner of Green Leaf Medical, which is seeking cultivation licenses. But, he added, “it’s frustrating” waiting.
Goldberg signed a lease on a 42,000-square-foot warehouse in Frederick, northwest of Baltimore, where he intends to have his grow site. Since January, he’s been paying $8,500 per month to rent the space.
“It is a month-to-month lease,” Goldberg added. “We’re not crazy.”
Christopher Garrett, spokesman for Maryland’s health department, said the entity reviewing the applications – the Regional Economic Studies Institute of Towson University – would make its recommendations “later this summer.”
He said the regulatory agency implementing the MMJ program – the Maryland Medical Cannabis Commission – will weigh the recommendations and vote on granting preliminary “Stage 1” licenses within about two weeks of getting the recommendations.
Goldberg of Green Leaf Medical expects the first cultivation licenses to be issued by mid-September. “And if it got pushed back another 30 days, it would not shock me,” Goldberg said.
Late last year, the Maryland Medical Cannabis Commission postponed the announcements of marijuana business licenses until this summer from January. The delay means medical cannabis won’t be widely available to Maryland patients until next year.
Once the industry is up and running, sales are expected to total $20 million to $40 million during the first full year after the dispensaries open, according to the Marijuana Business Factbook 2016.
Under the program, holders of the 15 cultivation licenses will be allowed to operate one dispensary. The program also plans to allocate 94 individual dispensary licenses not tied to cultivators.
Applicants receiving a Stage 1 license have 365 days to complete the necessary steps to obtain a license and request a final commission inspection. Steps include raising capital, acquiring real estate, securing zoning approvals, and hiring and training staff.
Possible rule changes
Last month, license applicants learned the commission is mulling changes to the program guidelines, sparking worries that changes could further delay the announcements. That move followed a decision in May in which the commission capped the number of processor licenses at 15. Previously, there was no limit.
“I can’t believe they did that. That was a shock,” said Brian Fox, CEO of Cannovations, a multi-state cannabis firm that has one processing license application and four dispensary license applications in Maryland. “If you’re one of the winners, that’s great.”
But, Fox added, many people applied thinking that an unlimited number of licenses meant they would get a permit – as long as they met the application criteria. Fewer people may have applied if a limit on processing licenses had been in place from the beginning, Fox added.
Still, he reckons that 15 processors will be “ample” for Maryland.
Maryland’s top MMJ regulator – Patrick Jameson, the executive director of the Maryland Medical Cannabis Commission – defended the new cap.
“The commission is limiting the preliminary number of processor licenses to 15 to allow for a manageable, timely and complete compliance inspection process by commission compliance staff,” Jameson told Marijuana Business Daily via email.
He added the commission will “monitor the demand for further processors as the medical cannabis market evolves, and will award additional licenses from the ranked pool of applicants when deemed necessary.”
While the vast majority of changes proposed for the program cover technicalities and typos, a couple relate to significant issues: financial disclosure standards, and whether testing labs should be changed to for-profit status from nonprofit.
Some industry observers worry greater financial disclosure would mean additional costs and paperwork. “These things can take months and cost thousands of dollars,” Green Leaf’s Goldberg said, referring to a proposal that businesses submit more detailed financial audit reports.
Others worry that for-profit testing labs would undermine the integrity of the testing process.
Darrell Carrington, executive director of the Maryland Cannabis Industry Association, is concerned the proposed changes might require legislative approval before they can be adopted.
Maryland law requires the state legislature to approve significant changes. Maryland’s legislature is in session between January and March, although a special committee could be convened to approve the changes.
“Our legislature is part time, and getting people together is hard,” Carrington said. “It’s certainly possible this will delay the process.”
But Jameson, the commission head, said it would not require a full meeting of the legislature to pass the changes.
He explained that an oversight committee of the legislature – known as the Joint Committee on Administrative, Executive, and Legislative Review – meets with two lawyers from the Department of Legislative Services.
Together, they review proposed regulations, and determine whether they conform to the legislative intent of the law.
The commission is expected to decide about proposed regulation changes this month. Jameson said the commission would meet July 12.
In the meantime, the waiting game continues.
Omar Sacirbey can be reached at [email protected]