MD dispensary license winners move forward amid turmoil

By Omar Sacirbey

Maryland dispensary license winners celebrated briefly after learning about their victories last week, then turned their attention to getting their businesses up and running in what could become one of the most lucrative medical marijuana markets on the East Coast.

For most of the 102 license winners announced Friday, that means fundraising, buying or renovating real estate, establishing relationships with growers, processors and laboratories and hiring staff.

Others, however, also are focused on concerns that the oft-delayed program could be held up some more by other factors, most significantly a pending court case and state lawmakers.

Alternative Medicine Maryland went to court to stall Maryland’s MMJ program until the state’s Medical Cannabis Commission “takes action to ensure racial and ethnic diversity among licensed growers.”

But the biggest threat to upend the program might come from the Legislative Black Caucus of the Maryland General Assembly, which wants to know why no minority groups received any of the 15 cultivation and 15 processing preliminary licenses awarded by the Medical Cannabis Commission in August.

That created an uproar among caucus members who had hoped that at least some of the growing and processing licenses would go to minority applicants. The Maryland population is about one-third African-American.

‘Going to be contentious’

The caucus plans to introduce multiple bills to try to address this problem, said Ivan Lanier, president of the Greenwill Consulting Group, which represented one of Maryland’s few minority teams to win a dispensary license, LinLar LLC.

“The caucus still has every intention of applying the full-court press to get this addressed,” Lanier said. “It’s going to be very contentious. … The caucus is very committed to (correcting) what was seen as a grave injustice.”

What action might be forthcoming?

At the very least, industry observers should expect the caucus to draft a bill for an oversight committee composed of lawmakers to report on the state’s Medical Marijuana Commission, which has been harshly criticized for not picking minority groups for licenses. Such a bill would also likely require the General Assembly to approve any commission decisions. There also has been talk of abolishing the current commission and replacing it with a new one, Lanier said.

In the worst-case scenario for dispensaries and patients, some caucus members want to introduce a bill that would formally delay or stop the process. Other lawmakers prefer legislation that would increase the number of licenses to 20-35 in either or both the cultivation and procession categories, Lanier said.

Strength in numbers?

The best solution would be to increase the number of licenses and make some of them available to minority groups, said Lanier, who cited the benefits of additional competition and resulting lower prices for patients. He believes most Black Caucus members also prefer expanding licenses and that there is enough bipartisan support in the General Assembly to pass such an initiative.

“I would be very concerned about anything that scraps the program. Patients would be the ones who suffer,” said Dr. Kyle Kingsley, CEO of Vireo Health, which has existing cannabis operations in New York and Minnesota and won cultivation, processing and dispensary licenses in Maryland under the name MaryMed.

“I think diversity is very important, and if it takes a few more licenses to address that, I think that’s a reasonable approach. I also think the existing companies could be held to task a little bit more and have … more of a diversity requirement.”

“Any time you issue any kind of licenses, you’re going to end up with lawsuits,” said Leah Heise, a Baltimore-based attorney who won a license in the city under the name Chesapeake Integrated Health Institute.

“My hope is that during the litigation process the court will not completely invalidate the entire program. That’s the worst-case scenario,” added Heise, who is also president of Women Grow trade association.

Licensees moving forward

License-winning entrepreneurs, meanwhile, are taking steps to get their dispensaries operational, and they have 365 days after receiving their licenses to open their businesses.

MaryMed is trying to raise $6 million to mainly fund construction of the cultivation and processing facilities, which will be located at one site on Maryland’s Eastern Shore, in Hurlock. That’s about two hours from Senate District 21, where the MaryMed dispensary will be located.

Investor interest has been strong, said Kingsley, who added that his company mainly approached individuals and smaller groups and has built operational expenses into the raise to combat further delays.

“In Maryland, what we found is that the people who were not successful in obtaining licenses often had access to substantial capital,” Kingsley said. “This capital is now looking for a home, and with our track record in New York and a reasonable valuation, I think we’re a desirable investment for folks.”

Heise and her husband, James, a real estate attorney, spent last weekend scouting land for their new business and planning meetings with Baltimore city councilors, police and leaders of community associations.

The Heises also are reaching out to cultivators and processors to establish relationships. “I’m going to have to be very careful about vetting the people who bring product into our store,” she said.

Brian Fox’s company, Cannavations, won both processing and dispensary licenses. The CEO said he already has identified people who won only dispensary licenses in hopes of reaching out to them as customers for his processing facility. He plans to do the same with cultivators who can supply both his processing site and dispensary.

“It’s very important,” Fox said, “to start making those relationships now.”

Omar Sacirbey can be reached at [email protected]

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