MMJ Dispensary Application Process in Massachusetts Shows Serious Players Involved

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And then there were 158.

The Massachusetts Department of Public Health has eliminated nearly two dozen applicants for dispensary licenses in the first round of the process, leaving a still-crowded field to compete for a limited number of permits and paving the way for the state to collect up to $4.7 million in application fees. The 158 applicants that moved to the next round will vie for up to 35 dispensary licenses, the maximum amount allowed under the state’s medical cannabis law. (You can see the complete list of applicants here.)

The fact that the vast majority of applicants advanced shows that some serious, professional players with deep pockets are involved, as they had to meet steep financial requirements to make it this far.

The biggest hurdle: Demonstrating that they have at least $500,000 in reserves.

That’s a huge amount of money for someone just starting a business, meaning the average entrepreneur had to find investors with deep pockets, team up with others looking to open a dispensary or back out of the process entirely.

The state also looked at other financial metrics of the applicants and ran criminal background checks. Additionally, applicants that make it to round two must pay a nonrefundable fee of $30,000 – another daunting requirement for entrepreneurs. Most applicants will ultimately fail to win a license given the relatively few number of opportunities, leaving them out a substantial sum of money. And those who are approved will have to pay $50,000 in registration fees annually, which will sap profit margins.

The steep financial requirements, in particular, stand in stark contrast to relatively lax (or even nonexistent) criteria required to open dispensaries in other states.

In many areas of California and Washington State, for instance, entrepreneurs don’t have to go through any type of registration or vetting process, and even many states with strict regulations (like Colorado) don’t set financial criteria beyond the fees to apply for and obtain a license. In some of these states people with little business acumen, questionable backgrounds and limited financial resources have been able to open up shop, leading to issues with professionalism and overall legal compliance.

In Massachusetts, however, mainstream professionals appear to be getting involved, creating a highly competitive playing field – and possibly a more professional industry from the get-go. This could help Massachusetts avoid some of the problems in other MMJ states that fed stereotypes about medical marijuana and tarnished the industry’s reputation (such as selling out the back door, using distasteful marketing strategies, etc.).

The health department will hold an informational meeting at 1 p.m. on Oct. 10 for applicants who made it to the second round. If all goes according to plan, dispensaries will likely start opening up in Massachusetts next year.