Quick: If you could set up a medical marijuana business in any state, which one would you choose?
Many entrepreneurs would no doubt pick Colorado or Washington, which offer ample opportunities not only in the medical marijuana space but also in the emerging recreational cannabis industry. Others might select Arizona, where nearly 100 dispensaries are slated to open up this year, or newer MMJ states on the East Coast like Connecticut and Massachusetts.
But some industry professionals and companies are bucking the trend, bypassing the obvious choices and instead selecting states that are flying under the radar.
Case in point: MediSwipe, which defied conventional wisdom recently by moving its headquarters from Florida to Birmingham, Michigan, of all places.
The publicly traded company provides services and software that help medical marijuana dispensaries manage patient records, handle customer payments via cashless kiosks and offer coupons using mobile products. It’s the type of business that could transition easily into the recreational marijuana market or tap the large patient base out West by relocating to a state in the area.
MediSwipe executives did in fact consider moving to Colorado or Washington. But, in the end, they felt Michigan offered a better opportunity.
It’s an interesting choice, given that the state’s MMJ industry is in turmoil. Dozens of dispensaries have closed over the past two years, and only 50-75 remain. Lawmakers are trying to change and clarify Michigan’s vague MMJ regulations, but it’s unclear what shape the overhaul will take. The state Supreme Court has even taken up the issue, and its ruling could either destroy the remaining market or lead to its revival.
Despite the volatility, MediSwipe is optimistic for several reasons.
Residents in a handful of cities recently voted in favor of moves to decriminalize marijuana or make it a low police priority. Additionally, lawmakers passed several bills that help clear up parts of the state’s convoluted medical cannabis law. One deals with patient requirements for getting registration cards and could help speed up a backlog in applications, while the other focuses on the type of doctor-patient relationship needed to obtain a card.
Although some advocates decry the new laws, saying they are unfriendly to patients, MediSwipe believes they help stabilize the industry and create new business opportunities. The company also hopes its new location will help it penetrate some new markets in the region, including Connecticut, Massachusetts and New Jersey.
“While the states out West…figure out total legalization, we would prefer to focus on and be the dominant player within the East Coast and Midwest markets like Michigan, New Jersey, Massachusetts and potential new emerging markets like Ohio and Vermont,” MediSwipe CEO B. Michael Friedman said in a release.
Friedman added that staying closer to New York will help the company maintain solid relationships with “our investment banking partners on Wall Street.
Investors seemed to welcome the move (though it’s often hard to tell with thinly traded penny stocks).
The company’s stock, which trades under the symbol MWIP on the over-the-counter market, is currently hovering around 3 cents a share vs. 2 cents before the announcement. Trading activity has been particularly large over the past few days, signaling stronger investor interest in the stock.