Connecticut receives dozens of applications from aspiring medical cannabis entrepreneurs, a Pennsylvania court tosses a lawsuit that could have undone the state’s medical marijuana program, and Florida hits 100,000 MMJ patients.
Here’s a closer look at some notable developments in the marijuana industry over the past week.
East Coast MMJ rising
News that Connecticut regulators received more than 70 dispensary license applications – after expanding the MMJ program from nine dispensaries to as many as 19 – highlights a regional trend: New medical cannabis business opportunities continue to arise in the eastern United States.
“There’s still a lot of room to grow in most of these medical markets on the East Coast,” said Kris Krane, managing partner of Boston cannabis consultancy 4Front Ventures.
What makes these markets attractive? “You have huge populations and limited licenses,” Krane noted.
“People are looking at the Northeast as a region that, if you can get in, these businesses are likely to be pretty lucrative.”
Several eastern states besides Connecticut have moved to expand their programs or patient base by approving new medical conditions or products.
Rhode Island is considering adding 15 new dispensaries to the current three, adding acute pain as a condition, and allowing reciprocity with neighboring Massachusetts and Connecticut.
Last July, New Hampshire added chronic pain and PTSD to its medical conditions list.
And last September, Vermont awarded a fifth medical business license and doubled the number of dispensaries a licensee could operate, to two.
While owning a license in a high-barrier eastern market may be alluring, Krane warned that winning one won’t be easy.
“If you can’t put together an A-plus team and an A-plus app,” he said, “you really don’t have a chance in these competitive application processes these days.
“You need real experience on your operations team and on your application team; otherwise, it’s probably a waste of time.”
Do your homework
It’s common for MMJ entrepreneurs to appeal license rejections, especially in states that restrict the number of growers and dispensaries.
But an unsuccessful challenge in Pennsylvania provides a key business takeaway: A license applicant better exhaust their appeals with state regulators before trying to undo an entire medical marijuana program through a lawsuit.
That was the gist of a Pennsylvania court’s decision to reject a suit by Keystone ReLeaf, which failed to win two dispensary permits and one grower license.
The Bethlehem company claimed in its 2017 suit that the licensing process was unfair, arbitrary and secretive, and it sought to force the state to restart the permitting operation from scratch.
“There is nothing novel or unique about the Petitioner’s claims in this regard,” opined Judge Michael Wojcik, who wrote the majority decision for the appeals court.
Wojcik noted that 140 other unsuccessful applicants felt much the same way. That’s the number of applicants that reportedly challenged the process the correct way: by filing appeals with the state.
Hoban Law Group attorney Steve Schain, who practices in Pennsylvania and New Jersey, characterized Keystone ReLeaf’s challenge as “sour grapes” and a “poorly designed lawsuit in which the litigants failed to exhaust their administrative remedies.”
He said the ruling validates that Pennsylvania launched a “successful, compliant and transparent competitive application process and medical marijuana program.”
Several of Schain’s clients were among about 400 applicants denied permits in the program’s first phase.
Regulators issued 27 dispensary and 12 grower licenses in the first phase last year and have started taking applications for more licenses . Dispensaries started selling medical marijuana in February.
Keystone ReLeaf’s attorney, Seth Tipton, didn’t respond to a request for comment. But he told the Philadelphia Inquirer the company plans to appeal the court’s decision.
Florida hits 100,000 MMJ patients
When Florida passed legislation at the end of 2016 to begin a full-strength medical marijuana program, many thought the state’s market could easily become one of the nation’s largest.
More than a year later, the patient pool has grown to meet expectations, hitting the 100,000-patient mark a week ago.
While more patients are signing up, the state’s regulators aren’t keeping up.
The Florida Department of Health was expected to add five more MMJ businesses to the current total of 13 by the end of 2017.
Then, when the patient count reached 100,000, it was written into the regulations that four more licenses would be added. Each of the existing businesses could also add five more storefronts.
Regulators have not acted.
“This is a big and growing and potentially booming marketplace, but there’s been places where the regulators have lagged behind where the patients are,” said Florida For Care’s Ben Pollara.
“For us to achieve full potential as a MMJ state, those things need to catch up.”
Pollara would also like to see the health department set regulations for edibles, seed-to-sale tracking, pesticides and dosing.
“They have a laundry list of regulatory responsibilities that they have either failed to act on or only taken preliminary action on,” he said.
In addition, Pollara is concerned that not enough physicians have signed up to recommend MMJ. About 1,300 physicians are registered for the program.
“That continues to be a big concern,” he said. “We’re going to get to a point, if we’re not already at it, where this explosion in the patient population simply cannot occur because there’s not enough physicians.”
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