Week in Review: Florida’s restrictive plan, slow returns in NH & Pennsylvania app processs

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Florida’s draft medical marijuana rules would bar new entrants, New Hampshire dispensaries have a ways to go before breaking even, and Pennsylvania releases MMJ business applications.

Here’s a closer look at some notable developments in the marijuana industry over the past week.

Work in progress

Entrepreneurs angling to capitalize on Florida’s new MMJ program may be out of luck – if state health regulators have their way.

Health officials proposed giving the seven companies currently licensed under Florida’s CBD-focused program entire control of the pending MMJ market.

In other words: no new growers or dispensary operators in a medical marijuana market projected to become one of the nation’s largest, with annual sales eventually hitting $600 million-$800 million, according to estimates by Marijuana Business Daily.

But Ben Pollara, the campaign manager behind last November’s MMJ ballot measure, is confident the draft rules will be overhauled. State lawmakers, for instance, are expected to wade into the controversy.

“This is far from being the law of the land,” Pollara said, calling the proposal “ludicrous on its face.”

Currently, seven companies can produce and sell primarily CBD-based products in Florida, though they can provide higher-THC medicines to the terminally ill. The new law will create a more traditional, full-strength MMJ program with more conditions.

Questioning the draft rules, Pollara noted the CBD market is “totally different” than what will develop once the state rolls out its full-fledged medical cannabis program.

Pollara said keeping the market in the hands of the seven current licensees would be a “killer for patient access.” That, in turn, could strangle the new MMJ industry.

New Hampshire rising

New Hampshire’s four medical marijuana dispensaries have seen steady patient increases since launching in 2016, but they still have a ways to go before they break even financially.

Consider Sanctuary Alternative Treatment Center, in Plymouth, which became the first New Hampshire dispensary to launch when it opened in April.

state health department report says New Hampshire has 2,089 MMJ patients, and Sanctuary CEO Jason Sidman estimates about 700 of those list his company as their provider. But only about 65% of those, roughly 455, visit at least once a month.

To operate sustainably, Sidman reckoned, Sanctuary needs more than 1,000 patients a month. Under current conditions, Sanctuary may reach that figure by June, Sidman said.

New Hampshire’s MMJ industry could grow more quickly if regulators expanded qualifying conditions, and Sidman estimates adding severe pain would double his patient numbers.

The good news for dispensary owners is that lawmakers are weighing bills that would add qualifying conditions, including severe pain. Sidman expects the bills become law by summer.

And more help could be on the way – improved patient application processing.

State officials receive 60-80 MMJ applications every week, Sidman said; a dearth of staff has slowed processing. However, the state is developing an online patient application portal, which Sidman expects will “really streamline” the process when it launches, likely in a few months.

Serving more patients would also allow dispensaries to scale up and lower costs, said Sidman, who estimates Sanctuary is using only about 25% of its growing capacity.

When Sanctuary does hit the break-even point, it still must deal with a big loan.

“We’re prepared, we’re well-capitalized, and we’re in it for the long haul,” Sidman said.

Pennsylvania MMJ applications

It appears the new Pennsylvania medical cannabis market is cruising along, greased by well-intentioned regulators who plan to have a functional MMJ program running by mid-2018.

At least that’s how it appears to Patrick Nightingale, executive director of the Pennsylvania Medical Cannabis Society.

Asked about the newly released applications for MMJ growers and dispensaries, Nightingale is “optimistic” state officials are doing everything they can to quickly establish a functional MMJ program.

“Things are progressing as we hoped they would,” said Nightingale, who noted it will probably be 18 months or so before medical cannabis dispensaries begin serving patients.

Nightingale also said the permitting process’ high fees will probably mean a fairly narrow crop of applicants, especially for the 25 grower/processor licenses. Those require $210,000 in licensing fees, along with proof of $2 million in assets – a high bar for many entrepreneurs.

“I think there are hundreds who want to try to do this, but when you look at it practically, we may have a few dozen entities making a play for the grower/processor licenses,” Nightingale said.

However, only about half the permits for cultivation and dispensing will be awarded during phase one of the licensing process, said attorney Christine Taylor Brann. The other half will be handed out during phase two; the state hasn’t announced when that will begin.

During the first permitting phase, only 12 of 25 grower/processor licenses will be handed out, and 27 of 50 dispensary licenses.

That could also affect many business plans, Brann said, because the health department plans to award the licenses geographically to ensure MMJ providers are spread statewide.

“I don’t think we’ll see phase two until at least the awards have been issued for phase one,” Brann said.

She also said the lack of a residency requirement in Pennsylvania’s MMJ program will likely result in plenty of out-of-state applicants. So she’s expecting “hundreds” of applicants for the cultivation and dispensary permits.

Bart Schaneman can be reached at barts@mjbizdaily.com

Omar Sacirbey can be reached at omars@mjbizdaily.com

John Schroyer can be reached at johns@mjbizdaily.com