Week in Review: Long wait for Oregon rec cannabis permits, OK docs told no MMJ & New Jersey deluged by applicants

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New recreational cannabis applicants in Oregon have to wait at least a year for a license, many Oklahoma doctors are told not to recommend medical marijuana, and New Jersey receives a flood of applications for MMJ licenses.

Here’s a closer look at some notable developments in the cannabis industry this week.

Oregon preps for license caps

It’s probably going to get a lot harder in the years ahead for newbies to break into Oregon’s marijuana industry.

That assessment comes after Oregon’s top cannabis regulator disclosed that the state probably won’t issue any new recreational marijuana licenses for at least a year.

The announcement comes amid concerns that surplus MJ products are flowing into the black market.

According to Portland cannabis consultant Sam Chapman, the state Legislature, regulators and cannabis industry executives will “absolutely” push to restrict market access in 2019. Oregon lawmakers return to work in February.

The restrictions could take a number of forms, according to Chapman:

  • A cap on the total number of licenses issued.
  • A halt in the issuance of new licenses.
  • Tougher enforcement measures to ensure that people who don’t follow the rules risk losing their licenses.

The Oregon Liquor Control Commission already has been cracking down on businesses that skirt the rules.

Chapman, for his part, doubts a license cap ultimately will have the intended effect of alleviating the current glut of MJ products.

“Absolutely not,” he said. “Any kind of license capping or restriction on cultivation production will absolutely end up doing the opposite of what the public intent is.

“We’ve learned after almost 80 years of prohibition that it doesn’t work.”

Oklahoma’s illicit market could thrive

The latest threat to Oklahoma’s medical marijuana program could be a boon to the state’s illicit market.

In a setback for Oklahoma’s potential $100 million-$150 MMJ million market, physicians at two of the state’s major health-care systems – Saint Francis Health System and Oklahoma State University Medical Center – were told not to recommend medical cannabis to patients.

The Sooner State’s MMJ program will succeed only if there is an adequate number of physicians writing patient recommendations, said Bud Scott, executive director of New Health Solutions Oklahoma, a cannabis industry group.

According to a recent tally, 38 physicians in Oklahoma have registered as providers willing to recommend medical marijuana.

If only a limited number of physicians are willing to recommend MMJ, the state’s patient count could be stunted. As of Wednesday, the state had received 2,977 patient applications.

Scott said his group has been combating “whisper campaigns” that perpetuate misinformation about the potential fallout for doctors who recommend MMJ.

“Ultimately, the success of the program depends completely on the number of participating patients,” he said.

Scott noted that the combination of nearly 700 applicants for cultivation licenses, the lack of a canopy cap and barriers to patient access would be a recipe for surplus product flowing into the black market.

“If we don’t have a patient population to support the market,” he added, “we’re positioning Oklahoma to be the largest cultivator for the black market in the United States.

“And that’s not good for the cannabis industry.”

New Jersey MMJ market entices

Many entrepreneurs want to participate in New Jersey’s rapidly growing MMJ market. But there are only limited opportunities for doing so.

New Jersey announced it received 146 applications from 106 groups for just six new medical marijuana licenses.

That means applicants face long odds. The state is expected to announce the lucky winners Nov. 1.

Scott Rudder, president of the New Jersey CannaBusiness Association, said it’s easy to see why there’s so much interest.

“They (applicants) want to be in this densely populated market. They want to be positioned for the future adult-use program,” said Rudder, who believes recreational marijuana legislation will pass and be on the governor’s desk later this fall.

There are other reasons why the New Jersey market is attractive, Rudder noted:

  • The state, under Gov. Phil Murphy, has relaxed what was a heavily regulated industry. For example, five qualifying medical conditions were added in March.
  • The number of MMJ patients has nearly doubled from a year ago to 30,000.
  • Under New Jersey’s system, dispensaries grow and process their own marijuana to sell. But licensees will now be allowed to open satellite dispensaries across the state.

Rudder said the application fee was a relatively minor expense: $20,000, with $18,000 refunded to unsuccessful applicants.

What was expensive were the attorneys, accountants and other consultants needed to quickly put together a comprehensive application: The turnaround was 30 days.

Rudder said he’s heard of applicants who spent anywhere from $50,000 to $800,000 in an effort to be “best of the best” of applicants.

“It was very intensive – it required a lot of resources in a very short period of time,” Rudder observed. “That’s why some of these firms spent a tremendous amount of money.”

Bart Schaneman can be reached at barts@mjbizdaily.com

Joey Peña can be reached at joeyp@mjbizdaily.com

Jeff Smith can be reached at jeffs@mjbizdaily.com