Week in Review: Stellar Start for MMJ in Massachusetts, Cannabis Recall in Denver & Delays in Minnesota

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By John Schroyer

The first dispensary in Massachusetts sees an explosion of customers in its first two months of operation, Denver issues a recall involving concentrates, and a medical cannabis company in Minnesota delays opening more storefronts.

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

Mass MMJ Appeal in MA

Talk about hitting the ground running.

The first dispensary in Massachusetts threw open its doors to patients in June, and over the next two months the company served as many customers as it expected to see in its first calendar year of sales.

Alternative Therapies Group (ATG) – which operates in Salem, north of Boston – served roughly 1,500 patients over the summer, which is an extremely promising sign for other Massachusetts dispensaries hoping to open down the road.

Scott Hawkins, a cannabis consultant who helped ATG prepare its business plan and license application, thinks it’s no accident that the dispensary has already gotten so much traction.

“They built their patient base patiently (and) assiduously over the last four months through good-hearted outreach,” said Hawkins, a principal with California-based Grun Strategic. “Community outreach was a key part of the original strategic plan.”

A spokesman for ATG couldn’t be reached for comment on specifics about the dispensary’s outreach plan, but it’s arguably the same kind of approach that has made dispensaries such as California’s Harborside Health Center so successful, Hawkins said.

“They sought to be good neighbors, and effective service providers to the community. It’s part of the culture of the organization,” Hawkins said.

Other Massachusetts dispensaries should take note, as in many cases you can’t just open and expect patients to flock through the door. In order to become a really successful MMJ provider, dispensaries have to conduct outreach work and create goodwill in their respective communities, Hawkins said.

Recall in Colorado

After the Denver Post found alarming levels of prohibited pesticides in the products of one local extraction company, the city instituted a recall of a marijuana product over pesticide concerns.

Mahatma Concentrates, the company the Post found had been selling concentrates with pesticides in them, “has voluntarily recalled a batch of its wax and shatter concentrates,” according to an email from city spokesman Dan Rowland, adding that the city issued a formal recall order on top of that.

Rowland said this ranks as Denver’s first cannabis-related recall due to the “possible presence of pesticide residue.”

On top of that, the Post reported on Thursday that the state Department of Agriculture has also opened two investigations into Mahatma and one of its suppliers, grower Treatments Unlimited, regarding pesticide contamination.

The recall and investigations could be just the first of many, said Jason Katz, a former Denver cannabis consultant who is now the vice president of business development for Evolab, another extraction company. That’s because it’s hard to tell if cannabis supply may be tainted before extraction companies or edibles companies purchase flower for their own use (which is what happened with Mahatma).

“It’s the first of many dominoes that are going to fall,” Katz said. “I don’t want to put the fault on the extraction company. There’s a lot of holes in the production process that result in pesticides ending up in final products… The problem is the processors don’t have control over source material, so you’re getting (flower) that may have been sprayed with God knows what.”

Katz predicted that it will likely take years before problems with pesticides and processed marijuana products are cleared up, simply because Colorado’s testing regulations are lagging.

“Colorado’s probably behind the curve, because the detection specific to these compounds is just now being enforced, whereas in other states, they’re kind of setting up the infrastructure to detect and enforce at the front end,” Katz said.

Another problem is that the infrastructure to test for pesticides and other impurities is expensive, as are highly trained lab technicians. That all takes time and money to establish a network for testing products, so the pesticide issue likely won’t be resolved anytime soon.

Setback in Minnesota

Despite initially expressing little concern over low MMJ patient counts, executives at Minnesota Medical Solutions said this week that they will delay opening the company’s final two dispensaries by several months.

The news comes just a month after the company, also known as MinnMed, announced a price hike because it had underestimated how many of its patients would take advantage of a low-income discount.

Such problems likely don’t come as a surprise to many observers who have been watching Minnesota’s industry take off at a snail’s pace. The patient count in early September stood at a meager 395, although an additional 304 have been certified for MMJ but are not yet fully enrolled in the program.

That’s probably due to a number of factors, including physicians who are reluctant to recommend cannabis for their patients, a narrow list of qualifying medical conditions and perhaps a lack of public education on the uses of MMJ.

Some representatives of MinnMed and the state’s other licensed cannabis company, LeafLine Labs, have estimated that the number of patients will grow to up to 1,000 or more by the end of 2015 and keep expanding in coming years.

While that could provide some relief for the pair of MMJ firms, the bigger question is what does a lack of patients mean for the long-term viability of Minnesota’s medical cannabis program?

State officials are considering adding intractable pain to the list of qualifying conditions, which would boost the patient base dramatically. But it’s not a given that they will approve the condition.

Even if they do, patients with intractable pain wouldn’t be able to purchase MMJ until next August at the earliest – which means MinnMed and LeafLine will have to operate in the current difficult climate for the foreseeable future.

John Schroyer can be reached at johns@mjbizmedia.com