Week in Review: Hawaii OKs first MMJ testing lab, Florida’s patient growth rate & New Jersey’s final license

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By John Schroyer, Bart Schaneman and Omar Sacirbey

Hawaii approves its first medical marijuana testing lab, Florida’s MMJ program adds 10,000 patients in less than two months, and New Jersey awards its final dispensary license.

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

Hawaii on the launch pad

Hawaii is inching closer to medical cannabis dispensary sales with the news this week that the state’s first testing lab, Steep Hill Hawaii, has received provisional certification to begin operations.

Although regulatory hoops remain for the lab – and dispensaries and growers – to jump through before sales can start, the end of a long wait is getting closer, said Chris Garth, executive director of the Hawaii Dispensary Alliance.

“Provided that any of the cannabis actually passes the tests, I imagine we’ll have product on shelves by Sept. 1,” Garth said. “Everyone has been waiting a very long time for this.”

Garth said a Maui dispensary could be the first to open and that the licensee has taken precautions to ensure it doesn’t encounter supply shortages, as many Nevada retailers did after the launch of that state’s recreational cannabis program in July.

A supply shortage “could be” a problem for some Hawaiian dispensaries, depending on how well they prep for MMJ sales, Garth said.

“I doubt that it will happen,” he said. “I think there’s enough common business sense for our licensees to ensure that there isn’t.”

Despite the Steep Hill certification, Hawaii’s MMJ industry still has a way to go before it’s operating smoothly, including licensing new labs and getting the other dispensaries up and running, according to Garth.

For instance, he said, three of the state’s eight licensed MMJ producers have yet to build out their dispensaries and grows. “They’re just waiting,” Garth added, though he’s not sure for what.

Regardless, Garth said, Steep Hill Hawaii’s certification represents another step forward.

Tempered growth in Florida

Florida’s registered medical marijuana patient pool has jumped – up 10,000 since June to nearly 27,000 – but cannabis businesses in the state should expect that growth to level off once the MMJ program gets up and running, according to one industry analyst.

“Big picture, I think the growth is going to continue,” said Matt Ginder, a Fort Lauderdale-based attorney with Greenspoon Marder. “Then I think we’ll see a slowdown once the program becomes operational.”

There are several key issues to consider regarding the rapid growth Florida’s experiencing, Ginder said:

  • MMJ has been a very public issue in the state.
  • Amendment 2 passed with 71% of the vote.
  • There’s no longer a 90-day waiting period for patients to receive product once a doctor recommends it.

Ginder mainly attributes the patient uptick to the state’s full-fledged MMJ law, which became effective in late June. The measure took Florida from a CBD-only program to a full-strength medical cannabis system.

However, he sees a potential bottleneck in patients’ access to doctors.

Florida law provides a level of scrutiny for doctors, including monitoring for diversion through physicians, “unlike many other states,” Ginder added. “You’re going to see some issues there.”

He expects MMJ stakeholders to alert lawmakers to issues that are impeding businesses as the industry rolls out.

“Then you’ll see the legislature react positively to the industry and you’ll see more rapid growth after that,” Ginder said.

More competition in NJ

New Jersey’s medical marijuana program got a big boost when regulators awarded a licensing permit to Harmony Foundation, the sixth and final dispensary allowed under the Garden State’s MMJ law. Passed in 2010, the statute requires that all dispensaries be vertically integrated.

But Harmony’s success could prove to be a loss for the state’s other five dispensaries.

Harmony – which will operate out of a 10,000-square-foot greenhouse, processing and retail facility – said it has the capacity to serve 4,000 patients. The company hopes to be operational by the end of the year.

In a state with about 13,200 active patients through July 25, it’s difficult to imagine at least some “alternative treatment centers” not losing market share to Harmony – despite patient increases of 22% statewide just from the end of last year, when there were 10,799 patients. Patients are allowed to be registered with only one ATC but may switch centers.

Greenleaf Compassion Center seems to be in the least desirable position of New Jersey’s other ATCs – it’s only about 12 miles from Secaucus.

By comparison, the next closest ACT – Garden State Dispensary in Woodbridge – is nearly twice as far away from Harmony, at 27 miles. Compassionate Care Foundation, in Egg Harbor, is the farthest away, at 120 miles.

To boot, Greenleaf seems to be performing less well compared to New Jersey’s other dispensaries.

In the 56 months since its December 2012 opening and late July, Greenleaf has sold only 554 pounds of product, or about 10 pounds per month.

By comparison, Compassionate Care Foundation has been selling about 29 pounds of product per month since opening, Breakwater has been averaging about 48, Garden State Dispensary 53 and Compassionate Sciences 94.

But Greenleaf CEO Julio Valentin isn’t worried about Harmony. He believes everyone would be better served if the state would process patient applications faster.

“I think there are plenty of patients for every ATC in New Jersey,” said Valentin said, who estimates Greenleaf brings in about 100 new patients a month.

John Schroyer can be reached at johns@mjbizdaily.com

Bart Schaneman can be reached at barts@mjbizdaily.com

Omar Sacirbey can be reached at omars@mjbizdaily.com