Week in Review: MassRoots battles cannaphobia again, Hawaii heats up & Arizona MMJ threat

By Omar Sacirbey

A marijuana executive addresses the tech sector’s cannaphobia, Hawaii opens its MMJ application process, and Arizona’s medical marijuana program comes under attack once again. Here’s a closer look at several notable developments in the marijuana industry over the past week.

Cannabias rears its head

Among his efforts for 2016, Isaac Dietrich, the founder of marijuana social media platform MassRoots, had already planned to push back against what he sees as a prejudice against marijuana by some of his tech sector peers.

“People in the Silicon Valley tech sector talk like they have these very progressive views, but when it comes to cannabis, they are really very regressive,” said Dietrich.

Those plans now have more impetus, Dietrich said, following a controversy where Dell, the Texas-based computer giant, declined an invitation to judge a high-profile contest among start-up companies that was sponsored by the Consumer Electronics Show, a major tradeshow organized by the Consumer Electronics Association.

The reason? MassRoots – a cannabis-related company – was competing.

“I wish they had more progressive views on marijuana, and hope they come around to seeing that legalization would be positive,” Dietrich said.

Dietrich said many tech companies, including household names like Facebook and Google, discriminate against marijuana companies by not allowing them to advertise on their sites.

“There’s a disconnect between tech leaders and the tech public on this issue,” Dietrich said. “There needs to be public pressure put on these people to get things to change.”

And where is Dietrich going to get that kind of muscle? MassRoots users, he said, who now number about 725,000 and are projected to hit one million in the first half of the year. He hopes to get users to email and put other forms of pressure on tech companies that have discriminatory views towards marijuana companies.

“When you have that many email addresses, you can get some pressure going,” Dietrich said.

As for the contest, Dietrich didn’t win but still gets to have dinner with Sir Richard Branson, Chairman of the Virgin Group and noted marijuana advocate. What will Dietrich ask him about? “Certainly about marijuana,” he said.

Hawaii heats up

The race for marijuana licenses is on in Hawaii, which opened its application process on Jan. 12.

The Aloha State will award eight licenses for medical marijuana businesses on the islands of Oahu, Maui, Kauai and the Big Island. Each licensee will be allowed two production centers and two retail stores. Out-of-state residents can own up to 49% of a license.

Three of the licenses will go to applicants in Oahu, where Honolulu is. License winners will be announced in mid-April, and dispensaries could be open by July 2016.

Industry observers pointed to Maryland, which received an overwhelming 1,046 applications, including 811 for dispensaries, as an indicator that many people will try to break into Hawaii. The marijuana market is hot and now is the time to get it.

“They will get deluged by applications,” said Greta Carter, president of G.Car Companies, a marijuana business consulting firm in Seattle. And the submissions will be from groups that are even better capitalized than those who pursued licenses in Maryland, which saw major players like Columbia Care, PharmaCann, and Harvest Inc. apply.

“There’s larger money wanting to get into Hawaii,” Carter said. “The competition is significant there. I know a lot of people that have thrown their hats in the ring, and some that have backed off because the competition is so rough.”

What are Carter’s plans in the Aloha state? While she’s been behind 11 successful applications across the growing, processing, and retail sectors, she decided to sit Hawaii out, despite being tempted by a couple of opportunities, she said.

AZ bill could significantly curtail industry

Does a proposed bill in Arizona that could put a big dent in the state’s MMJ medical marijuana patient pool have a chance of passing?

That’s the question that some medical marijuana businesses owners and other advocates are asking after Rep. Jay Lawrence proposed a law that would prohibit naturopathic and homeopathic doctors from recommending medical marijuana to their patients. Arizona’s Department of Health Services recently reported that naturopathic doctors issued more than 87% of the 77,639 medical marijuana certifications for patients in 2015.

The lawmaker’s bill, and a separate proposal to restrict pregnant women from possessing cannabis at all, have recalled the long and bitter fight MMJ advocates waged to force the roll-out of Arizona’s MMJ law.

However, because the state’s medical marijuana law was enacted through referendum, the bill would require a supermajority to pass. If it does get that far, it would also have to survive legal challenges under the state’s Voter Protection Act, which limits the ability of lawmakers to change laws passed by referendum, amend laws enacted via ballot initiatives.

“It’s a fatally flawed bill,” said attorney Ryan Hurley of the Rose Law Group in Scottsdale. “Any change to (a referendum-based) law has to further the purpose of the intent of the law. Homeopathic and naturopathic doctors were included in the language of the ballot, so there is no way taking them out achieves the purpose of the ballot,” Hurley explained.

Omar Sacirbey can be reached at [email protected]

2 comments on “Week in Review: MassRoots battles cannaphobia again, Hawaii heats up & Arizona MMJ threat
  1. Brett Roper on

    While in Hawaii this month working with clients (instead of relegation to work in the colder environs of Denver in January) I have a few thoughts regarding this article and Hawaii in general …

    A) “dispensaries could open 90 days after announcement of licensing awards” … I think not much chance of that happening as those winning licenses still have to secure permissions to start cultivation (includes inspections, etc.) 30 days prior to initiation of operations (a grow), submit strains and other information for manufacturing products that have to be approved as well and on and on prior to initiation of cultivation (not including permitting, etc. of local building departments) … meeting those initial requirement and assuming 20 weeks to grow, harvest, trim, dry, cure, test, and deliver products to a dispensary (there are no existing third party test businesses at this as yet) if you applied the day after securing a license for the DOH required elements (not including getting NED certification for destruction protocols) you would still be six to seven months before product could become available through a dispensary operation to the market assuming you had an indoor secure facility already completed and ready to accept plants into cultivation (no greenhouse or shade house allowed) … a quality indoor facility (green field start) would at best be delivering products to their dispensary in early 2017;

    B) “deluged with applications” … I believe that once the state made it clear that a greenhouse start would not be allowed, many of the less well capitalized potential applicants or those only wanting to cultivate in a greenhouse environment dropped out and with the applications due only 19 days after going live, the State DOH Team should have little trouble sorting out quality applications to focus on and putting lesser apps on the back burner to ensure the evaluation process provides a clear set of best applicants (not politically connected or otherwise a ‘shoe-in’ as we always hear about in the various precursor states already moving ahead) for consideration … I would expect a ratio of between 7 and 8 apps for each available slot on average and one more thing …

    C) We have been approached by numerous groups for support and eventually selected a handful that we felt were well capitalized and comprised of a strong ownership group so any consultant or service provider not working in Hawaii on this opportunity would certainly be by choice as noted in the article as we have referred several prospective clients to other consultants.

    D) Investment requirement prognostications of the article in that only well funded groups will prevail seems spot on as with the requirements of the laws we are advising clients to expect (as we did this past summer when interviewed by the local news channel KITC by Kenny Choi) to invest $7-8M at a minimum and more if they plan to own the facilities they are deploying. The burn rate to profitability will very likely be well into seven figures and keep in mind many of those card holders that already have growing proficiencies will likely not become clients of these dispensaries so reliance on 100% access to the October card holders would not be a good idea as you develop your pro forma.

    E) Power … the electric bill will be relative to the states requirements for an indoor cultivation as well as the quality and vitality of the cultivation and manufacturing process … even with the States higher utility bills (3X or more that we are used to seeing), the impact on the power grid across all of the islands for only eight licenses will be virtually non-existent … We project for the initial facilities the power needed for about 15 upscale homes should be adequate (200 amps each) and the dispensary operations will fold nicely into existing space that was already using power. We generally see the cost of power as it relates to the retail cost of the plant in our operations run just over 3% or about $75 a pound (flower, trim, fan on a retail basis of approximately $2,400 a pound) to cultivate so even with Hawaii’s higher utility rate this should only comprise an increase of about 3% based upon the assumption that a retail value of a pound of cannabis in Hawaii will run around $4,000 ($150 in additional power as related to the $4,000 retail value), more if this assumptive value is less.

    Overall, while I do not necessarily agree with some of the scoring strategies in the application’s merit section (would have liked to see more weight put on sections related to an applicants ability to deliver safe and consistent materials), I think the State and DOH have done a fine job in getting to this point and will be excited to see how the next year unfolds for those needing access to cannabis related products in Hawaii!

    Nicely Done Hawaii … Nicely Done!

    Reply
  2. Gentle Jim on

    I am so tired of reading everywhere that the politicians are rigging the laws to stop MMJ. Just had an epiphany! We need to let these politicians know that we see and are furious about their scheming. I think we should flood the schemers with letters and e-mails containing little “paper toilet seats” with the inscriptions that “we are tired of their crap” and their( with a photo in the center) That their personal “political future is now in the toilet”. Be creative but be heard. flood their inboxes with their little pictures in a toilet seat and a wake up call to remind them the people have spoken and will not be ignored and mocked.
    God bless all who work to end the war on drugs. It’s nothing but a tool for tyranny .
    Gentle Jim

    Reply

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