Week in Review: Michigan medical cannabis firms in limbo, MA to the rescue, Alaska crawls ahead

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By John Schroyer and Omar Sacirbey

Michigan medical marijuana businesses ponder their future under a new regulatory system, Massachusetts hopes to jump-start its MMJ program, and Alaska’s rec rollout proceeds at a snail’s pace.

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

Mulling Michigan

Michigan’s MMJ businesses wonder how life will change after lawmakers approved a statewide regulatory system for the industry. Gov. Rick Snyder is expected to sign the legislation.

What is clear: The number of medical cannabis dispensaries – currently estimated at around 300 – will likely shrink.

So MMJ business owners wonder if they’ll survive the licensing process, depending on how the state Department of Licensing and Regulatory Affairs (LARA) writes the industry’s rules.

“As far as going forward and surviving, we’re hoping that the fees (that) apply aren’t too expensive,” said Jamie Fricke, owner of Holistic Earth dispensary outside Flint.

“We’re all tentatively planning on applying for the licenses. The rules seem straightforward now, but LARA is going to put their twist on it … I may have to bring investors on board, and I might sell. I’m not sure what the future holds.”

Fricke, who also runs an infused products company called Remedy’s Medicinals, said her small outfit may be unable to afford huge licensing fees, or may be ineligible if LARA requires applicants to have significant financial reserves.

“Do I have $300,000 for a state license? I don’t know if I can do that. I don’t know if they’re going to ask if we have liquid $1 million in the bank,” Fricke said.

She’s also worried about higher compliance costs, which will range from paying for mandatory insurance and testing to dealing with a seed-to-sale inventory tracking system.

Moreover, all applicants must win support from the community where they want to locate their business. Consequently, Fricke said, many existing Michigan MMJ companies won’t make it.

While the new regulations, licensing and oversight will bring long-term stability to Michigan’s market, the uncertainty plaguing the industry isn’t going away just yet.

Mass Rule Changes

Massachusetts’ MMJ program suffers from too few operational dispensaries: seven serving 30,000 patients. Now state regulators want to breathe new life into the industry.

In coming months, the Massachusetts Public Health Council will likely vote on proposed changes to the state’s MMJ program that are designed to expand the patient pool, help new cultivators, and spur competition among dispensaries.

The proposals would allow:

  • Nurse practitioners to certify patients for MMJ.
  • Cultivators to start crops with clones rather than seeds.
  • Dispensaries to post their prices online.

Kris Krane, managing partner of 4Front Advisors, a Boston cannabis consultancy, thinks the proposals could help.

He said allowing nurse practitioners to recommend medical cannabis would be helpful.

In Massachusetts, doctors who want to be certified to recommend MMJ must take a five-hour course and register with the state’s health department.

For doctor who plans to open a cannabis clinic, it makes sense to get certified. But it doesn’t for docs who plan to see just a few MMJ patients a day.

“It’s a fairly onerous process that most doctors aren’t incentivized to do. So having a wider universe of people who can make these recommendations will only be a good thing for patient access,” Krane said of nurse practitioners.

Licensed cultivators, meanwhile, must start their crops with seeds – a process that can take up to a year. Allowing growers to start with clones would shave off months.

“This will allow newer businesses to get up and running more quickly,” Krane said.

Allowing dispensaries to post prices would help patients comparison shop; but it wouldn’t trigger a price war, Kane said.

Medical cannabis prices in Massachusetts are fairly “uniform” and “commiserate with black market prices,” he noted.

But online prices could facilitate internet ordering and pickup services, Krane said. “The more people who order online and go to a pickup window, the more people you can move through your dispensary.”

Why the Wait, Alaska?

Alaska cannabis officials have approved the first retail license for the state’s new recreational marijuana industry. But sales may not launch until next February, a timeline entrepreneurs find unpalatable.

Rec license applicants may have a point, given allegations levied against the Marijuana Control Board by ousted member Bruce Schulte over a month ago.

Schulte alleged the board and some in Gov. Bill Walker’s administration aimed to hamper the industry’s rollout, because they’re opposed to cannabis. And this week the board’s director said the agency is understaffed and overworked, arguably an easy problem for the state to solve by hiring one or two more employees.

If true, it’s not the only instance where anti-cannabis public officials have tried to erect roadblocks to the burgeoning industry or ignored logistical problems. Illinois Gov. Bruce Rauner has been unfriendly to his state’s MMJ program.

But it’s also worth noting Alaska didn’t have a statewide medical cannabis system when it began assembling its new rec system. That’s in contrast to Colorado, which also took over two years to launch the first rec sales in modern history on Jan. 1, 2014 – even though Colorado already had hundreds of dispensaries.

Alaska still doesn’t have legal MMJ dispensaries.

The bigger picture is that the fourth rec state is just a few months away from launching. Perhaps a little more patience is warranted.

John Schroyer can be reached at johns@mjbizdaily.com

Omar Sacirbey can be reached at omars@mjbizdaily.com