Week in Review: Relief in CA, MMJ gains in two states & major expansion in the works

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By John Schroyer

California moves to slow the pace of medical marijuana bans, MMJ makes big gains in Ohio and Florida, and a cannabis company announces what could be the most ambitious expansion plan in the industry to date.

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

Ending the California screamin’

Lawmakers in California created an unexpected uproar in medical cannabis circles late last year when they passed regulations on the state’s MMJ industry.

Not because of the main rules themselves, but because of a particular provision that set a March 1, 2016, deadline for municipalities and counties to enact their own rules governing medical cannabis businesses.

With that deadline approaching, an estimated 160 such bans have been either introduced or already approved – creating fears that cannabis companies could be grounded across the state if the pace continues.

But on Thursday, lawmakers approved a bill to eliminate the deadline for local governments to enact their own MMJ regulations, which could very well save the industry.

“This bill that was passed was meant to stem the tide and encourage them to take their time,” said Aaron Herzberg, a partner at CalCann Holdings who has been working to get the bill passed in Sacramento.

The bill – which is now headed to the governor – lets local governments regulate businesses as they see fit going forward, without any deadline. That should help slow down the pace of the bans, as there won’t be any rush to make a decision.

That’s crucial, because the Medical Marijuana Regulation and Safety Act – the set of three regulatory bills the legislature approved last September – requires both state and local licenses for businesses to be fully legal.

“The whole industry cannot be effective if every city and county bans it,” Herzberg said.

Now the real challenge begins: Stakeholders have to persuade local officials around the state that there’s a better way to oversee MMJ businesses than simply banning them.

MMJ revival

The chances of two potentially enormous markets – Florida and Ohio – joining the medical marijuana industry fold this coming year jumped over the past week.

A proposal to legalize medical cannabis formally qualified for the ballot in Florida on Thursday, and the influential lobbying group Marijuana Policy Project announced that will engineer a medical cannabis campaign in Ohio.

If both are approved by voters in November, they will bring millions of more patients into the fold – creating possibly hundreds of millions of dollars in annual sales.

That would give cannabis reform efforts a huge boost in general and likely create an eye-popping number of business opportunities in both states for companies across the board.

And there’s a decent chance both could pass, as support for medical marijuana is strong in both Florida and Ohio.

Some observers may look with skepticism at the dismal failure of a medical and recreational bill in Ohio last year. But there are two big differences in terms of what MPP is shooting for.

First, MPP is only planning on legalizing medical, not recreational.

Second, based on MPP’s lengthy history of ballot measures, it’s safe to say there’s no way the organization will try to create an oligopoly the way last year’s ballot measure would have. That was one of the main drivers for the opposition, whereas MPP’s initiative is certain to be more of a free market approach.

Both campaigns will also likely have timing and politics on their side, with the 2016 presidential race driving turnout, especially among younger voters.

That demographic turned out in force in 2012 in Colorado and Washington State to legalize recreational marijuana, with cannabis getting even more votes in Colorado than President Barack Obama did.

Big money, big plans

Vireo Health isn’t stopping with just Minnesota and New York. It wants a presence in up to 20 more states.

The company, which owns Minnesota Medical Solutions and Empire State Health Solutions, is working on a $31.5 million capital raise to fund expansion into a number of states that have existing MMJ programs, such as California and Colorado, and several more that have not yet even legalized, including Georgia, Ohio, Pennsylvania and Texas.

“We understand these states have a ways to go, but I think it’s just a matter of time, and often, by the time legislation is passed, it’s too late to get your boots on the ground and get going,” Vireo CEO Kyle Kingsley said. “We’re looking at 17-20 states. We’ll probably wind up expanding to a more limited number, but one of the reasons for the raise is we’re trying to build on the best science and uses in the world for medical cannabis.”

Even in California and Colorado and other states that allow MMJ flower (as opposed to Minnesota and New York, in which only non-smokeable cannabis is permitted), Vireo plans to stick with oils and extracts, Kingsley said. He believes that’s the wave of the medical marijuana future, because it allows for more precise dosing and treatments.

“I think there’s a huge shift in the industry going to oil, and I think that’s the real opportunity. It’s better medicine,” Kingsley said.

Regardless, Vireo has already raised about $6 million of its stated goal, and if it does eventually set up a presence in 20 more states across the country – along with pursuing scientific research into the medical benefits of cannabis – it’ll be well on its way toward establishing itself as a major national player.

John Schroyer can be reached at johns@mjbizmedia.com