Week in Review: WV process begins, Oregon medical cannabis lifeline & possible Florida license increase

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By Omar Sacirbey, John Schroyer and Bart Schaneman

West Virginia starts developing a medical marijuana blueprint, Oregon’s MMJ industry may get a shot in the arm, and Florida could issue more business licenses under its existing CBD-focused program.

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

‘Pretty good start’ for West Virginia

West Virginia regulators have started trying to figure out how to implement the state’s new medical marijuana law, and at least one supporter likes what he sees.

“I think we’re off to a pretty good start,” said Keith McMillion, executive director of the Alternative Economic Development Association of West Virginia.

Regulators have established 15 conditions for which residents can seek MMJ treatment, most notably chronic pain. Other conditions include cancer, HIV, Parkinson’s disease, epilepsy and post-traumatic stress disorder.

The acceptable delivery methods for the ailments include pills, oils, topicals, tinctures and dermal patches.

Though McMillion would’ve liked the bill to have included smokable cannabis, he is encouraged by a provision authorizing the MMJ commission to permit flower – without lawmaker approval.

“If the cannabis commission feels the program is going well and they think it’s OK,” he said, “they have the power to allow flower.”

West Virginia’s MMJ program initially will allow up to 10 licenses each for cultivation and processing. The application fee will cost $5,000, a one-year license $50,000 and renewal $5,000. Companies may apply for both cultivation and processing licenses, but a dispensary licensee can’t hold a grow or processing license.

The state will allow up to 30 dispensary licenses, with each permitting two locations. The fee for each dispensary location will be $10,000, McMillion said, while the dispensary application fee and the renewal will cost $2,500 apiece.

Applications will be accepted during the first quarter of 2018 and licenses awarded that summer, McMillion said. Patients can start receiving cards in July 2019, he said, meaning the program will launch by then.

New life for MMJ in Oregon

With the stroke of a pen to Senate Bill 1057, Oregon’s governor will likely be bringing medical cannabis growers and over 25,000 small-scale MMJ caregiver cultivation operations into the supply chain for the state’s recreational market.

That’s on top of Oregon’s existing 500 licensed adult-use growers, meaning the industry could be in for a shock to the proverbial system.

But Anthony Taylor – founder of Compassionate Oregon and an activist who helped shepherd the bill through the Legislature – doesn’t believe the change will “have much of an effect,” in part because they’ll only be allowed to sell to wholesalers and manufacturers, instead of directly to rec retailers. Gov. Kate Brown is expected to sign the legislation.

“What it is going to do is pull another 80,000 pounds out of the black market because the (medical) growers will be allowed to have some limited access to (the rec) market,” he said.

Undermining the black market was the lawmakers’ driving force behind the bill, Taylor said.

Medical growers have had diminished outlets for their product, with most of the state’s longtime dispensaries having transitioned fully to the rec market, which is overseen by the Oregon Liquor Control Commission. And until SB 1057 becomes law, medical caregivers and growers are prohibited from selling into the rec market; they can only sell to authorized MMJ dispensaries.

Further compounding the problem is reluctance by the medical growers – who are governed by the Oregon Health Authority – to buy into the OLCC system, often because they’re located in towns or counties that have opted to ban rec businesses.

The measure fixes that issue, Taylor said, and also gives rec retailers more access to craft cannabis.

“They’re hungry for this product,” he said. “The retailers, especially, are missing the craft product.”

Still, Taylor said, Oregon sold only about 100,000 pounds of cannabis in 2016, while the licensed OLCC growers produced about 250,000 pounds.

That means there’s an enormous surplus of inventory in the state. Throw more sites into the mix, and it’s hard to tell how the market may react.

The state could be in for a wholesale price crash. Or maybe it’ll be business as usual.

Florida applicants get a boost 

It’s all about the licenses in Florida.

The state’s medical marijuana market could eventually be one of the largest in the nation – once the full-fledged program gets off the ground – but the lack of available licenses is a major roadblock and perhaps the largest complaint to date. Only seven have been awarded under the existing CBD program.

That could change soon, however. A judge recommended that two more licenses be awarded to companies he believes were slighted in the application process.

Administrative Law Judge John Van Laningham said the Florida Department of Health should have awarded licenses to Tornello Landscape, aka 3 Boys, and Plants of Ruskin when they applied for CBD licenses in 2014.

Van Laningham’s analysis found that the state’s process for scoring applicants was “clearly erroneous, arbitrary, capricious, or abuse of discretion,” according to the official court document. He added: “It is unlikely that the five applicants originally chosen by the department actually were, as a group, ‘the (five) most qualified applicants.’”

He  suggested the health department create new licenses for Tornello Landscape/3 Boys and Plants of Ruskin, but whether that happens is solely up to the health department.

Regardless, the judge’s actions were “pretty incredible,” said Florida-based cannabis attorney Matt Ginder.

It’s an open question whether more licenses may someday be available in Florida, but entrepreneurs are watching with interest.

“Stakeholders and people in the industry understand that there’s significant value to holding one of these dispensing licenses,” Ginder said. “Whether they’re self-capitalized or seeking funding on their own, people in the industry see the upside value of pursuing one of these licenses.”

Omar Sacirbey can be reached at omars@mjbizdaily.com

John Schroyer can be reached at johns@mjbizdaily.com

Bart Schaneman can be reached at barts@mjbizdaily.com