Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Saturday, November 7, 2015

Is Maryland a "sleeper" marijuana reform state to start watching closely?

ImagesThe question in the title of this post is prompted by this interesting Baltimore Sun article headlined "Maryland's nascent medical marijuana industry already booming." The article suggests a number of reasons why the Old Line State could and should be the new hot state to watch in the marijuana reform movement. Here are excerpts:

More than 350 applicants for licenses to grow, process or dispense medical marijuana were filed with the state's Medical Cannabis Commission by Friday evening's deadline as entrepreneurs try to get in at the ground floor of the newest pot market. The applications cover every county in the state. "It's very busy, and we're very excited," said Dr. Paul Davies, the commission's chairman. "There's an awful lot of excitement buzzing around."

State officials said they had counted only some of the applications received. Already, they have processed nearly three times more applications than there are grower licenses available and at least twice as many dispensary applications than they can award.

The huge demand is typical of a new medical marijuana market, said Troy Dayton, CEO of ArcView, a cannabis industry research firm. Apart from the District of Columbia, Maryland is the first jurisdiction south of the Mason-Dixon line that has a medical marijuana industry, he noted....

"The biggest opportunity in the cannabis industry is the opportunity to be a limited license holder in a state that is likely to expand," Dayton said. "It makes a lot of sense that people would put a lot of time and resources into their applications and really swing for fences." And because Maryland set up its industry to award licenses on a merit-based system with high fees to apply, Dayton said, it is likely that the businesses that ultimately win licenses will be successful. "You have people really vested in the success of that effort," he said. "And they have a protected market. They're guaranteed a flow of customers."...

Maryland's medical marijuana program has stirred much interest in the industry, said Taylor West, deputy director at the National Cannabis Industry Association. Not only are there few medical marijuana programs on the East Coast, she said, but Maryland's approach to treating a broad range of conditions and awarding a fair number of licenses makes it an attractive place to invest. "This is a brand-new market where there really isn't an established set of businesses there," West said. "So getting in at the ground floor, treating patients and building a reputation has a lot of value."

The breadth of Maryland's medical marijuana program attracted Dr. Greg Daniel and his associates to the state. They plan to build what he calls a "seed-to-sale" operation that grows the marijuana, processes it and then sells it at a dispensary. Daniel said he has talked to officials in Easton about converting an old Black & Decker factory into a growing and processing plant, and he applied to operate a dispensary near Baltimore-Washington International Thurgood Marshall Airport. The total cost to build the operation would be about $10 million.

For more than a decade, Daniel ran a doctor-staffing business before getting into the medical marijuana industry. He said he narrowly missed the cutoff to be awarded one of the few licenses available in New York, where he is based, but sees a bigger potential market in Maryland because of the way the program is set up. "We could be very successful here," said Daniel. "The number of patients that we would be able to treat would be greater in the Maryland marketplace."

In 2013, Maryland lawmakers approved a medical marijuana program that relied on academic institutions to distribute the drug, whose sale is prohibited under federal law. No university volunteered to participate, so the legislature retooled the program in 2014. The program authorizes physicians in the state to recommend the drug for a specific set of conditions, with 15 growers and as many as 94 dispensaries to supply it.

The Maryland Medical Cannabis Commission spent months crafting regulations on how to implement the law, and even longer developing the complicated application that stretches more than 60 pages. Most of the questions require an essay answer, plus proof that the applicant can pay for the operation. The commission plans to have an independent third party review and score all of the applications — with names of applicants redacted — to determine which ones make the first cut.

The commission came under fire last year for setting some of the highest fees in the medical marijuana industry, charging $125,000 to growers for a two-year license and $40,000 for a dispensary. But the cost apparently did not scare off many applicants.

Tony Toskov said he became interested in the business because his wife suffers from migraines and he hopes medical marijuana might alleviate her symptoms. "I hope everyone's doing it for the right reasons," said Toskov, a restaurateur who owns several Anne Arundel County locales and has applied to operate a dispensary in Baltimore, Washington or Anne Arundel. "It's not a pot store; you're getting into the medical business."

http://lawprofessors.typepad.com/marijuana_law/2015/11/is-maryland-a-sleeper-marijuana-reform-state-to-start-watching-closely.html

History of Marijuana Laws in the United States, Medical community perspectives, Medical Marijuana Commentary and Debate, Medical Marijuana State Laws and Reforms | Permalink

Comments

Hopefully prospective MD licensees look beyond the hype and perform both plant canopy AND retail penetration analyses on the statewide and local market before committing big $ for a MD license. And they'd better hope MD doesn't pull a Washington State and go from dispensary # cap to zero cap (albeit Washington's was on the retail side) - in WA it appears likely to result in a significant culling of the retail base.

Posted by: Eric Hollowaty | Nov 7, 2015 10:49:50 AM

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