Almost 200 Applicants for Dispensaries in Massachusetts

On Election Day, by an overwhelming majority of voters, Massachusetts legalized medical cannabis and approved the Act for the Humanitarian Medical Use of Marijuana. The law includes allowing patients to possess a still-to-be-determined “best estimate” of a 60-day supply of cannabis in various forms for “cancer, glaucoma, positive status for human immunodeficiency virus, acquired immune deficiency syndrome (AIDS), hepatitis C, amyotrophic lateral sclerosis (ALS), Crohn’s disease, Parkinson’s disease, multiple sclerosis and other conditions as determined in writing by a qualifying patient’s physician.”

For the 35 legally-proposed medical cannabis dispensaries that the state of Massachusetts has allotted itself, 181 applications have been filed before the deadline, according to The Boston Globe. The number 35 was arrived at by allowing no more than five Registered Marijuana Dispensaries (RMD) per county. Processing these applications is due to be completed by mid-September. Those that pass the initial examination will move on to Phase Two.

Phase One required a non-refundable fee of $1,500, proof of substantial financial backing, proof of non-profit status and (no surprise here) assurances that no one in the proposed dispensary has a felony drug conviction. Most applicants are corporations, a few seem to be individuals.

Those whose applications make it to Phase 2 have to send an additional non-refundable $30,000 and then a committee will conduct an in-depth review of each application. As part of their evaluation, applicants will be scored based on factors including the appropriateness of the proposed site, overall geographical distribution of RMDs, local support for the business placement, and “the applicant’s ability to meet the overall health needs of registered patients, while ensuring public safety”. Dispensaries will have to use a “seed to sale” business model, in which they grow most of the plant matter they sell with the expectation that some will be converted into edibles, tinctures and vaporizer-ready products.

An interesting point: considering the basic costs of applying and then having an on-going licensed business, there must be a lot of well-to-do financial backers supporting these dispensary applicants. Why? Well, since the IRS has targeted cannabusinesses’ cash flow through abuse of Section 280E of the tax code and the Treasury has frightened major credit card companies (MasterCard, Visa and American Express) and banks away from doing business with dispensaries, where else would they get needed capital except in the private sector? Some of the incorporated businesses applying already have dispensaries in other New England states; presumably their funding comes from those other businesses, too.

By delving into the Massachusetts Department of Health and Human Services website, I found some interesting facts. The fee structure is quite extensive:

Patient fees:

Registration: $50 paid annually (low income patients can get a waiver)
ID card replacement: $10
Hardship cultivation: $100

Registered Marijuana Dispensaries:

Dispensary agent registration (per employee) $500 paid annually
Registration: $50,000 paid annually
Location change of dispensary: $10,000
Name change: $100
Architectural review of building: $8.25 per $1,000 of construction costs, with a minimum fee of $1,500

The purpose of all these fees is to create a “self-financed medical marijuana industry that supports patient access without relying on taxpayer resources”. With all of US states being cash-strapped, this is a noble ideal. As in any bureaucracy, even one as straight-forward in its language as the Massachusetts Department of Health and Human Services, they will of course be using part of these fees to hire and train new staff and inspectors to monitor the medicinal cannabis industry.

Think for a moment: the number of business applicants was more than five times the number of available licenses. Out of a population of about 6.5 million (2010 census) the Health Dept. expects only 1% (65,000) of its citizens to apply as patients. When will the rest of the politicians wake up and realize that one way to help with budget deficits is to stop supporting the DEA’s misguided attempts to (unintentionally!) support cartels and black markets, and instead start supporting their citizens and their budgets by legalizing medical cannabis? Politicians can only vote properly if you repeatedly tell them what you want them to do. Be proactive!