Measures to legalize medical marijuana – and set up a system of regulated cultivation operations and dispensaries – have a realistic shot of passing in both New York and Illinois, which rank as the third- and fifth-largest states in the nation by population. At the same time, a bill in Nevada that would pave the way for dispensaries is gaining traction among lawmakers, while the odds are good that several other states such as Oregon and New Hampshire will pass MMJ-related measures as well.

If all or most of the measures pass, the medical cannabis industry would benefit from hundreds of millions of dollars in additional sales of marijuana, edibles and related products and services, thousands of jobs and potentially 200,000 or more new state-registered patients.

About two dozen states introduced some type of cannabis legislation this year. Many bills have already died in the legislative process or been put on the back-burner, while several are still working their way through the legislative process but face huge resistance. Just one state – Maryland – has passed medical marijuana laws so far in 2013, but its program is so restrictive that some industry organizations don’t even count it as an “official” MMJ state.

Illinois has the best chance at this point of becoming the next state to join the medical marijuana club. Last week, the state legislature approved a bill that would create a four-year pilot program allowing up to 60 dispensaries and 22 cultivation operations. Illinois Gov. Pat Quinn now holds the fate of the bill in his hands and is expected to make a decision in the coming weeks. While he has not given an indication of which way he is leaning, Quinn has said he is open to the idea of medical marijuana, and the state’s lieutenant governor supports the bill.

Under the measure, patients with one of several dozen medical conditions could register with the state to use medical cannabis after receiving the go-ahead from their doctor.

The list of qualifying medical conditions doesn’t include catch-all ailments such as “chronic pain,” which means the market will be much smaller than states with broader laws such as California and Colorado. Still, the list is extensive enough that Illinois would likely rank in the middle of the pack in terms of overall MMJ market size and near the top when it comes to near-term business opportunities.

Anywhere from 50,000 to more than 100,000 patients could eventually qualify for medical marijuana cards, according to MMJ Business Daily estimates based on per-capita rates in other states with similar rules. The emergence of dozens of dispensaries and cultivation sites would create a sizable need for a variety of other services and products, such as packaging, cannabis testing, edibles products, legal and accounting services, consultancies, etc.

The bill in New York is gaining traction as well, though it has a bigger mountain to climb than the Illinois measure given that it hasn’t been put up for a vote yet. The measure would allow patients with debilitating diseases such as cancer, HIV/AIDS and multiple sclerosis – but not chronic pain – to use marijuana for medical purposes. It would also create a regulated network of dispensaries and grow operations, though an exact number (or whether there will be caps at all) has not yet been determined.

At first glance, the bill seems more limiting than the Illinois measure in terms of who would qualify to use medical cannabis, but patients numbers in New York would most certainly reach into the tens of thousands and could top 100,000 over time.

Aside from the business implications, passage of MMJ laws in New York and Illinois would be a significant moral victory as well. Should they pass, three of the largest states in the nation (including California) would have MMJ laws on the books, helping to erode the federal government’s justification for opposing MMJ. What’s more, the states are spread across the nation, spanning the West Coast, Midwest and Northeast.

In Nevada, a measure that would allow regulated, registered dispensaries to serve patients cleared a Senate finance committee this week, fueling hopes that lawmakers are finally ready to move forward and reform the state’s MMJ laws after years of inaction. Nevada voters approved the use of medical marijuana more than a decade ago, but the law doesn’t allow for dispensaries, meaning patients essentially have to grow their own cannabis. Local and federal officials have raided and shut down the few dispensaries and collectives that sprouted up several years ago.

The patient base in Nevada is relatively small, with just 3,400 registered MMJ users. But the law would potentially allow more than 60 dispensaries in the state, including up to 40 in Clark County (which includes Las Vegas), so there would be plenty of business opportunities.

Proposals in several other states will help fuel additional growth as well if passed, though not to the extent of what would develop in New York, Illinois or Nevada. Medical marijuana seems well on its way to becoming a reality in New Hampshire, for instance, but the state will likely just allow four or five dispensaries to operate.

A bill in Oregon – which, like Nevada, already has medical marijuana laws but doesn’t technically allow dispensaries – would legalize and regulate retail MMJ shops. That would be a major win for the medical cannabis industry, but the business potential could be somewhat limited given that an estimated 150 to 200 dispensaries already operate in the state despite the current legal situation. If the bill passes, most of those would attempt to get a state license. Still, new operations would certainly crop up because the risks would subside greatly. According to a state analysis, the law would lead to an estimated 225 state-licensed dispensaries.

Another Medical Marijuana Business Boom on Horizon? Cannabis Bills Advancing in Key States is a post from: Medical Marijuana Business Daily - Legal, Financial and Dispensary News

It’s D-Day in LA.

The estimated 700-plus dispensaries in Los Angeles will likely learn their fate sometime tonight after voters weigh in on several MMJ proposals during citywide elections.

Make no mistake: This is a crucial election not only for the LA cannabis community, but also for the medical marijuana industry as a whole. Los Angeles ranks as the largest single market for MMJ in the country, boasting more dispensaries and related medical cannabis businesses than the rest of California combined – and any other state for that matter. At stake are thousands of jobs and millions of dollars in revenues.

The ballot measures aim to create a viable, stable and regulated business climate in LA, which would be an important development for a turbulent market and could help offset some of the negative stereotypes about the industry (many of which are tied to shady dispensary operations in Los Angeles).

But the proposals have a different method of going about it, and each would have a very different impact on dispensaries and related businesses. Although there are three proposals on the ballot, voters will basically decide between just two:

#1. Proposition D would force most of the city’s dispensaries to close, allowing only 135 that were open before LA enacted a moratorium in 2007 to remain in business. The measure also calls for additional oversight on dispensaries – including restrictions on hours of operation and a requirement that key personnel submit to background checks. Additionally, it would increase city taxes on MMJ centers to $60 for every $1,000 in sales, up from $50 currenly.

Some of the city’s top officials have come out in support of this measure, seeing it as a way to allow the industry to exist while reining in the unchecked growth of the past few years. They also believe it will help rid Los Angeles of sketchy, fly-by-night operations that some consider a blight on neighborhoods. The measure, crafted by the Los Angeles City Council, has gained the support of older dispensaries as well as a fair share of advocates and the main union representing MMJ workers.

Dispensaries that are allowed to remain open will benefit immensely from this proposition because they’ll be able to capture a much bigger share of the market with the decrease in competition. A major downside of this proposal, however, is that hundreds of responsible, upstanding dispensaries – not just the questionable players – would be forced to close and overall access to medical marijuana would shrink significantly.

#2. Initiative Ordinance F would implement new regulations on the industry – including background checks for dispensary owners and employees, mandatory cannabis testing and a requirement that would force centers to file an audit annually with the city. While the regulations are actually stronger than the ones in Proposition D, this ordinance does not set a cap on the number of operations. Existing dispensaries would be allowed to stay open provided they can meet all the requirements and register with the city. Taxes on marijuana transactions at dispensaries would rise, and centers would have to ensure they are at least 1,000 feet from a school.

Ordinance F would have a smaller immediate impact than Proposition D, as all existing dispensaries would at least be given a chance to stay in business. Still, while some dispensaries would eventually be forced to close because they can’t meet all of the requirements, it might not be enough to completely address the concerns of lawmakers and community members that there are simply too many centers. So there could be ongoing pressure on the industry.

Additionally, Los Angeles would remain a fairly sizable target for the federal government, which has been cracking down on medical marijuana businesses.

Supporters behind a third proposal on the ballot – Initiative Ordinance E – have essentially abandoned the measure a shifted their support to Proposition D, which is similar.

While each measure has supporters and opponents within the medical cannabis industry, some MMJ organizations are pushing for all of the ordinances. The California chapter of the National Organization for the Reform of Marijuana Laws (NORML) recommends voting yes on each of the three proposals to avoid a “tragedy” that would arise if all of them fail.

The good news is that none of the measures call for a complete ban on medical marijuana dispensaries, something the Los Angeles City Council actually pushed through last year before rescinding it when faced with the possibility of a costly and time-consuming referendum.

However, a tricky situation could arise if more than one of the proposals gets more than the required 50 percent of the votes. In that case, the measure with the most overall votes wins, which is sure to create a great deal of controversy. On the other hand, it’s certainly possible that voters will strike down all three proposals, in which case city council would ultimately go back to the drawing board and try to come up with a workable solution.

Los Angeles has long struggled to effectively regulate the medical marijuana industry. After a proliferation of dispensaries popped up in a lax regulatory climate – soaring above 1,000 at one point – the city passed a measure in 2010 that was supposed to cut down the number of dispensaries to less than 100. But huge opposition from the industry as well as a court-ordered injunction, contradictory legal rulings and a lack of enforcement allowed the industry to continue operating virtually unchecked. Then came last year’s ban, which quickly dissolved when MMJ supporters gathered enough signatures to put their pro-dispensary measure on the ballot.

The chaos in Los Angeles is common in California’s medical marijuana industry, which has been at the center of the federal government’s MMJ crackdown in recent years. Chalk it up to the lack of statewide regulations on the industry, which have created a turbulent business climate with little or no rules.

On Monday, the California Senate passed a bill that could help stabilize the environment by introducing some basic statewide regulations on the industry and shielding compliant dispensaries from state prosecution, though cities could still set their own policies and rules.

Los Angeles Marijuana Dispensaries on Edge With Voters Set to Reshape Nation’s Largest MMJ Market is a post from: Medical Marijuana Business Daily - Legal, Financial and Dispensary News

In fact, owners could wind up on a blacklist that would prevent them from getting a merchant account ever again – a major hidden risk of doing business in the medical marijuana industry.

Kayvan Khalatbari, co-owner of the dispensary Denver Relief, found this out the hard way recently when he tried to open a new American Express merchant account for a completely separate pizza business.

American Express denied his application, saying he could no longer open new Amex merchant accounts going forward. The reason: Amex closed a previous Denver Relief account for “operating under illegal terms” because it deals with a federally banned substance, Khalatbari said, citing his conversation with an Amex representative.

In essence, American Express has blacklisted Khalatbari and possibly hundreds of other dispensary owners from opening new merchant accounts for side businesses simply because they are involved in the medical cannabis industry (regardless of whether they are following local and state MMJ regulations).

“Because my social security number is tied to Denver Relief, the gentleman on the phone said they won’t be able to open merchant accounts for any of my businesses now,” Khalatbari said. “It’s interesting because I’m a minority owner in the two companies, and I’m the only one who has a stake in both. But because my name is tied to Sexy Pizza LLC, that business is not able to get a new merchant account with Amex.”

American Express has not yet responded to MMJ Business Daily’s request for comment.

This is a prime example of how getting involved in the cannabis industry can lead to unexpected repercussions. Aside from federal and local crackdowns, unstable business conditions and other lofty challenges, dispensary owners face longer-term risks that could hinder their future business prospects in other sectors.

Over the past two years, Amex and other major credit card companies – including Visa and MasterCard – have distanced themselves from the medical marijuana industry, refusing to process transactions at dispensaries and closing merchant accounts for MMJ centers.

In some cases, the credit card companies have added dispensary owners’ names to the dreaded “merchant match list,” also known as the “terminated merchant file” list, said Lance Ott, a principal at Guardian Data Systems, Inc., which provides financial services to high-risk merchants including dispensaries.

Once your name is on that list, it can be almost impossible to open a new merchant account – though credit card companies and underwriters don’t always check the list right away, while others don’t discover it unless there’s an audit.

“When you’re added to the list – regardless of whether a financial institution, credit card processor or the credit card company itself adds you – you might not get another merchant account ever, no matter what type of business it is,” Ott said, adding that he’s seen this happen to a lot of dispensaries.

In fact, all owners of a given dispensary – regardless of whether they own a minority or majority stake in the operation – could be blacklisted, making it hard for them to open viable businesses in the future.

While some credit card companies will simply decline new accounts, American Express, it seems, is particularly aggressive in actually blacklisting dispensary owners.

To date, very few dispensary owners run other companies, so the impact has been limited. But that’s expected to change as the industry matures and new MMJ states with high entry barriers come online. In Massachusetts and Connecticut, for example, many potential applicants for dispensary licenses currently run other businesses – which isn’t surprising given that starting an MMJ center in those states will require a ton of capital.

“Everybody I know in Massachusetts and Connecticut who is interested in a license is also a previous business owner,” said Khalatbari, whose dispensary has a consulting arm that is working with potential applicants in those states. “One owns a yogurt franchise, and this may affect him down the road as well.”

Khalatbari said an Amex representative told him that his pizza company’s existing merchant accounts for its current locations won’t be affected. But he won’t be able to get one (and therefore won’t be able to accept Amex payments) for Sexy Pizza’s new online ordering app or any other locations he plans to open in the future. Khalatbari said he was able to open new merchant accounts for his pizza business with Visa and Master Card, even though those companies also closed Denver Relief’s account recently.

The situation is more of an annoyance for Khalatbari than anything at this point. American Express transactions currently account for about 10-15% of Sexy Pizza’s credit card revenue, but Khalatbari said most customers would simply use another payment option rather than go to a competitor who accepts Amex.

However, this problem could be a much bigger issue for dispensary owners who also run side businesses with higher-priced items or services, as customers might be more set on using Amex to earn reward points or for other reasons.

So how can other entrepreneurs avoid this problem going forward?

The only choice might be to set up a shell company that would technically own your non-MMJ firm so that your individual name is not tied to it. While doable, that involves a lot of paperwork, resources and some money.

Alternatively, you could just try to wait it out and hope the situation changes.

“This is a problem,” Khalatbari said, “but I have to imagine in the next 6-12 months we’ll see some change on the federal level with banking in general.” If that happens, credit card companies would likely rethink their positions on MMJ.

Credit Card Companies Barring Dispensary Owners From Opening Accounts for Other Businesses is a post from: Medical Marijuana Business Daily - Legal, Financial and Dispensary News

Medical cannabis professionals in California had hoped the court would prevent cities from enacting dispensary bans. In the end, they didn’t even have a shot: The court ruled in a 7-0 decision this week that local municipalities can indeed bar dispensaries within their boundaries. The case involved a dispensary – Inland Empire Patient’s Health and Wellness Center – that challenged the city of Riverside’s recent ban on MMJ shops.

The court essentially ruled that cities can use nuisance or zoning moves to ban dispensaries, saying such moves do not violate or conflict with the state’s medical marijuana rules.

“While some counties and cities might consider themselves well suited to accommodating medical marijuana dispensaries, conditions in other communities might lead to the reasonable decision that such facilities within their  borders, even if carefully sited, well managed, and closely monitored, would present unacceptable local risks and burdens,” the court wrote in its decision (you can read the full ruling here).

The decision shouldn’t come as a surprise: Legal experts have been warning the California MMJ community not to get its hopes up.

Still, the ruling will ripple across the state’s medical marijuana in several ways:

#1. More cities will enact bans in the near future. Some municipalities pursuing dispensary bans have been waiting on the sidelines until the court decision. They are expected to move forward quickly in light of the ruling, meaning the state could see dozens of centers close in the coming weeks. Other towns that previously weren’t seriously considering bans might move in the same direction now that they have the clear authority to do so.

#2. It will be difficult to overturn existing bans. Roughly 200 cities in California have banned dispensaries (you can read a list of them here), meaning access to medical cannabis is limited in huge swaths of the state. Advocates in some of these cities have challenged the moves via the courts and other methods – but these efforts might now be futile.

#3. The MMJ climate in California will remain volatile. California doesn’t have any statewide regulations covering dispensaries, which led to the chaotic situation that exists today. The Supreme Court ruling essentially paves the way for more uncertainty and volatility, as it could encourage more cities to ban MMJ centers.

#4. Pressure will grow on the state to come up with a broader solution. Medical marijuana advocates have been pushing for change on the state level for years, to no avail. As a result of the ruling, expect a renewed push for statewide regulations. In fact, the industry is already coming out in force to support such change, highlighting a line in the Supreme Court ruling that says “nothing prevents future efforts by the Legislature, or by the People, to adopt a different approach.”

At a press conference in Sacramento held shortly after the Supreme Court released its decision, several industry leaders and advocates – including Harborside Health Center Executive Director Steve DeAngelo, Americans for Safe Access (ASA) Executive Director Steph Sherer and Dan Rush, medical cannabis director at the United Food and Commercial Workers union – stressed the need for action on a state level. They also presented letters from mayors of several cities, including Oakland, San Diego and San Francisco, urging state lawmakers craft dispensary guidelines.

“Patients should not be pushed into dark alleys in order to obtain a medicine that has been deemed legal by the voters of California,” Don Duncan, ASA’s California policy director, said in a statement. “The ball is in the legislature’s court to establish statewide regulations that both meet the needs of patients and keep communities safe.”

Khurshid Khoja, the principal and founder of Greenbridge Corporate Counsel, agrees. “My thoughts are that this decision underscores the urgent need to pass comprehensive statewide regulation of medical cannabis dispensaries in California,” Khoja told MMJ Business Daily. He added that industry professionals and drug policy reform activists in the state should “lobby their legislators to ensure we have statewide regulations in place as soon as practicable.”

Lawmakers recently introduced two measures – Senate Bill 439 and Assembly Bill 473 – that would help clear up the situation. But similar legislation in the past has stalled, signaling a reluctance by state lawmakers to establish a clear framework for dispensaries.

Fallout From CA Ruling: More Dispensary Bans, Uncertainty…and Pressure for Statewide Regs is a post from: Medical Marijuana Business Daily - Legal, Financial and Dispensary News

Organizers are currently setting an agenda and are now looking for experts and business owners knowledgeable about various aspects of the industry, from dispensaries, infused products manufacturing and cultivation to legal and regulatory issues, operations, finance and investing, marketing/advertising and ancillary cannabis issues (testing, paraphernalia, consulting, real estate, human resources, etc).

The conference is 100% focused on cannabis professionals - not advocates, patients or recreational users – so all speakers must address topics that are relevant to businesses and executives.

Other guidelines/information:

- Chosen speakers must talk about an agreed-upon subject and cannot use their presentations to pitch their products/services or promote their companies or partners (beyond a simple mention).

- MMJ Business Daily’s editors and event organizers will work closely with speakers on their presentations and reserve the right to edit slides and other materials.

- The selection process will be competitive, as interest levels are high. Nomination forms should be thorough and well thought out. MMJ Business Daily is also looking for geographic diversity, so nominations for experts/ancillary business owners in states without medical cannabis laws (in addition to those with cannabis legislation) are encouraged.

- Content must be fresh and specifically tailored to this event, meaning speakers should not use the same presentations and PowerPoint slides they have used at other gatherings, though there can be some overlap in the material.

- Nominations for professionals who spoke at last year’s event will be considered, but most open slots are reserved for new speakers to ensure a diversity of content and opinions.

- Speakers will receive a complimentary ticket to the show (value $599) in addition to the benefits that come with the exposure this event provides.

To nominate a speaker – including yourself – fill out and submit this form. MMJ Business Daily will review all nominations and make final decisions by early summer. The process will play out in stages, meaning some speakers will be locked in and chosen earlier than others.

Last year’s event in Denver attracted nearly 400 professionals and featured 40 speakers, including Steve DeAngelo of Harborside Health Center, Troy Dayton of The ArcView Group, Tripp Keber of Dixie Elixirs & Edibles, Rob Kampia of the Marijuana Policy Project and noted California MMJ attorney Henry Wykowski. It also received sizable local, national and international media attention from newspapers, TV stations and Web sites. MMJ Business Daily expects this year’s conference to attract even more attendees, sponsors and exhibitors.

Nominate a Speaker for the National Marijuana Business Conference & Expo 2013 is a post from: Medical Marijuana Business Daily - Legal, Financial and Dispensary News

The Thomas C. Slater Compassion Center in Providence opened its doors at 10 am to registered patients.

It’s been a long time coming: Rhode Island residents voted in favor of a medical marijuana law all the way back in 2005. The state eventually approved three dispensary applicants in 2011, but Rhode Island Gov. Lincoln Chafee halted the program over concerns that state employees and center owners could be prosecuted. Chafee worked with state lawmakers to revise Rhode Island’s medical cannabis laws to lessen the risk and then began moving forward with the program in earnest.

“Today is the culmination of four years of fighting for patients to have dignified, safe access to medicine,” the dispensary wrote on its Facebook page this morning.

A woman who answered the phone at the center said the dispensary was packed, evidenced by the noise of an excited crowd that could be heard in the background. “Everything is going great,” she said. “We are very, very busy this morning.”

The owners were unavailable for immediate comment, as they were dealing with patients.

With the opening of the Slater Center, Rhode Island becomes the 11th state in the nation with dispensaries.

Other states with dispensaries include Arizona, California, Colorado, Maine, New Jersey and New Mexico. In several states – Michigan, Montana, Oregon and Washington State – dispensaries operate in a legal gray area or are not technically allowed under local laws but exist anyway because of lax enforcement. Dispensaries are also gearing up to open in a handful of additional markets over the next year, including Connecticut, Massachusetts and Vermont as well as Washington DC.

According to documents filed recently with the Rhode Island health department, the Slater Center expects to generate $2.6 million in revenues during its first full year of operation and post a 50% increase in sales the second year. The dispensary also projects that it will serve 1,000 state-registered patients who have designated the center as their caregiver.

The Slater Center filed plans for a 13,750-square-foot space that includes 5,000 for retail cannabis sales and 5,600 for cultivation.

Another dispensary – Greenleaf Compassion Center – is gearing up to open soon as well.

Rhode Island is home to roughly 5,000 registered MMJ patients.

Photo credit: Thomas C. Slater Center’s website

Rhode Island Welcomes First MMJ Center, Becomes 11th State in US With Dispensaries is a post from: Medical Marijuana Business Daily - Legal, Financial and Dispensary News

On Monday, the San Diego City Council will hear an ordinance put forth by Mayor Bob Filner that would allow dispensaries to operate in specific commercial and industrial areas.

If the measure passes, dozens of dispensaries would likely open this year, and the city could eventually have 100 or more MMJ centers according to some estimates. That would create additional business opportunities for support companies and professionals, including lawyers, consultants, landlords, electricians and cultivation equipment suppliers.

Annual marijuana sales could hit $50 million once all dispensaries are up and running, according to MMJ Business Daily’s estimates, adding roughly $1 million to the city’s coffers.

But the measure faces some opposition, and whether it will pass is anyone’s guess at this point.

“It’s looking, somewhat ominously, like it’s going to be an incredibly tight vote, but I’m very hopeful that we’re going to pull it off,” said Ken Cole, president of One on One, which is one of the only dispensaries that survived recent MMJ turmoil in the city. “I’m going at (council members) nonstop on the compassion side. We’ve got to get them to realize that this about their mothers, grandmothers, uncles and the guy they work with. We’re talking about ordinary everyday people.”

Cole said the vote at this point appears split 4-4. There’s one open City Council seat that will be filled soon. The two candidates are both Democrats, though one has come out in support of medical marijuana and the other against it.

Here are some key business-related highlights of the ordinance:

- Medical marijuana centers would have to meet a host of requirements tied to everything from security to signage.

- Dispensaries would have to fork over $5,000 each year in permit fees and pay a 2% annual excise tax on medical marijuana transactions.

- Centers would need to operate as nonprofits, meaning they could only accept “donations” from medical marijuana patients who have valid state-issued MMJ identification cards and also have submitted their doctor recommendations for cannabis to the California Department of Public Health’s central registry.

- Dispensaries would have to set up shop at least 600 feet away from schools, parks and childcare facilities and 1,000 feet from another MMJ center.

Under the ordinance, medical marijuana “vending machines” also would be banned. (MedBox Inc., a publicly traded company that sells automated MMJ dispensing machines, believes its technology would still be allowed under the mayor’s proposal. The firm recently said it hopes to help open 30 dispensaries in the city that feature its machines.)

The move to change San Diego’s medical marijuana laws comes after a turbulent period that saw hundreds of dispensaries open rapidly several years ago and then close just as quickly after the city began a crackdown in 2011.

Local and state laws have long been murky when it comes to dispensaries. The City Council passed an ordinance two years ago that set clear rules for dispensaries in a bid to clear up the situation. But it ended up rescinding the measure after MMJ advocates who felt the rules were too restrictive mounted a successful petition drive challenging the ordinance. The move backfired for the industry, as the city then forced most dispensaries to close.

As recent as January, there were just a handful of dispensaries. But more centers as well as delivery-only services have sprouted up in the past two months after the mayor moved to ease up on the industry.

Fate of San Diego Dispensaries, Local MMJ Industry on the Line as City Council Debates Ordinance is a post from: Medical Marijuana Business Daily - Legal, Financial and Dispensary News

If the state adopts these rules, the barriers to entry will be quite high. Smaller local players will have an extremely difficult time meeting the application requirements and getting final approval.

But that hasn’t deterred many entrepreneurs, at least so far. Hundreds of locals seem poised to put a lot of money, time and resources on the line for a shot at getting in on the ground floor of a new industry.

“There are a lot of people out there kicking the tires and others who are waiting on the sidelines ready to jump in,” said Bruce Bedrick, chief executive officer of MedBox, which develops automated cannabis dispensing machines and offers consulting services in new MMJ states. “I expect about a 10-to-1 ratio” of applicants to available dispensary permits.

On April 3, MedBox hosted free educational seminars in Boston focused on the proposed rules, drawing about 300 entrepreneurs throughout the day. Bedrick said most attendees had a relatively high level of familiarity with the draft regulations and were still interested in exploring opportunities to open a dispensary.

“Most of the questions asked were about fundamentals – the process and details – rather than generic questions about what the draft regulations contain,” Bedrick said.

Massachusetts has ranked as one of the hottest new medical cannabis markets ever since it passed a law in November allowing up to 35 dispensaries – much more than other MMJ states in New England. A handful of out-of-state players – including Colorado-based Denver Relief Consulting and the law firm Vicente Sederberg – are looking to tap this new market and assist locals who want to open medical cannabis businesses. Several of these firms and other organizations have hosted seminars and conferences to feed locals’ voracious appetite for information about running a medical marijuana operation.

Last month, the National Cannabis Industry Association held a business-focused symposium before the state released its draft rules, drawing more than 125 participants. The industry trade organization said it continues to see high levels of interest now that the proposed regulations are out.

“Individuals who we are connected to in the area are as interested as they were prior to the release of the rules,” said Betty Aldworth, deputy director of the NCIA.

Adam Fine, a Massachusetts attorney who is working with Vicente Sederberg, said he thinks interest has actually increased in the past two weeks.

“I would say it’s elevated,” Fine said. “I think that’s really the result of the comprehensive nature of the regulations and the fact that we now have a vision for what they will look like. It seems more real, and on balance I thought the regulations were well thought-out.”

Going forward, interest levels could hinge on the amount of fees and expenses tied to applying for and receiving a permit. The state’s health department did not offer any specific suggestions on this end, other than to say fees would be set down the road.

A few thousand dollars likely won’t affect entrepreneur interest. But if applicants have to shell out tens of thousands of dollars just to apply – which is a real possibility given the huge escrow proposal and the fact that other nearby MMJ states have high fees – many potential cannabis entrepreneurs will likely drop out. In fact, some observers think there will only be a couple dozen “serious” applicants in the end, which – if true – will narrow the competitive field significantly.

Regardless, it will likely be many months before dispensaries start opening up, meaning entrepreneurs who move forward will need a lot of patience. And even those with deep pockets and a wealth or resources to make it through the application process will face challenges.

“What I am seeing the most of are groups that are well capitalized but are deficient in the other two major areas: securing a cultivation or retail space (especially one that will conform to zoning regulations or meets with town approval), or technical expertise,” said Robert Hunt, who owns cultivation supply stores in several states and is also an MMJ consultant. “On both fronts it does not matter how well-funded these guys are, they are facing uphill battles.”

Significant Interest in Starting MA Cannabis Dispensaries Despite Onerous Regulatory Proposals is a post from: Medical Marijuana Business Daily - Legal, Financial and Dispensary News

Every entrepreneur looking to start a medical marijuana center asks that question early on in the due diligence process, but the answer is often elusive given the lack of industry data.

As a result, most look to Harborside Health Center to get an idea of what’s possible in this industry. The California-based dispensary – one of the few MMJ operations to reveal financial data publicly – claims it generates more than $22 million in annual revenues, making it one of the largest cannabis centers in the nation from a sales perspective.

Impressive, for sure. But most dispensaries don’t come close to those figures.

Nearly 60% of dispensary owners who responded to a recent industry survey said they take in $500,000 or less in annual revenues, according to first-of-its-kind data in the newly released Marijuana Business Factbook, published by MMJ Business Daily. A fair share (27% of all respondents) reported sales of between $100,000 and $250,000, while 15% said they bring in less than $100,000 a year.

Those numbers may sound surprising to newbies, and they certainly fly in the face of the media’s representation of the industry. But they reflect the reality of the situation: Opening a dispensary is not necessarily a route to quick riches.

The good news is that if you put in the hard work, follow local regulations and implement best practices, the potential is indeed sky high. More than a quarter of dispensaries in the survey reported annual revenues of more than $1 million, and another 15% said they generate between $500,000 and $1 million.

Dispensaries at the top end of the spectrum often have thousands – or even tens of thousands – of loyal patients, professional packaging and tested products, a dozen or more employees and multiple locations within one state.

Dispensaries on the lower end (less than $100,000) typically are mom-and-pop shops or tiny storefronts in rural areas where the market is small. These dispensaries often have just a few hundred customers and are staffed by the owner and maybe a part-time employee or two.

How big a dispensary gets from a revenue perspective depends on many factors, including local regulations, plant limits and permitting and licensing requirements (the higher these are, the larger dispensaries usually are). Additionally, it depends on the intentions of the owner. Some entrepreneurs prefer to fly under the radar given the industry’s shaky legal status, so they keep their dispensaries small to avoid unwanted attention and scrutiny.

The findings are part of a larger survey of MMJ business owners conducted online in January. More than 130 cannabis executives – including those who run dispensaries, cultivation operations, edibles companies and ancillary firms – responded to the survey. Given the sensitivity businesses have when it comes to their own financial data, MMJ Business Daily did not require respondents to provide names or any other identifying information.

Click here to get your copy of the entire 180-page Marijuana Business Factbook 2013, packed with exclusive financial, legal and market research data for cannabis professionals.   

From Less Than $100K to Millions of Dollars, Annual Marijuana Dispensary Revenues Run the Gamut is a post from: Medical Marijuana Business Daily - Legal, Financial and Dispensary News

That’s exactly what happened in Colorado recently, according to a report by CBS 4. To recap: A mother in Denver said her son received about 25 texts on his mobile phone from a local dispensary since November, even though the family sent replies asking to be removed from the list. One message even boasted that the dispensary has “20 strains of pure dank in stock.”

The dispensary reportedly employs an out-of-state marketing service to send promotional texts to registered patients, using the numbers customers write down when they register at the center. So it’s possible someone made a typo when entering the number. Alternatively, the patient could have provided the wrong information or even switched phone numbers at some point without notifying the dispensary.

Regardless of the circumstances, the dispensary didn’t heed – or wasn’t notified of – the requests to stop sending the texts (the owner did not return a message left by MMJ Business Daily this morning).

This is the type of story that gives the industry a black eye and sticks with the public, even though it very well could have been an honest mistake and is a rare occurrence in general.

Lawmakers could use it to hype up the perceived dangers of medical cannabis when debating related bills. Or they could use it to set limits on cannabis-related advertising.

We’ve already seen this play out in the past. Denver, for instance, banned all outdoor advertising for medical marijuana – including billboards, posters and sign-twirlers – last year in part because of irresponsible marketing practices employed by some dispensaries. A Colorado task force set up to suggest regulations on the recreational cannabis industry also recently recommended that both the state and local governments set rules for marketing, and that marijuana shops be allowed to advertise on mobile devices “as long as there is an easy and permanent opt-out feature” (you can read more on page 51 of this document).

Dispensaries are in a difficult position. They of course want to use the same marketing and advertising tools available to the rest of the business world, but they must be much more careful with their approach given the sensitivity surrounding cannabis.

“This presents a precarious situation for dispensaries: How do you contact your customers like other retail establishments, without putting controversial content in front of their family, and especially, kids?” said Micah Johnson, president and co-founder of Cannapages.com, which offers consultation in product quality, store presentation, niche branding and marketing. “Snail mail is dangerous, email can be compromised and who knows how many people will look over your shoulder when you get a text?”

Dispensaries that want to use mobile marketing technologies should consider implementing safeguards, such as allowing patients to opt-in for text marketing, testing all numbers before initiating a text-based marketing campaign and ensuring recipients can stop the messages at any time.

“We have always urged dispensaries to request permission to text if they will be adding such a service; many simply export the phone numbers of their patients and start mass messaging right away. The better solution is to request ‘private’ email addresses only, and emphasize the intention to send ‘deals,’” Johnson said. “If dispensaries are going to text, I recommend they have patients opt-in during their visit to the dispensary and in front of those managing. Or, have the patient sign a waiver.”

If dispensaries don’t get patient approval before sending out text messages to cell phones, they could be setting themselves up for lawsuits given privacy laws around medical information and other concerns.

“The implied or written permission is legal protection,” Johnson said. “In this case, it was a 10-year-old with little to lose other than a bit of innocence. But when an employee – or even executive – loses their job due to such communication, I’m sure the resulting lawsuit will set a precedent.”

Photo credit: Tom@Swin via Compfight cc

Dispensary’s Texts to 10-Year-Old Highlight Need for Marketing Caution in Cannabis Industry is a post from: Medical Marijuana Business Daily - Legal, Financial and Dispensary News