logo

A long list of competitors will be expected to apply for the five licenses that will be issued by the state of New York to manufacture and dispense medical marijuana. The Department of Health released their final regulations and the applications were posted on April 20th.

Gary Smith of H2Gro Greenhouses has expressed a desire to apply for one of the licenses. The complex set of rules will not deter him from putting in an application but many critics are concerned that the state has erected too many barriers. The Assembly sponsor of the Compassionate Care Act, Richard Gottfried has openly stated, “[o]ne might wonder if the regulations were designed to prevent the system from operating at all.” However, the Health Department has found a supporter in the Senate sponsor of the new law, Diane Savino who feels that “[t]hese regulations are necessary because we’re creating a new industry in a state where there is no template for it”.

The goal is to be able to provide the medical marijuana to certified patients by January 16, 2016. Before that can happen growers will have to apply, undergo background checks then be able to acquire the proper amount of financing necessary to build or equip buildings with the required level of security and staff. Not to mention, sowing the seeds which will take 12 to 15 weeks to grow and then one must consider the processing of the plants into a form of the drug that doctors will be able to prescribe. Patients will only be allowed to consume through an oil, pill or vapor. Eating and smoking of the drug is forbidden.

Patients will need a registration card which must be approved by a qualified physician based a list of specified conditions such as cancer, AIDS, ALS, Parkinson’s, MS, spinal cord injuries and epilepsy. Critics are concerned that post-traumatic stress disorder is absent from the list of qualified conditions.

After you consider these requirements, the next concern is cost, pricing and its link to affordability.   First, there will be a non-refundable $10,000 application fee along with a $200,000 registration fee that will also have to be paid at the time of submission. Since state regulators have not set a price, potential dispensing companies have found it difficult to complete an accurate business plan. Some would-be bidders have speculated that the cost of compliance will be more than $8M every 2 years.

In terms of pricing, there are competing concerns that the prices not be so high that it incentives people to turn to the black market but at the same time not discourage companies from joining the program.   Some worry that the regulations do not provide for discounted doses to poorer patients. Speaking of access, many believe that 20 dispensaries will not be enough to serve all the New Yorkers who get a prescription.

Health Department regulators and their defenders claim that the program has to be restrictive because marijuana possession is still illegal and they want to prevent losing bidders from suing or the Federal government from intervening. Senator Savino believes that the Cuomo administration truly wants the program to succeed and expects that the licenses will be awarded in July. The deadline for turning in the application is May 29th. As for access, regulators will be allowed to consider geographic balance and will have the ability to add qualifying health conditions and expand the number of dispensaries.

It must be noted, that New York will be the only state in the country that sets the medical marijuana price and there is a question as to whether it will take into consideration the higher cost of growing in certain parts of the state. Jody Miller head of Buffalo’s 4Front Consulting Group, applauds the state for its “responsible approach” but is predicting some thin margins for companies compared to other states.