How Investors will be Making Money off Massachusetts Medical Marijuana

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On May 8, 2013, Massachusetts state public health officials approved a set of regulations for the use and distribution of medical marijuana in the state.  In November 2012, Massachusetts voters approved a ballot initiative to allow the medical use of marijuana for "debilitating medical conditions", such as HIV, AIDS, Parkinson's disease, and multiple sclerosis.  Massachusetts is the 19th state (including the District of Columbia) to allow the distribution and use of medical marijuana.   

Up to 35 dispensaries will be open throughout the state.  Communities throughout the state are scrambling to modify zoning regulations to accommodate or even limit where a dispensary may be placed.  For example, Here is a link to what Pittsfield and Stockbridge are currently doing with their zoning laws.

Potential investors are wondering how to cash in on the inevitable market that will soon open up in Massachusetts surrounding medical marijuana.  The medical marijuana market in Massachusetts will no doubt be a multi-million dollar industry. Patients may receive up to a 60-day supply of marijuana, which the regulations defines as 10 ounces--a little over 1/2 a pound.  However, some patients may be allowed more with permission from their doctors.

Investors wondering how to become licensed to sell medical marijuana should be intimately familiar with the regulations.  The following is a break down of some of the regulations, not all.  This blog post does not constitute legal advice.  You are advised to speak with an attorney before acting on any information contained in this blog.

Registered Marijuana Dispensary

A registered marijuana dispensary (hereinafter "RMD") is a non-profit entity that acquires, cultivates, possesses, or sells medical marijuana. In order to sell medical marijuana in Massachusetts, an entity must be a RMD.

How to apply:

The following is a list of some of the requirements an RMD, all executives, directors, employees and volunteers must have:

• Be over 21 years of age;
• Have not been convicted of a felony drug offense in Massachusetts, or similar violation in another state, or U.S. territory;
• Submit a CORI Report from the past 30-days prior to application;
• All dispensary agents must have valid registration cards that were issued by the state;
• The entity must show proof that is has at least $500,000 at its disposal in bank accounts or lines of credit;
• a non-refundable application fee; and
• Various other requirements of the regulations.

After submission of the above information, state officials will then determine if your application can move into Phase 2 of the process.  Phase 2 requires much more detail than Phase 1 and a company would be wise to have an attorney assist with Phase 2.  Although, a company or potential company, may also want to consult with an attorney before any steps are taken before applying to become a RMD.

State officials will "score" the application based up certain criteria. Obviously, a RMD with a higher "score" has a better chance at obtaining a license.

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General requirements of a RMD:

Once a company is qualified to be a RMD, certain additional requirements must be met. The following is a list of some of those requirements:

• The non-profit company must be a corporation in good standing with the Massachusetts Secretary of State;
• Vaporizers must be available for sale to qualifying patients;
• a RMD cannot have more than two locations, but only one location can be dispense marijuana and other limitations must also be met with regard to the two locations;
• RMD must have a program for reduced costs or fees for for patients for financial hardships;
• Obtain a "certificate of registration"; and
• various other requirements such as security systems and storage facilities.

How Can One Make Profit if a RMD is a Non-Profit Company?

Since a RMD must be established as a non-profit corporation, a company and its directors or employees, may not expect to have significant financial compensation from running such a business.  However, one may be surprised that directors, executives, and some employees of certain non-profit companies have been known to receive substantial compensation for their work due to the demands and/or expertise of the work. 

Additionally, opportunities may exist in leasing land to an RMD.  There is a provision in the regulations that allows for an RMD to lease land, rather than having to purchase land. Various types of leases should be examined in order to fully maximize the profit potential of such a lease.

If you or your company want to explore the possibility of applying to become an RMD to dispense, grow, and sell medical marijuana in Massachusetts, or if you are looking to lease land to a RMD, an attorney may be able to help further explain and assist in the intensive application and regulation process

Here is a breakdown of some the regulations put out by the Massachusetts Dept. of Public Health.

By: Attorney Geoffrey Farrington

www.Bohnet-Romani.com
Twitter: @FarringtonLAW