Jacob Redmond
Well-Known Member
Competition is heating up among companies jockeying for one of the state's five medical-marijuana licenses. But for some, being an early adopter in New York, with its restrictive medical-marijuana law, isn't worth the financial risk.
GrowOp, a unit of publicly traded TerraTech, considered applying for a New York license, but shareholders pushed to prioritize licensing in Nevada instead, citing legal standards that promised a larger patient base and lower infrastructure costs in the desert. The company had looked at purchasing a cultivation site and recruiting staff in New York until last Wednesday, when Terra-Tech CEO Derek Peterson announced the Irvine, Calif.-based company wouldn't be bidding.
"Putting together a team is not difficult for us, but we want to make sure we're utilizing our assets and capital for the most advantageous purposes," Mr. Peterson said.
At first, he feared New York would restrict public companies from getting a license. But even after it was clear public companies were welcome, Mr. Peterson wasn't sure that applying early in New York would provide a good return on his shareholders' investment.
Nevada permits marijuana treatment for a broader range of conditions than New York, as well as patient reciprocity; cannabis-cardholders from other states can use them in Nevada. Unlike New York, the state also allows the sale of the whole cannabis flower rather than only pills and oils.
Leslie Bocskor, a marijuana investor who consults with companies in both New York and Nevada, estimated startup costs for New York medical-marijuana companies to be a minimum of $25 million.
"I can't imagine you can run a business according to New York standards and make a profit anywhere within the next few years," Mr. Bocskor said.
Before the decision to bow out was firm, Mr. Peterson laid out the logic behind TerraTech's potential bid for a license.
"If we were to get involved, it would be because we want to be in the marketplace. We would work very hard on the lobbying front to get some things changed," he said.
That may include permitting the use of marijuana for common conditions such as anxiety or back pain, boosting the number of dispensaries a company can open and making it easier to site them.
Many of the pharmaceutical and biotech companies applying for licenses in New York don't believe the Compassionate Care Act is overly restrictive. They claim the degree of processing the plant must undergo before reaching patients is necessary to create stand-ardized doses of cannabis.
"We can give people the exact same dose every time," said David Weisser, president of Empire State Compassionate Care, whose firms sell lozenges, pills and other forms of medicinal cannabis in Colorado and New Jersey. "We want to bring that same pharmaceutical grade to New York."
But Gabriel Sayegh, director of the New York Drug Policy Alliance, calls that view disingenuous, because the potential market is much greater than what the law allows. "Anyone who's saying it's great that the law is this restrictive is making a business decision. In no way is such a restrictive law great for patients."
Mr. Peterson sees the law's limitations as a temporary hurdle. Once TerraTech's Nevada operations are "cash-flow positive" and "some of the kinks are worked out in the New York marketplace," TerraTech would hope to get another shot, he said.
News Moderator: Jacob Redmond 420 MAGAZINE ®
Full Article: First isn't always best in New York's medical-marijuana race
Author: Caroline Lewis
Contact: Contact Us | Crain's New York Business
Photo Credit: Bloomberg
Website: Crain's New York Business
GrowOp, a unit of publicly traded TerraTech, considered applying for a New York license, but shareholders pushed to prioritize licensing in Nevada instead, citing legal standards that promised a larger patient base and lower infrastructure costs in the desert. The company had looked at purchasing a cultivation site and recruiting staff in New York until last Wednesday, when Terra-Tech CEO Derek Peterson announced the Irvine, Calif.-based company wouldn't be bidding.
"Putting together a team is not difficult for us, but we want to make sure we're utilizing our assets and capital for the most advantageous purposes," Mr. Peterson said.
At first, he feared New York would restrict public companies from getting a license. But even after it was clear public companies were welcome, Mr. Peterson wasn't sure that applying early in New York would provide a good return on his shareholders' investment.
Nevada permits marijuana treatment for a broader range of conditions than New York, as well as patient reciprocity; cannabis-cardholders from other states can use them in Nevada. Unlike New York, the state also allows the sale of the whole cannabis flower rather than only pills and oils.
Leslie Bocskor, a marijuana investor who consults with companies in both New York and Nevada, estimated startup costs for New York medical-marijuana companies to be a minimum of $25 million.
"I can't imagine you can run a business according to New York standards and make a profit anywhere within the next few years," Mr. Bocskor said.
Before the decision to bow out was firm, Mr. Peterson laid out the logic behind TerraTech's potential bid for a license.
"If we were to get involved, it would be because we want to be in the marketplace. We would work very hard on the lobbying front to get some things changed," he said.
That may include permitting the use of marijuana for common conditions such as anxiety or back pain, boosting the number of dispensaries a company can open and making it easier to site them.
Many of the pharmaceutical and biotech companies applying for licenses in New York don't believe the Compassionate Care Act is overly restrictive. They claim the degree of processing the plant must undergo before reaching patients is necessary to create stand-ardized doses of cannabis.
"We can give people the exact same dose every time," said David Weisser, president of Empire State Compassionate Care, whose firms sell lozenges, pills and other forms of medicinal cannabis in Colorado and New Jersey. "We want to bring that same pharmaceutical grade to New York."
But Gabriel Sayegh, director of the New York Drug Policy Alliance, calls that view disingenuous, because the potential market is much greater than what the law allows. "Anyone who's saying it's great that the law is this restrictive is making a business decision. In no way is such a restrictive law great for patients."
Mr. Peterson sees the law's limitations as a temporary hurdle. Once TerraTech's Nevada operations are "cash-flow positive" and "some of the kinks are worked out in the New York marketplace," TerraTech would hope to get another shot, he said.
News Moderator: Jacob Redmond 420 MAGAZINE ®
Full Article: First isn't always best in New York's medical-marijuana race
Author: Caroline Lewis
Contact: Contact Us | Crain's New York Business
Photo Credit: Bloomberg
Website: Crain's New York Business
