Medical Marijuana Fees May Price Everyone Out

[Jim Finnel]

At some point next year, medical marijuana will finally be available to qualifying patients in the District. The problem? It might be too expensive for anyone to grow it or sell it, much less for anyone to actually afford to buy it.


A comprehensive set of rules and regulations published by Mayor Adrian Fenty's administration on August 6 outline a tightly restricted system where growing, selling and buying marijuana for medicinal use is subject to a number of bureaucratic loopholes. Amongst those are rules, regulations and fees for anyone looking to operate one of the city's five dispensaries (where patients will get the marijuana) and 10 cultivation centers (where the marijuana will be grown).

Just filing an application to run a dispensary or cultivation will set any prospective entrepreneurs back $5,000, while the annual licensing fee for a cultivation will cost a cool $5,000 and a dispensary a stiff $10,000. And that's not even including registration costs for managers, employees, officers, and so on. Needless to say, start-up and operating costs won't be low.

The D.C. Patients' Cooperative, a local non-profit that has advocated on behalf of the system and is planning on opening an Adams Morgan-based dispensary, recently outlined its grievances with the fees in comments submitted to the proposed rules. (The rules were open to 45 days of public comment, and will be voted on taken up by the D.C. Council by October 19 at some point this Fall.) According to the group, the fees aren't only excessive, but might make opening or running a dispensary or cultivation center prohibitively expensive.

In reference to the annual fee for operating a dispensary, the group pointed out that health care providers and pharmacies only pay $130 and $280 a year, respectively, to distribute controlled substances. "It is difficult to understand the rationale or justification for charging an annual fee for registration of a dispensary that is 30-50 times the amount charged for fees for other licenses needed to distribute controlled substances for medical purposes," it stated in its comments to the rules.

Additionally, the fees charged to dispensaries -- which will be regulated by the Alcoholic Beverage Regulation Administration -- are higher than those charged to run a bar in the District. "Even a Class A retailer -- a liquor store selling hard spirits for off-premises consumption -- pays an annual licensing fee of $2,600. A bar serving less than 100 persons pays an annual licensing fee of only $1,300 and a bar serving more than 200 persons pays an annual licensing fee of $3,210. If anything, following the ABRA model, the fees for dispensaries should be lower than those for bars, since a dispensary can only serve a limited universe of qualifying patients, while a bar can serve an unlimited number of persons as long as its licensed capacity is not exceeded at any one time."

Fees for a cultivation center may well be even more prohibitive, the group argues, and if there's no one that can afford to grow the stuff, well, then the whole program doesn't even get off the ground. The $5,000 annual fee coupled with a rule limiting the amount of plants that can be grown at any one time -- 95 -- may mean that if anyone actually gets into the business, the cost to the consumer may be significant. "If the annual licensing fee is $5,000, the cost of the annual fee alone would amount to $17.54 per plant, not including any other costs. This cost, plus the application fee, will be passed on and marked up by the dispensary, resulting in very significant costs to the qualifying patient," wrote the group, which prefers an annual fee of $1,500, or $5 per plant.

In comments of its own, the Marijuana Policy Project sounded similar concerns, writing that "businesses will not have a high sales volume that will enable them to generate enough revenue to justify the initial investment." The group proposed application fees of $1,000 to $2,000 and annual registration fees of no more than $5,000.

In August, the City Paper crunched the numbers and found that opening and running a dispensary alone may cost up to $500,000 a year. Of course, if the system weren't so restrictive, that amount of marijuana probably wouldn't be hard to sell. But it is. And that might make jumping in to open a dispensary or cultivation center something of a difficult proposition, or, worse yet, make the marijuana so expensive that a qualifying patient could well do better just buying from their local dealer.


NewsHawk: User: 420 MAGAZINE
Source: dcist.com
Author: Martin Austermuhle
Copyright: 2010 Gothamist LLC.
Contact: DCist: Washington DC News, Food, Arts & Events
Website: Medical Marijuana Fees May Price Everyone Out - DCist

 

[TorturedSoul]

I agree that those fees seem high in general and disproportionately so when compared to either traditional controlled-substance dispensers (pharmacies) or alcohol establishment.

But... $17.54 per plant. Looks like they're basing that on three consecutive grows per year.

Umm... How much are they projecting as an average yield? I see mention of plant-limits but not of space-limits. Now I'm no expert and certainly no professional, but if I was - and I must assume that they aren't going to hire wannabes off the street corner, lol - and if I was getting paid an hourly wage to put in 40 hours per week to take care of plants in a suitable look-at-me-legal environment, I could take care of a lot of plants. If I had a couple of hard-working helpers and an equally hard-working second-shifter to cover the general things - look around for fires, make sure the timer setup doesn't go twitchy during the lights-off period, monitor a bank of climate/pH/ppm displays and make sure all the various controllers are reading green, stuff like that - then I could probably handle quite a few more. Many have run (much smaller) gardens while they held down a 40-hour "day job" (or two). Of course, when it's for someone else it's another level. But that's offset by being legitimate, not sneaking around, being able to use the company credit card where needed and being able to walk into the storeroom and pick up a bulb/ballast/pump/fan from the racks the moment something flat-lines. Spares cost money but the average piece of equipment - even a bulb - produces quite a bit in its lifetime and like any other business, they're "maintenance items."

No more panicky chants of, "Oh shit oh shit ohshitohshitohshit!!!" on Saturday night when something poofs and the hydroponics store doesn't open until Monday morning - when you're at work at your "day job." Instead, picture, "Hey, Fred, #53 just started going out, coming back on a few minutes later, then going out again. Pull the light setup, drop it on Dave's bench so that he can check it out in the morning to see what is bad and what isn't, and go grab another tested setup out of stores. Get a move on, it's been doing it for almost 20 minutes and it'll take you almost that long to do the swap-out." (Yeah, every grower should have spares. Most do. But there's always something that you didn't think to get, that the store was out of, that your buddy saw sitting on the shelf and talked you out of - or that you bought as a spare but then found yourself thinking, "It's a shame that it's just sitting there collecting dust when I have that extra space...")

Spares cost money. Labor costs money. Fees and regulations costs money. In a well-run dispensary that grows its own product 95 plants at a time in an area with a high cost of doing business in general and expensive fees, it might cost... How many grams in a well-grown plant with two shifts (well... A shift and a half (reduced night-staff. And ol' Fred is a trifle slow, lol) taking care of it? It might cost... If you're growing your own product, you don't have a "wholesale" product cost - and even at wholesale, the grower is covering expenses and almost certainly collecting a decent wage - you have an ACTUAL labor cost and ACTUAL materials costs.

It might cost... I don't know, really. A lot if you're talking about toothpaste. But a whole lot less per ounce than that ounce cost in actual dollars.

I cannot help but wonder if whatever they're saying, what they're actually meaning is, "But I don't see how I can make so much money that I have to call a Brinks truck to haul my daily deposits to the bank."

I'm not saying that there aren't any dispensary owners that close up each night, climb into their 15-year old car (mine will turn 29 in less than six months), stop off at their local supermarket, pick up their food, use their coupons when checking out, and drive on home to cook their own meal six nights out of seven.

I just don't read about many of them.

They could do a lot for the price of medicinal-use cannabis by lowering the fee structure and relaxing some of the requirements.

But they could do a whole lot more by instigating a real, enforceable profit-cap.

That last sentence seems so unrealistic that I almost canceled this post. <SHRUGS> But I spent a few minutes typing it in. And most of you are on a flat-rate Internet plan so it didn't cost you any more to read it than it would if you were just sitting there, lol.

[/RANT]