Pubdate: Sun, 25 Aug 2013
Source: Chicago Tribune (IL)
Copyright: 2013 Chicago Tribune Company
Contact: http://drugsense.org/url/IuiAC7IZ
Website: http://www.chicagotribune.com/
Details: http://www.mapinc.org/media/82
Author: Peter Frost

ILLINOIS MEDICAL POT LAW SPARKS INTEREST

Risks Could Weed Out All but 'Big Players'

Talk long enough to anyone in the business of growing or selling 
medical marijuana, and you'll hear plenty about risk.

It's hard to find a bank. It's difficult to find insurance. The 
plants are finicky. Security systems are expensive. Good, trusted 
employees are hard to find. State laws change at the whim of 
legislators and regulators. And, of course, because the drug remains 
illegal under U.S. law, federal agents could swoop in at any time, 
shut the operation down and put its owners in jail.

The risks may be even greater in Illinois, where Gov. Pat Quinn this 
month signed a bill into law that will allow a temporary, for profit 
medical marijuana industry, permitting cannabis sales to patients 
with certain medical conditions starting in 2014.

Still, as two events over the past three days have proved, plenty of 
people are willing to invest hundreds of thousands of dollars - in 
some cases several million - to get a shot at serving a new market of 
marijuana consumers.

More than 200 people crowded into a second-floor meeting area of the 
Embassy Suites in River North on Saturday, paying up to $375 each to 
learn more about the business of medical marijuana and to network 
with experienced purveyors of the product from states like 
California, Colorado and Michigan. That followed an event Thursday at 
another downtown hotel that drew more than 50.

"I've talked to several potential investors here thinking home-run 
dollars from the beginning," said Michael Mayes, the Chicago-based 
chief executive officer of Quantum 9, a marijuana consulting and 
technology company. "But, here at least, if you're swinging for the 
fences, you have to know you might strike out."

Mayes, 30, who also operates two marijuana cultivation centers and 
three retail dispensaries in Colorado, had conversations with 
attorneys, doctors, prospective growers and capitalists who see 
opportunities in Illinois to carve out a niche in the nascent industry.

While there appears to be plenty of interest, the potential rewards 
may not outweigh the risks.

"There is a lot of optimism here, but it's going to take a minimum of 
a year before any of these businesses can start operating, maybe even 
15 to 18 months," said Hilary Bricken, a Seattle-based attorney who 
has worked with growers and sellers in other states.

Although the new state law kicks in Jan. 1, three state agencies must 
also draft rules and regulations to govern the industry. Then there's 
an intensive application and review process, which could take several 
months depending on the number of individuals or businesses that 
apply for a limited number of licenses to grow and sell the product.

By the time the first ounce of medical marijuana is sold to a patient 
with a qualified condition at a licensed dispensary in Illinois, it 
could be mid-2015. And because the four-year pilot program could end 
Dec. 31, 2017, there may be only 2 1 2 years to recoup an investment 
that would likely surpass $1 million.

"There are just so many unknowns about Illinois. From a capital 
perspective, it seems pretty tough," said Elliott Klug, an industry 
veteran who operates a growing operation and chain of dispensaries 
based in Denver under the Pink House banner.

While Klug isn't willing to test the waters in Illinois, many of his 
contemporaries have shown interest in competing for one of 22 
licenses to grow the product and 60 to sell it across the state.

"I think what you're going to see are the big players, who are 
already established in other states, be the ones who can come in, 
take the risk and get a lot of the licenses," said Gabriel Plotkin, a 
Chicago attorney with Miller Shakman & Beem. "These are 
businesspeople with experience, credentials and money."
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MAP posted-by: Jay Bergstrom