Pubdate: Mon, 07 Oct 2013
Source: Boston Herald (MA)
Copyright: 2013 The Boston Herald, Inc
Note: Prints only very short LTEs.
Author: Jack Encarnacao


Medical Marijuana Entrepreneurs Seek Out Unusual Backers

Shut out of traditional bank loans, budding entrepreneurs who want to 
sell medical marijuana in Massachusetts have been forced to get seed 
money from a host of unconventional sources - from restaurant and 
nightclub owners to friends and family, landscapers and even former 

A Herald review of the 181 applications for 35 licenses to sell 
marijuana reveals financial commitments from a hodgepodge of sources. 
Marijuana is still illegal in the eyes of the federal government, 
meaning banks can't issue small business loans, which are federally 
backed, to pot store owners.

"Getting a financial institution to give you a loan is almost 
impossible; everyone tries, and they're eventually forced into an 
all-cash business model," said Chris Walsh, editor of Medical 
Marijuana Business Daily, who has tracked dispensary financing in the 
Bay State. "What you're seeing is people with deep pockets and 
professionals from other industries are the ones getting involved, 
not necessarily the guy who's been growing marijuana in his basement 
for the last decade."

To secure a Massachusetts license, dispensaries must have $500,000 in 
escrow - a higher bar than most other states - and must operate as 
nonprofits. Walsh said investors are tantalized by being on the 
ground floor if recreational use is legalized across the country.

"I think people want a piece of this business, no matter how they can 
get it," Walsh said.

Andrea Nuciforo, a lawyer and former state senator from Pittsfield, 
pledged $423,000 to Kind Medical Inc., led by a Westfield doctor who 
is eyeing a dispensary in Amherst that he said will be 
"patient-focused, compassionate, secure and accessible."

"Members of our team think that it's an exciting time to be involved 
in something like this," Nuciforo said. "It may be new in 
Massachusetts, but it is certainly not new to the country."

But banks are steering clear. Weymouth Bank President Robert 
Terravecchia said the lack of federal backing and the potential hit 
to the bank's image - it sponsors anti-drug programs in schools - 
means loaning money to pot stores is not worth the risk.

"I'd really just prefer that they wouldn't apply, but you can't 
prevent that," Terravecchia said.

Of the 181 applications submitted to the state Department of Public 
Health, 159 passed the first-phase review, which was focused on finances.

The phase-2 review will include full criminal background checks, said 
DPH spokesman David Kibbe. Attorney General Martha Coakley's office, 
which oversees nonprofits, is also involved.

"Our office is already working closely with the DPH and other law 
enforcement to closely monitor these dispensaries as they open for 
business," Coakley spokesman Brad Puffer said.
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MAP posted-by: Jay Bergstrom