Pubdate: Sun, 18 Jan 2015
Source: Chicago Sun-Times (IL)
Copyright: 2015 Sun-Times Media, LLC
Contact: http://mapinc.org/url/5QwXAJWY
Website: http://www.suntimes.com/
Details: http://www.mapinc.org/media/81
Author: Becky Schlikerman

GREEN BEHIND THE GRASS

Costs Adding Up for Medical Pot Entrepreneurs

In the world of medical marijuana entrepreneurs in Illinois, there's 
plenty of green behind the grass. Hundreds of would-be medical 
marijuana growers and sellers have put millions of dollars on the 
line hoping for coveted state permits that were supposed to be issued 
by former Gov. Pat Quinn by the end of last year.

To snag those valuable permits, the entrepreneurs hired consultants, 
lawyers and lobbyists.

They're already paying rent in some cases, or have money tied up in 
options to buy property.

And now, they wait. And with millions of dollars on the line, waiting 
can get expensive.

The state's medical marijuana program - and the status of the coveted 
21 medical marijuana farming licenses and 60 dispensary licenses - 
depends on the decision of one man: Illinois' new Gov. Bruce Rauner.

Nobody is sure what he's going to do, and Rauner has given few hints.

A spokesman, Lance Trover, said in a statement: Rauner "has serious 
concerns about the law and how licenses were chosen. However, he is 
committed to a quick and thorough review of the program, in the hopes 
of bringing clarity to the many concerned families across the state."

The new governor has said among his chief concerns are the clouted 
people that may be awarded licenses.

Politically, issuing the licenses may not appeal to the anti-drug 
element of his party. Still, some Republicans have come out in favor 
of the program, hoping for jobs in their rural communities. Even some 
La Salle Street bankers have shown an interest in cashing in on the 
legal marijuana business.

In October, U.S. Attorney Zach Fardon was quizzed by finance attorney 
Richard Demarest Yant, who wanted to know if Chicago banks have the 
all-clear to accept funds from legal marijuana businesses.

Applicants are so fearful of offending Rauner that they are reluctant 
to go on the record about their concerns, but chief among them is the 
rising tide of costs with nothing to show for it.

'The longer it takes, the more money they're having to burn through 
without any guarantee they're going to get a permit or see a return 
on their investment," said Kris Krane, a managing partner of 4Front 
Advisors, a marijuana consulting firm.

Krane, who is working with several applicants in Illinois, declined 
to speak about specific applicants.

But one of the people Krane works with is strip club and trucking 
firm owner Perry Mandera, who hopes to grow and sell medical 
marijuana in Chicago. Mandera has said he's invested $10 million just 
into the cultivation center on the city's Southeast Side.

Even for smaller players, the costs add up, records show.

For example, Organic Leaf Medical Dispensaries, which seeks to open a 
dispensary in the Ukrainian Village neighborhood, had by November 
shelled out nearly $300,000 to lawyers, lobbyists, consultants and an 
architect, according to City of Chicago records obtained through the 
Freedom of Information Act.

That doesn't include application fees.

It costs applicants a nonrefundable $25,000 fee to apply for a 
cultivation center license and $5,000 for a dispensary license.

So far, the state's collected $5 million in fees from the more than 
350 applications submitted.

An owner of Organic Leaf, Iman Bambooyani, said the group is paying 
rent and utilities at their proposed site at 744 N. Damen. The group 
also applied for three other dispensary licenses, Bambooyani said.

"I'm just hoping for the best," he said.

Other applicants have said they have options to rent or buy 
properties contingent on getting the state license.

And when those expire, applicants have to re-up and pay up or lose 
the carefully selected property, some said.

"These businesses have put in a tremendous amount of investment just 
to get to the point of applying for licenses, and when the process 
breaks down like this, that leaves them stuck with the bill and 
nothing to show for it," said Taylor West, deputy director of the 
National Cannabis Industry Association.

On average, marijuana entrepreneurs spent at least $100,000 just on 
the application process, said Sara Gullickson, vice president of 
sales for Mari Med Advisors, a medical marijuana consulting firm 
working with applicants in Illinois.

"Everybody is pretty concerned," Gullickson said. "They've spent a 
lot of time, money and resources on these applications."

Those costs will eventually fall on patients, said Rep. Lou Lang, the 
Skokie Democrat who sponsored the medical marijuana legislation.

"All of that may add to the price [of the marijuana] when the 
patients buy it," Lang said. "Businessmen don't want to lose money. 
It's not good for patients for this to extend much longer."

Lang said members of the Rauner administration have met with Quinn 
holdovers to discuss the program. For now, Rauner is keeping Bob 
Morgan, the state's medical marijuana czar, on board.

"Far be it from me to offer the new governor political advice, but if 
he asked, I would tell him it's in the best political interest to 
just move the process along," Lang said. "These are very sick people 
that need this product."

Industry insiders say patients will continue to suffer until the 
issue is resolved.

"It is absurd that a program that was approved and began to be 
designed more than a year ago and should be right now providing 
serious relief for critically ill patients is instead hung up in some 
kind of bureaucratic or political wrangling," West said.

Contributing: Kim Janssen
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MAP posted-by: Jay Bergstrom