Pubdate: Sun, 14 Jun 2015
Source: Honolulu Star-Advertiser (HI)
Copyright: 2015 Star Advertiser
Contact: 
http://www.staradvertiser.com/info/Star-Advertiser_Letter_to_the_Editor.html
Website: http://www.staradvertiser.com/
Details: http://www.mapinc.org/media/5154
Author: Kristen Consillio

ADVOCATES SEE HUGE BENEFITS DOWN THE ROAD

HB 321 Could Lead to a $65 Million a Year Industry and Hundreds of 
New Jobs, They Say

Medical marijuana promoters say dispensaries in Hawaii could create a 
lucrative new market with up to 800 jobs and $65 million a year in sales.

House Bill 321 - which allows for 16 dispensaries to open in Hawaii 
on July 15, 2016, and potentially many more the following year - is 
now in Gov. David Ige's hands.

If he signs it into law, the race will be on to see who can get the 
eight licenses allowed, build their greenhouses and open retail 
spaces to begin selling marijuana legally in Hawaii for the first time.

"It's the beginning of a new era in Hawaii," said Michael Patterson, 
a medical marijuana consultant with the U.S. Cannabis Pharmaceutical 
Research. "It's a historic moment for so many different reasons. It's 
truly becoming legal in peoples' eyes and it's a turning point for 
how this is viewed in Hawaii."

Ige's representatives have said he's open to signing the dispensary 
bill into law, and members of his Cabinet worked with legislators in 
crafting the measure.

There are roughly 13,000 Hawaii residents registered to use medical 
marijuana. Under the current law, they have to grow their own pot or 
buy it illegally.

"That number is expected to quadruple once dispensaries are open," 
said Michael Visher, owner of Colorado's Green Man Cannabis 
Dispensary. "Right now there's no point in getting a medical 
marijuana card if you're growing it yourself."

Even with just 13,000 patients, the potential market for medical 
marijuana is large, according to Visher. In Colorado, medical 
marijuana sells for an average $150 per ounce and a typical patient 
uses one and a half ounces a month, he said. That translates into a 
$35 million a year business. With the anticipated growth in number of 
patients signing up for medical marijuana cards, the total sales in 
Hawaii could grow quickly to $65 million a year, said Nate Bradley, 
executive director of the California Cannabis Industry Association.

The bill allows for each licensee to operate two dispensaries and two 
grow centers for a total of 16 dispensaries: six on Oahu, four on 
Maui, four on Hawaii island and two on Kauai.

Each dispensary could employ up to 30 people and each grow center 
about 20, according to Patterson, who along with Visher were in 
Hawaii this weekend to consult with investors interested in opening 
dispensaries.

Hawaii Sen. Josh Green (D, Naalehu, Kailua-Kona) said the estimates 
of economic activity could be exaggerated.

"The people who have been pushing marijuana have been overstating the 
economic benefits to their communities, and the people against it are 
overstating the negative social impacts," Green said. "I don't yet 
know whether or not it's going to have a significant economic impact 
on Hawaii. There hasn't been an honest assessment yet."

The state Department of Health would have oversight of the 
dispensaries from planting to sales.

THE FIRST STEP in opening a dispensary is applying for a license, a 
process that won't be easy. For starters, applicants must prove they 
have $1.2 million to invest in the business. There is a $5,000 
nonrefundable license application fee and a $75,000 fee due upon 
approval, as well as a $50,000 annual renewal fee.

The legislation allows for additional dispensary licenses to be 
issued starting Oct. 1, 2017, as demand for the drug grows. The bill 
states that for every 500 medical marijuana patients in a county, one 
dispensary license will be allowed.

The only tax on medical marijuana will be the standard general excise 
- - 4.5 percent on Oahu and 4 percent for the neighbor islands. 
Municipal governments have the ability to impose taxes on businesses 
and occupational fees associated with permits specific to the 
marijuana industry, Visher said.

"The state will be collecting millions in taxes per year once all the 
dispensaries are up and running," probably in late 2017, Patterson said.

However, creating an industry from the ground up poses a number of challenges.

"What the actual cost will be to develop and successfully open a 
medical marijuana dispensary is difficult to determine due to so many 
unknown factors," including cost of land, construction, payroll and 
compliance, Patterson said. "But I can guarantee it will be more than 
$1.2 million."

Also, the proposed law doesn't allow licensees to grow and sell 
marijuana in the same location. It also doesn't allow for interisland 
commerce so each of the major islands will have its own self-contained unit.

"It's going to make for some very creative business models," with 
many different enterprises that cater to dispensary needs, Visher said.

"Every person that steps into a marijuana facility has to be 
licensed," he said. "If you hire a (cleaning) crew, those people are 
going to get licensed and they're going to be the only people that 
can clean it. If a dispensary has a plumbing issue, you have to call 
someone licensed by the state to allow them to come onto the 
premises. That license is going to be valuable."

To maintain a safe supply of the drug, Hawaii will have to invest in 
special marijuana laboratories, which will likely be solely for the 
testing of pot because it can't be certified for other medical 
testing, according to Visher.

"The only thing the lab can test is marijuana, so the marijuana 
business has to keep the lab in business; otherwise there's nobody to 
test the medicine," he said. "If no one is going to take the 
financial risk of opening a lab in Hawaii it's going to make testing 
impossible and going to make the whole process grind to a stall."

The retail outlets can also sell manufactured cannabis products such 
as capsules, lozenges, pills, oils and extracts, tinctures and 
ointments and skin lotions.

Patterson said all this adds up to more jobs. In addition to 
dispensary positions there will be jobs for attorneys, accountants, 
security firms, transportation workers, lab technicians, bud tenders, 
growers and horticulture supply stores, he said.

"Colorado has added over 10,000 jobs in the marijuana industry 
alone," Patterson said.

IN THIS NEW industry, people also have to think of how to manage 
commerce since marijuana is still illegal at the federal level.

Visher said he buys money orders "by the thousands" to pay his taxes 
and other expenses since "we can't do nothing electronic."

"We can't have credit cards. We have to have ATM machines," he said. 
"In certain cases you may not be able to use a bank since it's 
illegal federally. A lot of banks will not touch this because they 
could theoretically be charged with money laundering. Most 
dispensaries don't have a bank account. They have a big safe."

Nationally, the burgeoning business of pot is expected to more than 
double to a $3.5 billion industry this year from $1.5 billion in 
2013, said Troy Dayton, chief executive officer of the ArcView Group, 
a California-based marijuana research firm.

Currently 23 states and Washington, D.C., have legalized medical marijuana.

In California, which has approximately 1.3 million patients, the 
medical cannabis industry employs about 100,000 people and generates 
about $1.3 billion in annual sales, Bradley said.

Once dispensaries are set up, experts say it will be easy for the 
state to push for full legalization of the drug, a move that could be 
a boon for Hawaii.

"A legal market in Hawaii would be insane," Bradley said. "You would 
expect (sales) to grow times 10. It would be almost insurmountable to 
estimate the economic benefit it would bring to Hawaii through jobs, 
increased tax revenues and the increased availability of law 
enforcement not having to focus on this issue."

The next likely step will be decriminalization followed by 
discussions about whether or not full legalization is right for 
Hawaii, said Green.

"We're in the test-bed period of medicinal marijuana in America," he said.

[sidebar]

DISPENSARIES

)) No. of licenses allowed: 8

)) No. of growing facilities allowed: 16 (two per license)

)) No. of dispensaries allowed: 16 (six on Oahu, four on Maui, four 
on Hawaii island and two on Kauai)

)) Dates dispensary applications will be available: Jan. 12 to Jan. 29

)) Dates licenses will be announced: April 15

)) Date dispensaries can open: July 15, 2016

)) Minimum investment needed: $1.2 million

)) Other requirements: Applicants must be legal residents of the 
state for at least five years, be at least 21 years old and have no 
felony convictions.

)) Eligible conditions for medical marijuana use include: cancer, 
glaucoma, HIV/AIDS, severe pain and nausea, seizures and severe muscle spasms
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MAP posted-by: Jay Bergstrom