Pubdate: Mon, 05 Oct 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

SOME WELL-KNOWN NAMES LOOK TO SCORE POT LICENSES

Big-name entrepreneurs, high-profile attorneys and former politicians 
are positioning themselves to compete for one of the eight licenses 
the state will issue next year to begin selling medical marijuana 
legally in Hawaii for the first time.

Nearly 30 new business registrations include "marijuana," "cannabis," 
"pakalolo" and "weed" in their names, many of them filed with the 
state since the enactment of the law authorizing the establishment of 
pot dispensaries. Many are associated with well known business personalities.

The daughter of Henk Rogers, owner of the Tetris video game brand, is 
among those planning to apply, as is Bill Jarvis, CEO of Mobi PCS, 
and Michael Irish, CEO of kimchee manufacturer Halm's Enterprises 
Inc. and Keoki's Lau Lau. Anthony Takitani, a Maui attorney and 
former state legislator, registered Maui Medical Marijuana Dispensary 
LLC with Hollywood film agent and producer Shep Gordon. Former 
Honolulu Mayor and longtime city Prosecutor Peter Carlisle is 
representing a group of critical-care doctors vying for a license, 
and David Louie, previously state attorney general, is also 
representing a potential licensee.

"There are some obviously high-profile people," said Carlisle. 
"Absolutely and unequivocally it's going to be a fierce competition 
because there's a very limited number of licenses, and there's a 
large number of individuals of varying backgrounds who believe that 
there is a market for this and that it could be extremely lucrative."

Act 241, adopted this year, authorizes the state Department of Health 
to issue eight dispensary licenses next year and potentially many 
more in 2017. Applications for the first eight are due Jan. 29, and 
each licensee will be allowed to operate two dispensaries and two 
growing centers: six on Oahu, four on Maui, four on Hawaii island and 
two on Kauai.

Those interested are lining up funding and potential partners, as 
well as property, which adds to the investment.

Applicants must prove they have $1.2 million to invest. A $5,000 
nonrefundable license application fee and a $75,000 payment are due 
upon approval, as well as a $50,000 annual renewal fee.

Startup costs are anticipated to total $2 million to $12 million, 
according to Maya Rogers, Henk Rogers' daughter and president and 
chief executive officer of Blue Planet Software Inc. Maya Rogers and 
her three siblings have reserved the name "Blue Planet Medicinals 
LLC" and hope to open dispensaries on Oahu.

However, the return on investment could be significant. Medical 
marijuana advocates estimate dispensaries here could create as many 
as 800 jobs and generate $65 million a year in sales. Nationally, the 
legal marijuana business is expected to more than double to a $3.5 
billion industry this year from $1.5 billion in 2013, according to 
the ArcView Group, a California-based marijuana research firm.

ONLY 13,000 Hawaii residents are registered to use medical marijuana, 
but that number likely will increase when dispensaries open and 
patients are able to make legal purchases for the first time. The 
state approved a law in 2000 allowing marijuana use by prescription, 
but patients or their caregivers have had to either grow their own or 
rely on the black market.

"Once dispensaries are open people are going to think, 'This is an 
option for me.' People who were kind of on the fence, I think, will 
go and apply (for medical marijuana cards). That number (13,000) will 
double and triple very quickly," Rogers said.

Jarvis, of Mobi PCS, is investing $4 million to $6 million of his own 
money to get started, but he doesn't think the industry will be as 
lucrative as people believe.

"I'm hearing from people who are coming here from the mainland 
talking about how everyone's going to get ridiculously wealthy. I 
think it's misguided, and I don't think it's based in fact," he said. 
"It's not that lucrative of a business, really, when you think about 
the cost of electricity that's roughly four times the national 
average, real estate that is more expensive and the cost of shipping 
goods here to Hawaii. It's also an industry that requires high levels 
of security if you want to do it right. That's an added expense most 
businesses don't have."

Irish, whose mother died when he was 13 after a painful battle with 
cancer, also said the numbers don't pencil out for profitability.

"It's not a cash cow. We have a limited amount of people we have to 
service," he said. "It doesn't make the kind of money it does in 
California because of the restrictions our (state is) putting on us 
to make sure it's available to the people who have prescriptions 
today. Each location is going to get 2,000 to 3,000 prescriptions. If 
you do the math, it doesn't work."

At that margin, Irish is worried that marijuana sold by dispensaries 
will be so expensive that people will continue to buy it on the 
street. The state Department of Health is still drafting rules for the program.

"Let's say a bag of marijuana is $100 on the street. If you actually 
do this in a dispensary, it could cost between $400 to $500" because 
of government fees and regulations, Irish said. "The consumer has to 
pay for it. I want to make sure we can get it to the people who need 
it at the right possible price. Until we know what (the rules are), 
none of us will actually know if we're able to afford it or if it 
will be economical."

OTHER potential players in this high-stakes industry have already bowed out.

Ko Olina and Princeville developer Jeff Stone registered Hanalei 
Cannabis and Halelea Cannabis, as well as trade names Hanalei Weed 
and Halelea Weed, in June. His registrations say the business is for 
the purpose of "farming, dispensary, sales and services."

But Stone said he has no plans to open a pot dispensary. "I assure 
you I have no interest of applying for a growing license for weed," 
he said in an email. "My attorneys suggested we protect our resort 
brands by registering names that could be associated with our 
properties so others couldn't use them."

Likewise, Yuriko McPhail, owner of the Honolulu Baking Co., which 
provides baked goods and fresh sandwiches, salads and fruits for 
Starbucks, said she has "decided not to pursue any opportunities in 
this industry," although she registered the trade name Cannabis Hawaii in June.

Hank Wuh, founder and CEO of biomedical firm Skai Ventures LLC, also 
said he is "definitely not applying for a license," despite 
registering DTB Dispensary Hawaii LLC on Sept. 15.

The contenders say they are eager to open dispensaries because of the 
health benefits, which may be the answer for many patients suffering 
from painful ailments.

"I've had to take all this over-the-counter medication that has 
literally destroyed my body," said Rogers, who has suffered from 
severe back problems for 20 years. "The fact that Hawaii is allowing 
medical dispensaries to open up is really going to open many doors to 
many people who need it as an alternative to other forms of medicine. 
You can't overdose and you can't die from it, so there's so much 
potential to cure ailments that people desperately need help with. 
I'm just really passionate that if this is a cure for people, we 
should explore it."

Jarvis, who has registered the name Kona Wellness, also said medical 
marijuana is a personal endeavor for him.

"People very close to me had illnesses in the last several years 
where I felt medical marijuana would help," he said.

Jarvis went into a dispensary for the first time six months ago when 
he traveled to Seattle and Denver to research the industry.

"I had a lot of misconceptions about what medical marijuana was all 
about. I didn't see the proverbial 20-year-old looking to buy some 
marijuana. I saw people like my 89-year-old mother, and it blew my 
mind," he said. "They had legitimate heath care issues, and they were 
very educated about what worked for them and what didn't work for 
them. They could speak about the compounds in medical cannabis; they 
understood ... ratios, various strains and genetics of medical 
cannabis. I was startled at how much it mattered to them. It was like 
a revelation to me."

CARLISLE, now an attorney at O'Connor Playdon & Guben LLP, is 
representing a consortium of critical-care doctors who have 
registered for a marijuana business called the Wellness Group.

"I'm going to take a swing at it, but it's not like I think I'm a 
slam dunk," said Dr. Marc Kruger, a founding partner in the Wellness 
Group. "My chances are probably small."

Kruger, who also cofounded Aloha Critical Care Associates, the 
largest private critical-care group practice on Oahu, sought out 
Carlisle for his expertise and opinion on keeping pot strictly for 
medicinal use and "to help make sure it's implemented properly in our 
community."

Kruger estimates around $10 million in startup costs, which he is 
working to raise from undisclosed investors.

"What we do as doctors is help people with longevity and quality of 
life, and try to make sure people live as long as they can and feel 
as good as they can while they're alive. This medicine has the 
potential to do that," he said. "I would like to bring that to our 
community, but really I think it's got to be done in the proper way, 
with a very patient-focused, science-oriented approach. Real doctors 
need to look at this as medicine and a potential benefit for their patients."
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MAP posted-by: Jay Bergstrom