Pubdate: Tue, 12 Jan 2016
Source: Honolulu Star-Advertiser (HI)
Copyright: 2016 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

STATE OPENS BIDS FOR POT DISPENSARY LICENSES

The state Department of Health opened an 18-day bidding window today 
for companies interested in competing for medical marijuana 
dispensary licenses.

This year Hawaii is joining at least 18 other states in legalizing 
the commercial production and distribution of medical marijuana. 
Under Act 241, 16 medical marijuana dispensaries will be licensed to 
open starting July 15.

Several experienced Hawaii businessmen have said they plan to apply 
for licenses.

Companies will need to dish out $5,000 just to apply and pay a 
$75,000 license fee if their application is selected. To make a bid, 
a company must show that it has at least $1 million worth of 
financial resources for each license, as well as $100,000 for each 
retail outlet. There is a $50,000 annual license renewal fee and an 
estimated $2 million to $5 million a year in overhead costs.

Each license will allow a company to operate two marijuana production 
centers and up to two retail stores. Three licenses will be issued 
for Oahu, two licenses each for Hawaii and Maui counties, and one 
license for Kauai. A DOH official said the department won't release 
the names of applicants until licenses are awarded April 15.

The Health Department issued detailed rules Dec. 15 for dispensary 
operation. They include requiring licensees to grow their plants 
indoors at least 750 feet away from schools and playgrounds with 
24-hour security and unlimited unannounced inspections.

The costs of running a legal dispensary will push up the price of marijuana.

"(Marijuana) will undoubtedly be cheaper on the black market, and 
that's a huge concern," said Bill Jarvis, chief executive officer of 
mobile phone provider Mobi PCS, who formed Pono Wellness to compete 
for a dispensary license.

At $5 million in costs to pay for certified farms, retail outlets, 
labor and utilities, Jarvis estimates the retail price of medical 
marijuana in Hawaii could be as high as $380 an ounce, compared with 
$250 on the mainland.

"It probably burdens the cost by 30 to 50 percent," he said. "It will 
likely result in probably somewhere between $500,000 to $1 million in 
incremental costs that will get passed on to patients a year."

The costs of running a highly regulated business and competing with 
the black market is worrisome, said Michael Irish, CEO of kim chee 
manufacturer Halm's Enterprises Inc. and Keoki's Lau Lau, who also 
plans to compete for a dispensary contract.

"The question is, Can we bring medical marijuana to market at a price 
that works for the people who need it?" Irish said, adding that the 
drug isn't covered by medical insurance and isn't tax-deductible. 
"You're probably looking at something that's going to cost three to 
four times (more in a dispensary versus the price on the street). It 
could go as high as five times. I'm worried that they're going to 
make it so expensive that you might want to be the guy standing in 
front of the store selling it, not in the store." He formed Pono 
Wellness to compete for a license

He added, "Whether it makes business sense or not, that becomes the 
question. The government can put in all the rules and regulations, 
but the marketplace is going to determine if it works or not. 
Eventually the consumer pays for everything."

Applications are available at mmjdisp.ehawaii.gov and must be 
submitted online from 8 a.m. today to 4:30 p.m. Jan. 29. For 
information on dispensary license requirements, go to 808ne. ws/1SLgtUF.-
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MAP posted-by: Jay Bergstrom