Pubdate: Tue, 02 Jan 2018
Source: Journal News, The (NY)
Copyright: 2018 The Gannett Company, Inc.
Author: David Robinson


The five medical marijuana companies in New York have filed a lawsuit
to block new cannabis businesses, claiming the growth threatens to
kill the fledgling industry that has struggled to sell the drug to
critically ill patients.

The lawsuit seeks to stop the state Department of Health from allowing
five new companies to grow and sell medical marijuana in New York. The
companies in the legal fight include Vireo Health and Etain, which are
selling cannabis-based drugs at dispensaries in downtown White Plains
and Yonkers, The Journal News/lohud has learned from court records.
There is also a dispensary in Kingston, Ulster County.

New York Medical Cannabis Industry Association, a trade group for the
five licensed companies in the lawsuit, contended the marijuana
expansion push was hatched secretly amid heavy lobbying in Albany,
court records show, and state officials insufficiently explained how
adding five more companies would improve access to the drug for
thousands of eligible patients with serious illnesses, such as cancer
and epilepsy.

"Since New York's Medical Marijuana program got off the ground, there
has been a rush that has led to a fragile foundation at best," the
trade group said Tuesday. "DOH's decision to recklessly double the
number of license holders will undoubtedly lead to the collapse of the

Court papers also pointed to the current licencees' weak financial
footing due to low patient demand.

Health Department leaders, including Commissioner Dr. Howard Zucker, a
named defendant, would not discuss the lawsuit, the latest example of
controversy that has plagued New York's medical marijuana program
since it launched in January 2016.

"From Day 1, we made clear our commitment to the continued growth of
this program so that the New Yorkers who qualify for this therapy have
access to it," said Jill Montag, a DOH spokeswoman, referring to the
lawsuit. "We will continue to fight any attempts to block patients
from the relief they deserve."

The lawsuit stemmed from state DOH regulators last summer announcing
plans to double the number of companies growing and selling marijuana
to keep pace with patient demand. The plan came as patient advocates
complained the highly restrictive marijuana law and cap of 20
dispensaries statewide hindered access to the drug, especially in
rural communities.

The expansion plan seeks to increase the number of dispensaries in New
York from 20 to 40. It also added chronic pain as an eligible illness
and allowed nurse practitioners to certify marijuana patients, which
proponents said improves access as many doctors were slow to
participate in the controversial program.

About 1,000 doctors, out of more than 90,000, have registered for the
marijuana program and nearly 18,000 patients, out of more than 200,000
with eligible illnesses, were certified as of last week, which is when
the lawsuit challenging the expansion was filed in Albany County
Supreme Court.

The next court date in the lawsuit is June 9. The Attorney General's
Office is representing the Health Department in the case and declined
to comment.

The lawsuit included revelations about how the initial five medical
marijuana companies in New York are apparently teetering on insolvency.

Amy Peckham, chief executive officer of Etain, described how the
Katonah-based company invested hundreds of thousands of dollars to
start growing and selling marijuana, despite hurdles like the lack of
doctors certifying patients that have led to early financial losses.

"None of Etain's dispensaries are operating on a full-time basis due
to lack of patient need" Peckham said in court documents. "If more
registered organizations are approved, then these dispensaries' hours
will need to be cut back further, resulting in less work for already
part-time employees, who may leave as a result."

Further, Peckham noted Etain has a surplus of marijuana-based drugs
that is sufficient to serve the entire New York market for 18 months,
attributing the stockpiles to the lack of patient demand.

The trade group's lawsuit also contended that diluting the market
drives up prices, which are already unaffordable for many patients who
must pay out-of-pocket for the medicine that isn't covered by health

"Flooding the supply market when there is insufficient patient demand
will undermine the viability of the entire program, which is not yet a
profitable industry," the lawsuit stated. "At the very least, the
ability of the current (marijuana companies) to achieve economies of
scale and reduce prices -- which is essential for broad public access
- -- will be severely delayed."

In New York, marijuana-based drugs cost up to $1,000 per month as sold
in non-smokeable oils, tinctures (a solution) and pills under state
law, which is hundreds of dollars more than in some of the 28 other
states allowing the drugs, The Journal News/lohud has found.

Complaints about DOH secrecy also peppered the 27-page legal complaint
filed by Karl Sleight, the trade group's attorney. The lawsuit
contended that state regulators rejected repeated public-records
request and blocked other efforts to obtain information about the
program expansion.

Etain and other company officials contended they had to reapply for
licenses despite the DOH keeping hidden the new companies' plans to
open dispensary sites, which might overlap in places and prompt
unnecessary turf wars.

"This timing forced Etain to blindly reapply, because absent renewal,
Etain has no hope of recouping its investment," Peckham said in court

Still, the expansion plan is one of many political issues that medical
marijuana companies, such as Etain and Vireo Health, sought to
influence. Vireo Health, for example, included the expansion as one of
eight cannabis issues connected to an $18,000 payment last year to
Bolton-St. Johns, an Albany-based firm.

While the DOH has refused to discuss the matter, the lawsuit contended
the state agency plans to begin issuing licenses to new companies
later this month before phasing-in all five new companies during the
next two year.

Judge Richard Platkin on Friday denied the trade group's request to
block the expansion during the trial but took action to expedite the
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MAP posted-by: Matt