Cost of Starting an MMJ Business Drives Minnesota Applicants Away

Officials in Minnesota are working to get medical marijuana off the ground more than two months after the legislature approved it. But there are significant obstacles that are likely to deter many companies hoping to join the new market.

Minnesota MarijuanaFor one thing, only two businesses will be chosen to grow and distribute weed in the state. For another, the application fee is nonrefundable and steep: $20,000. And then there are the expected costs of building marijuana businesses from scratch, including capital investment.

Each of the two selected companies will run four medical marijuana dispensaries, one in each of the state’s eight congressional districts. That means the same businesses will grow, process and sell the pot.

That’s different from the structure in many other states, where some companies grow weed and others sell it. Also unusual: the requirement that patients use a method of marijuana consumption other than smoking.

State officials held a forum for potential applicants Aug. 9. More than 100 people showed up, but not everyone was convinced Minnesota’s approach to medical weed would succeed.

“It seems like it is going to be very hard to make this work,” Ben Streit of Duluth said during the forum. “What if no one applies?”

Manny Munson-Regala, assistant commissioner with the state’s health department, said he shares those concerns.

“That would be a very bad outcome,” Munson-Regala said. “I go on an hourly basis from thinking we’ll have zero applications to thinking we’ll have 62.”

Competition among applicants should be fierce, but if the process succeeds, sick Minnesotans will finally have access to a treatment many have been using in secret for years.

The law allows patients with eight specific conditions to use cannabis. But they can’t smoke it: They must vape it in concentrate form, take pills, or use a tincture. The listed conditions include AIDS, ALS, cancer, Crohn’s disease, glaucoma, multiple sclerosis, seizures, or Tourette’s syndrome.

MMJ would also be available to patients suffering from terminal illnesses who have less than a year to live.

Marijuana Joint“We have some really sick people in our state who aren’t being aided by our medical structure today,” Munson-Regala said. “Medical cannabis has the potential to fill some of the gaps.”

Start-up costs alone may drive most potential applicants away. Erich Reichwald, a sometime marijuana lobbyist, estimated it could cost $10 million to start a new cannabis business in Minnesota.

Applicants have until Sept. 19 to signal intent to file. A group of semi-finalists would be chosen by the end of October, and the final two by Dec. 1. Weed should be available to patients by July 2015.


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