Pot A Hot Medical Commodity–House Approves Legalization

UPDATE: The CT State House voted Wednesday night to approve medical marijuana. Now the bill goes to the Senate.

Greg Hladky, a scribe for www.ct.com, has a nose for stories in more ways than one. He files this report about the financial impact of medical marijuana that could be passed this state legislative session.

Medical marijuana looks to be coming soon to Connecticut, and when it does it’s going to be big business.

We’re talking tens of millions of dollars, covering everything from direct medical pot sales to hydroponic equipment and grow lights; from advertising in newspapers, magazines, TV and on the Web, to fertilizers and other mundane garden stuff.

“There are 200,000 to 300,000 patients [who might buy medical marijuana with a doctor’s recommendation], probably more, in just the state of Connecticut alone,” explains David Kimmel, president of Ledyard-based Vintage Foods Ltd. (Those numbers are far larger than the current state of the medical marijuana market in Rhode Island, for example, where only a few thousand people are classified as legally able to use pot for their illnesses.)

Kimmel is hoping his company will be one of those selected to run a pot-growing operation in Connecticut, assuming this state’s lawmakers agree to legalize that sort of thing. “That will take a pretty significant spend,” he says of the cost of creating a pot-growing facility. “At least $1.5 million to $2 million to do it right.”

But that could be a drop in the bucket when you consider what sort of money is at stake. “There are significant numbers involved in this,” says Kimmel, who also insists his first priority isn’t profit but the patients in need of pain relief from a natural product like marijuana.

You hear that same approach from almost everyone pushing for medical marijuana, that it’s about patients, not profits. But everyone knows the profits could be huge.

By one market estimate, medical marijuana could generate $9 billion in economic activity over the next five years in California, Colorado and the other 14 states that have already legalized medical pot. According to the Wall Street Journal, Scotts Miracle-Gro is planning to target sales to medical marijuana growers.

And if you still have any doubts about the big-business aspect of all this, consider the behind-the-scenes lobbying going on right now around a medical-marijuana bill that’s wending its way through Connecticut’s General Assembly.

Companies from Colorado and New York have hired Connecticut lobbyists to try and mold the legislative landscape to their liking.

Optometrists from inside Connecticut are pushing to be given the right to recommend pot as a treatment for glaucoma if medical marijuana is legalized. And they want it even though many ophthalmologists and optometrists doubt pot as an effective glaucoma treatment.

“There’s a lot of pressure right now to provide more flexibility in the way [Connecticut’s proposed medical marijuana] programs would be run to provide more business opportunities,” says Michael Lawlor, Gov. Dannel Malloy’s top criminal justice adviser. “We’re resisting that,” he adds.

A bill to create a very limited, state-regulated system for growing weed and distributing it through pharmacies to patients with medical recommendations for its use is a hot item in this year’s General Assembly. Another key legislative panel put its stamp of approval on the measure Friday. The vote by the Finance Committee was a lopsided 36-15, the kind of numbers that bode well for final approval before lawmakers adjourn next month.

The legislature actually passed a different version of a medical pot bill back in 2007, only to have it vetoed by Republican governor at the time, M. Jodi Rell.

This time around, Malloy’s Democratic administration supports the concept and the bill’s advocates believe this is the year it will win passage through the legislature with bipartisan backing.

And that’s drawing interest from all over.

Erik Williams, Connecticut representative for the National Organization for the Reform of Marijuana Laws (NORML), says he gets calls almost every day from groups and businesses looking to find a way into the Connecticut marijuana market.

Similar inquiries are deluging Aaron Romano, a Bloomfield lawyer who is part of NORML’s national legal team. “I’ve received pretty much a flood of calls,” he says.

Peter Smith, a former state lawmaker turned lobbyist, is working the bill for a New York-based operation called MediGrade. “I think they’re looking to participate in it, with a growing-distribution operation,” Smith says.

According to Smith, his clients are folks looking to make a “significant investment” in creating the most viable, insulated-from-federal-interference form of a medical marijuana system possible. The system they want is based on a “medical model” involving very controlled growing programs with distribution through pharmacies just like any other prescription medication, Smith says.

Federal interference is a big issue for all would-be marijuana investors. “The problem is there are significant risks involved,” Smith points out. Risks such as the feds coming in, as they’ve done to several big West Coast medical pot dispensaries lately, and shutting you down.

Kimmel says states like California and Oregon set up wide-open medical marijuana programs with so little real regulation that “they’re described by many of us as the ‘Wild West.'”

Architects of this year’s Connecticut legislation think they have the answer to that little difficulty.

The system they’d create would involve a very few, limited grow operations that would be licensed, inspected and tightly regulated by the state. The medical pot would be distributed through special state-licensed areas of pharmacies and only if a patient with a debilitating illness or condition had a doctor’s recommendation.

Lawlor says the legislation would allow patients to legally possess up to a month’s supply of their medical pot, and to grow a limited number of plants themselves. “As a practical matter, most of the people who would use this couldn’t be bothered to grow it themselves,” Lawlor says.

In Rhode Island, where medical marijuana is legal, there are about 3,580 patients allowed to possess pot for their treatment and another 2,263 “caregivers” licensed by the state to grow marijuana for patients. All those folks are allowed to have a limited number of plants and a limited amount of harvested marijuana.

An additional Rhode Island program for three, big, centralized grow operations has been put on hold because of fears about the federal policy that has recently cracked down on large-scale pot growing even when licensed by a state.

But the homegrown medical cannabis industry in Rhode Island has clearly been a boon to businesses selling hydroponic equipment, garden supplies and grow lighting. A quick glance at new magazines dedicated to the medical pot industry reveals a wealth of ads for such products in Rhode Island, Colorado, California and elsewhere.

John Watkins is president of GroundClouds, a two-person business based in Naugatuck that makes “aroma therapy vaporizers.” Watkins is eager to have his product transformed by the legalization of medical pot from “a novelty device into medical equipment.” He says a vaporizer would allow a pot patient to get the beneficial effects of inhaling the drug without the bad smoke.

Kimmel says another indicator of just how potentially lucrative the medical marijuana industry could be is what’s happening with Big Pharma. “Many large pharmaceutical companies outside the U.S. are working very diligently on medical marijuana research and development,” he says.

A British company, GW Pharma, is now conducting advanced clinical trials for a spray made from raw marijuana that it hopes to market in the United States for cancer pain treatments. And Israel has become a leader in government-sponsored medical marijuana research and treatments, according to an article published by Israel’s Consulate General in Boston.

As for his two-year-old company, Kimmel says it has financial backing for a business plan that is entirely focused on “development of medical cannabis” in food form. He argues that an “oral delivery system” is far healthier for patients with serious illnesses than smoking pot.

“For me, it’s not about the money,” says Kimmel. “But I’m a business person and I clearly recognize the money surrounding this.”

It’s the same scenario that’s created a hugely profitable pharmaceutical industry, according to Kimmel. If you have lots of people with medical problems that could benefit from a product, you have a situation that generates “a lot of money,” he says.

“This medical marijuana will probably have a similar path …. It parallels pharmaceuticals in that regard,” Kimmel adds.

Lawlor acknowledges that medical marijuana in Connecticut will generate some limited amount of economic growth, some new jobs, and some new state tax revenue. He doesn’t believe that should be or will be the purpose of the program.

“Some people see a pretty significant business opportunity here,” he adds, “but that’s not the way it’s going to be run in Connecticut.”

The reality, says Lawlor, is that plenty of people are making lots of pot profits right now in this state, although they happen to be underground and illegal.

“Marijuana is already a pretty big business in Connecticut,” he points out. “It’s just completely unregulated.”