Medical marijuana fees stir debate in Maryland

  • Medical marijuana cigarettes are hand-rolled at the All American Cannabis Club, aka A2C2, a medical marijuana collective, in San Jose, Calif.
Medical marijuana cigarettes are hand-rolled at the All American… (Nhat V. Meyer, MCT )
October 11, 2014|By Timothy B. Wheeler | The Baltimore Sun

With Maryland's proposed licensing fees for growing and selling medical marijuana among the highest in the nation, some advocates warn that the steep costs could drive off applicants, crippling the nascent program and limiting access to treatment for tens of thousands of state residents.

Prospective medical marijuana growers would have to pay $125,000 a year for a two-year license, while dispensaries would have to pay $40,000 a year, according to the recommendations of a state commission. Only one state — Illinois — is charging a higher upfront cost for growers.

Del. Cheryl D. Glenn, a lead sponsor of Maryland's medical marijuana law, called the proposed fees "outrageous." The 15-member medical marijuana commission is named for Natalie M. LaPrade, Glenn's mother, who died in 2011 of kidney cancer.

The Baltimore Democrat fears the steep costs could shut out small businesses and increase retail prices so much that marijuana would be unaffordable for some patients. "We have the haves and have-nots all over again," she said. "That's ridiculous."

Others say the steep fees might scare off small operators but are unlikely to chase away many entrepreneurs looking to get in on the ground floor of what appears to be a rapidly growing industry.

Maryland officials defend the proposed fees while noting that the medical marijuana regulations are still being drafted and could change before being published. They say the rates are needed to finance the new program, which was designed by lawmakers to be self-supporting. And they note that there is great variability in how such programs have been set up and financed in 23 states and the District of Columbia.

The General Assembly first approved legalizing medical uses of marijuana in 2013, but limited it to academic medical centers, which showed no interest. Lawmakers revamped the program this year, authorizing licensed physicians to recommend medical marijuana, with 15 growers and as many as 94 dispensaries to supply it.

State health officials estimate that 45,000 patients would be eligible to obtain medical marijuana to help alleviate debilitating illnesses and conditions that cause severe pain, nausea or seizures. Health insurance will not pay for medical marijuana.

Rachelle Yeung, legislative analyst for the Marijuana Policy Project, a Washington-based advocacy group, said Maryland's fees are "prohibitively high." She noted that in addition to annual licensing fees, prospective growers must pay $6,000 to apply, while those seeking to open a dispensary must put up $5,000.

Maryland's fees, she said, "are almost certainly going to be passed on to the patients, and these are already people who have expensive medical bills and are dealing with debilitating medical conditions. It's unfair they would have to pay the costs of the program."

But the steep fees on tap did not dissuade more than 100 people from attending a daylong "Canna-Business" seminar in Bethesda last week. Cultivators and dispensary operators from Connecticut, Colorado and the District of Columbia advised applicants that they would need deep pockets. But they suggested that that's the price of starting out in a new but expanding business, as more states approve medical marijuana.

"There's a green rush," said Chris Reilly, spokesman for one of three state-licensed "compassion centers" in Rhode Island, which he said cost nearly $3 million to set up. "People are clamoring to get into this industry."

Many states charge fees lower than those in Maryland's draft rules. But in some cases, those states serve a smaller patient population than Maryland expects. Some draw additional revenue from sales taxes or have costs partly covered in other agencies' budgets.

New Jersey, for instance, charges a $20,000 annual fee for its "alternative treatment centers," which are licensed to cultivate and dispense marijuana. The state has three, with another three being reviewed, to serve 3,478 patients who have qualified to buy it for their medical conditions.

That state's program has a budget of about $1.7 million, according to Donna Leusner, spokeswoman for the New Jersey Health Department. (The state also charges 7 percent sales tax on medical marijuana, a revenue source unavailable to Maryland, which exempts all medications.)

Connecticut charges a $25,000 nonrefundable application fee and a $75,000 yearly licensing fee to producers. Dispensaries pay $5,000 for their licenses. A spokesman said six dispensaries and four producers serve 2,326 patients. The program's annual budget is $650,000, with four administrative staff members and two inspectors.

In Illinois, applicants for cultivator licenses pay $25,000 to apply, plus a $200,000 fee for the initial one-year license, according to Melaney Arnold, spokeswoman for that state's health department. Cultivators' license fees drop to $100,000 upon renewal.

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