GO
Loading...

Pot Shop Owners: We're Not Criminals

Medicinal cannabis is legal in 16 states and Washington, D.C.

Uncertainty in dispensary business abounds as residents vote to ban openings in several communities

Drew Brown had trouble getting Abundant Healing, his Fort Collins, Colo., small business, up and running. His local bank abruptly asked him to shut down his account. The next bank did the same. Taking care of other basic start-up logistics wasn’t any easier.

“Dealing with credit card merchant accounts, landlords that would allow us to do what we do, trying to get insured,” he says. “Just dealing with all of the discrimination, the way people look at this like you’re the scourge of the earth, a criminal. It never ends.”

Add the fact that a lot of people consider what Brown does to be illegal—or at least immoral—and you have the life of a medical marijuana dispensary owner.

Medicinal cannabis is legal in 16 states and Washington D.C., but even in those areas, setting up a dispensary — and keeping one open — to make the product available to qualified patients is a constant battle. But dispensary owners say they continue to fight because they are passionate about assisting sick people in need of alternative treatments.

“I’m not a criminal, I don’t have felonies,” Brown says. “I’m a hard-working guy who just thought this would be an interesting business to get involved in, and I really like helping people.”

When attempting to open a dispensary, it helps to come across as a mainstream citizen. Chuck Ream, owner of MedMaRx in Ann Arbor, Mich., notes that he’s “a legitimate kind of guy” and had few problems opening bank accounts and lining up rental property.

“I spent 33 years teaching kindergarten,” he says. “I was elected five times in a row—four times as a Republican—as a township trustee.”

Reaching out to your neighbors can also score you a few points. Brown says he’s made a lot of friends by showing the locals what his shop is all about.

“Even people who were against it have since changed their minds,” he says. “Instead of just telling me that we don’t have sick people, that they’re all teenagers, I said, ‘Why don’t you come down and see for yourself.’ And I’ve changed people’s minds, which is really cool.”

Before Benjamin Horner opened Flint-based Michigan Organic Solutions in 2008, he made sure that all the trappings of any legitimate business were in place.

“The first thing we did was make sure to reach out to a good accountant to make sure all the books were being taken care of, because that was one of the biggest concerns we saw with some of the dispensaries and transfer facilities,” Horner says. “We made sure we were insured and had good security, and we opened.”

But in this line of business, things tend to change quickly. In August, the Michigan appeals court ruled that patient-to-patient marijuana sales are illegal, even if patients hold state-issued medical marijuana cards, creating uncertainty in the dispensary business.

"We know that at any moment, we could be shut down, even though the people of this town, and the city council, and the licensing board [approve]. We know we could be toast tomorrow, and our patients would be [out of luck]." -Owner, MedMaRx, a medical marijuana dispensary, Chuck Ream

Both Michigan Organic and MedMaRx continue to operate. But the day after the appeals court’s decision, Ann Arbor raided MedMaRx’s facility, arresting its principal investor and two others as part of an ongoing investigation. Although other area dispensaries shut down after these events, MedMaRx remained open. Ream notes that as a members-only collective, MedMaRx technically does not sell marijuana to patients (Michigan Organic also operates as a collective).

“We pay our providers for the service they provide when they provide the medicine,” he explains. “The people who obtain medicine from us make contributions to enable this whole thing to move forward. We are completely nonprofit.”

The legal situation in Fort Collins is just as volatile, despite the fact that Colorado, along with California, has been at the forefront of marijuana decriminalization. Brown says he and his partners spent “well over $200,000” to open Abundant Healing, including an extra $30,000 to comply with the Colorado Medical Marijuana Enforcement Division’s new rules, which require video surveillance to clearly identify all people and activities in areas where marijuana is grown, cured, manufacturedand processed, as well as in point-of-sale areas, entrances, and exits.

“My office, the dispensary, and all the different grow spots in the warehouse all have to be on camera with a static IP address and monitored 24/7 by the MMED,” Brown says. “We already had cameras in, with brand new DVRs, that we put in on our own. But they came forward and said they wanted these specific cameras, these specific DVRs.”

Photo: Benjamin Horner

But in a special election in November spearheaded by medical marijuana opponents, Fort Collins residents voted to ban dispensaries and grow operations in the city.

One of those opponents is Larimer County Sheriff Justin Smith, who was one of the representatives of the petition effort that jump-started the special election. Smith says the original amendment to the state constitution legalizing medicinal use of marijuana made no provisions for commercial dispensaries. Additionally, he says that as sheriff, he’s witnessed first-hand the impact dispensaries have had on the community, including an increase in DUI arrests and drug-related violent crime.

“We saw things happen in our community that didn’t happen here before,” Smith says. “The school district expressed concerns that they had seen a three-fold increase in kids getting expelled or suspended for drug-related activity. There was about a 50 percent increase in attempted robberies and burglaries at [dispensary-area] locations in a two-year period. It was obvious that the net impact was negative on the community.”

Brown disputes the statistics medical marijuana opponents presented and believes the vote should have been included in the general election rather than a special election. “I know they can’t deny the people, but you would think the city council would say, ‘Look, we just worked on this for a year to implement all these rules and regulations, these guys just spent all this money, let’s give this a little bit of time to see how all this works. Let’s monitor it, let’s see what the crime rate really does.’ But they didn’t.”

In New Jersey, which legalized medical marijuana in January 2010, some advocates have complained that the vetting process for approving dispensaries is taking too long. In March, the state’s Department of Health and Senior Services, selected six nonprofit entities to operate alternative treatment centers. The program was supposed to be up and running by the end of the year. No facility has opened so far.

Donna Leusner, a DHSS spokesman, said in an e-mail response that the state is working to ensure that dispensaries are approved in a manner that’s both timely and secure.

“The overarching goal of the state is to establish a secure network of alternative treatment centers,” she says. “The reality is that implementing a program to grow and dispense a controlled dangerous substance is complex with unique challenges.”

Despite the legal and logistical challenges, Horner says he’s not concerned about the future viability of his business.

“The only people they’re really going after are the people they can get secondary charges on,” he says. “They’re not going after the average person who’s following all the rules correctly.”

MedMaRax’s Ream, however, is less confident. “We know that at any moment, we could be shut down, even though the people of this town, and the city council, and the licensing board [approve]. We know we could be toast tomorrow, and our patients would be [out of luck].”

For others looking to enter the dispensary business, Brown recommends conducting extensive research about your local community.

“Find out what the laws are, find out who you’re dealing with in your city council,” he says. “Find out who politically is in your town and how they feel. Really get your groundwork done before you go and open up a place, because you can be in a situation like me where you basically have five individuals who can’t stand marijuana, and it can destroy you.”

Despite the recent Fort Collins vote, Abundant Healing is grandfathered into the city’s system and continues to operate. Brown and other local medical marijuana advocates hope to include an initiative on the city ballot in the 2012 elections.

“It’s not over yet,” Brown says. “We’re not giving up. We’re not just going to roll over.”



email: patricia.orsini@nbcuni.com

Contact Small Business

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More