Marijuana rules could seed a new industry

December 08, 2007

Thomas Munro, New Mexico Business Weekly, MSNBC

Proposed rules for medical marijuana providers could open the door to private nonprofit or for-profit producers in New Mexico.

Since the state's medical marijuana registry was created July 1, patients have had three ways to obtain marijuana: by growing it themselves; by contracting with "designated caregivers," who grow or otherwise obtain the plant and are each allowed to provide doses of the herb to at most four patients; or by buying it off the street.

While street drugs have high, black-market prices, the designated caregivers are not allowed to charge patients any more than the cost of "supplies or utilities associated with the possession of medical use marijuana."

The proposed rules could open the field of providers to private entities that would establish licit market pricing, raising concerns of a capitalistic free-for-all similar to the market in California, where 300 "pot clubs" offer a marijuana-connoisseur's delight of exotic varieties, often at prices beyond the means of needy patients. While only nonprofit operations are protected by California law, some clubs are reputed to be making millions.

"California's gotten really out of control," said Melissa Milam, coordinator of New Mexico's medical cannabis program. One bulwark against this distopian future is the much tighter restriction on conditions that can qualify a patient for a medical marijuana card. In California, a doctor can prescribe marijuana for anyone he believes will be helped by it. In New Mexico, only patients suffering pain as a result of one of seven conditions can qualify, short of a special petition to a medical advisory board. The board will look at proposals for additions to the list every six months.

"It will be important for published studies to show marijuana is beneficial for that specific condition," Milam said.

In the first five months of the program, 74 applicants were approved. "All the marijuana we could need right now could be grown on a quarter of an acre," Milam said. That doesn't sound like the makings of a multimillion-dollar industry, but Milam said interest from potential providers has been intense.

"I've heard from everyone from multimillion-dollar companies to very small ones," Milam said. "I've heard from out-of-state companies, from landscaping businesses and nurseries."

The final hammering out of the rules after a Jan. 14 public meeting might be all that stands between them and going into operation -- if they decide it will become a market worth investing in, and if they are willing to toe the line of the state's requirements for private providers.Those rules would require big investments in security, including high-resolution video of entry and exit areas, an alarm system, a bulletproof pass-through window, a time-lock safe, overnight lighting and staffing.

In addition to the business challenges facing a potential investor in marijuana production, the specter of federal prosecution remains very real. According to a March 22 report in the San Francisco Chronicle, "Perils grow in battle for medical pot," the U.S. Drug Enforcement Administration arrested 594 people on marijuana charges in California in 2006, up from 359 in 2001. They seized 3 million plants in 2006, up from 880,000 in 2001. The article went on to call enforcement of the federal marijuana laws "notably erratic."



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