Feeling the state’s six not-for-profit medical marijuana dispensaries will not be able to handle the needs of the program as it grows, the Department of Health and Gov. Phil Murphy’s administration announced a request for six more dispensaries in a statement Monday.
“We look forward to the opening of six new dispensaries, so we can ensure that all qualifying patients who want access to medicinal marijuana can have it,’’ Murphy said in the statement.
“Due to the steps that (Health) Commissioner (Shereef) Elnahal and I have taken since January, we have seen the addition of 10,000 new patients. Accordingly, we have to expand the number of businesses who are growing product and serving patients.”
Currently, more than 25,000 patients, 1,000 caregivers and 700 physicians are participating in the program. The new dispensaries would be equally divided: two in North Jersey, two in Central Jersey and two in South Jersey.
“As we strive to make the program more responsive to the needs of patients, caregivers and Alternative Treatment Centers (ATCs), we recognize the need to grow the industry and create more options for patients,” Elnahal said.
The request for applicants sets a deadline of Aug. 31, opens the door for for-profits, forbids existing dispensaries from applying (since they already have the ability to expand in the state) and allows a single entity to apply for multiple regions. For those who do submit multiple applications, the department asks them to rank them in order of priority.
The announcement is one many anticipated, in light of the expansion of patients in the program.
“It’s supply and demand, obviously,” Katelyn Gillece, a cannabis attorney at McCarter & English, said.
And, with the DOH seeking for-profit entities, it is likely that some of the larger and more experienced companies from around the country are going to apply to enter New Jersey, she said.
“The state wants to attract people that have experience,” Gillece said.
But this drastic shift from the restrictive regulations under Gov. Chris Christie has other attorneys worried.
Jill Ojserkis, a cannabis attorney and chair of the Health Care Law department at Cooper Levenson, said the search for for-profits could be bad news for the existing entities — which have struggled to establish themselves and maintain business with a limited volume of activity for years.
“Today’s announcement … has changed the entire playing field in New Jersey,” Ojserkis said. “Current law requires the first two of each ATC (alternative treatment center) in a region to be nonprofit. Each region currently has two nonprofits.
“The new RFA permits applicants to be either nonprofit or for-profit. It also specifically permits joint ventures and prohibits existing ATCs from participating. As a result, this announcement will likely result in a change in the landscape with existing marijuana businesses and Big Business vying for a coveted ATC permit.”
And Ojserkis believes all six will likely be for-profits, setting them up for a stronger entry into the recreational market when and if it is legalized in New Jersey.
“Banks have traditionally been reluctant to finance marijuana businesses and New Jersey ATCs have had to rely upon private financing,” she said. “I believe that most, if not all, applicants for the next six centers will be for-profit and, as such, have an easier time attracting capital and private financing.
“In fact, the first scoring criteria weighs past business experience, business operations, cultivation, manufacturing and dispensary operations, financing, etc., most heavily.