Medical marijuana shops: We need more customers
All the trappings of the Buffalo Grove business are in place: bulletproof walls, product locked away in a vault, high-end paintings and welcoming pharmacists.
There's just one big problem with the medical marijuana dispensary: virtually no customers.
"If this is the trend, with one to three patients a day, we'll go out of business," said Joseph Friedman, one of the clinic's owners.
Illinois regulators touted almost $1.7 million in sales since medical marijuana became legal in November, and about 400 new certified customers were added last month to the roughly 4,000 already approved to buy the drug. But the business owners say they need to see 20,000 to 30,000 customers in the next six months to a year to stabilize the industry.
The reason for the disappointing numbers stems from what the operators call unnecessarily tight restrictions on who can buy marijuana.
For example, chronic pain and sleep disorders are not considered valid reasons in Illinois to buy medical pot, but they are elsewhere. State politics also plays into it, as does some reluctance within the medical community to embrace the program.
"There's numerous, numerous people in need being denied entry into the program for which they are entitled," said Teddy Scott, CEO of PharmaCannis, a company that's opened four dispensaries.
Twenty-two dispensaries are now fully licensed in Illinois, and 12 to 14 more are expected to begin selling marijuana by the end of March.
"As they open up, we're going to be sharing a finite number of patients because it's not growing the way anyone expected," said Friedman, chief operations officer of PDI Medical and a board member of a state trade group.
Regulators anticipated "tens of thousands" of patients by the end of the four-year program, said Bob Morgan, the state's former coordinator and an attorney who works with marijuana businesses outside Illinois.
Retailers expect more patients would flock to their shops if those with chronic pain could legally use marijuana. In Arizona, 72 percent of patients apply under that condition, according to a recent report by the Illinois Department of Public Health. In Colorado, it's even higher.
But chronic pain remains off the list of Illinois' nearly 40 qualifying illnesses. The number of patients would jump in a matter of months -- potentially tripling -- if the state allowed that condition, says Michael Mayes, CEO of Quantum 9 Inc., a Chicago-based consulting firm for the industry.
"By six months after that, you would see a widely successful program," he said.
Politically, the industry faces an uncertain future. Gov. Bruce Rauner vetoed a measure that would have extended the program past its expiration date on Jan. 1, 2018. And his administration turned down a recommendation by an advisory panel to approve more qualifying medical conditions, a decision that's being challenged in court. In September, Rauner also vetoed a measure that would have included post-traumatic stress disorder, saying it would have been "premature" to expand the program "before we have had the chance to evaluate it."
State Rep. Lou Lang, a Skokie Democrat and lead sponsor of the law that established the program, disagrees.
"It would have given us more information," he said of adding conditions. "It would have lowered costs for patients. It would have given the licensees much more breathing room."
Physicians are considered the program's "gatekeepers," but some of their employers have barred them from writing patient recommendations to the state and may be worried about risking federal funding and liability, Lang said.
Most larger health care systems in the Chicago area remain neutral, but a few downstate have told their doctors not to certify patients, a requirement in patients' applications, Morgan said.
Arlington Heights-based Northwest Community Healthcare and Edward-Elmhurst Health leave the decision to the discretion of the physician. But the program is "still being evaluated in the medical community" because of questions about treatment and research, said Sue Nelson, NCH's vice president of physician operations. NorthShore University HealthSystem's employed physicians also may choose to certify an established patient with a qualifying condition, a spokesman said.
Doctors don't set the dosage or prescribe the drug, an illegal substance under federal law. But they certify that patients have at least one of the qualifying conditions. Medical marijuana businesses stress that distinction. "It's not a prescription," Mayes said. "It's a recommendation."
Morgan, the former state regulator, said he isn't aware of any health crises since the program began. But he said physicians have a "number of legitimate concerns" about how medical pot interacts with prescription drugs and how often and under what conditions patients should use it. But clinic operator Friedman, a pharmacist, says he's frequently on the phone with doctors talking about what strains their patients are using and plans to invite them to an open house early next month.
"It's the triangle of communication that's going to hopefully make us credible in the eyes of the physician community," he said.
Patients must tell the state where they'll be getting the drug in limited amounts. They only can switch dispensaries once every 24 hours.
At New Age Care, a Mount Prospect dispensary, only a handful had registered when Nonna Knapp opened the business late last month. But Knapp's seen an uptick since, which she attributes to her location. Locally, towns can adopt zoning rules to restrict dispensaries to industrial and offices parks. But Mount Prospect leaders allowed New Age to run out of a visible strip mall.
Shops that opened early on also seem to enjoy an advantage. The Clinic Mundelein served about 600 patients in the first week of legal sales in the state and now typically sees anywhere from 10 to 30 a day, said Jeff Goldman, chief marketing officer of GTI-Clinic Illinois.
"I think first-to-market was a big deal for dispensaries because patients flocked to them," said Ross Morreale, the board chairman of the state trade group, Medical Cannabis Alliance of Illinois. "Someone is going to have to do something special to get them to switch. That's the battle for a lot of these dispensaries."
Mitch Meyers is a partner in a company that hopes to open a Rolling Meadow dispensary by Feb. 1. But first, state inspectors have to sign off on an occupancy permit for Nature's Care after reviewing a "72-point checklist," she said. The relatively later start will enable the shop to debut with a "broader product line" after the first crops produce dried flowers. But she's scaled back her staffing plan by half to likely five full-time employees and a few part-timers because of the low patient tallies.
Friedman and his colleagues at the Buffalo Grove clinic are staying optimistic because of the response to medical marijuana in other states.
"I think the thing that makes investors antsy at this point is the low numbers in Illinois," he said. "Outside of that, they look at the potential in Illinois, if things could open up -- more conditions -- that keeps investors looking. No one's closed the door yet."
Why there aren't more marijuana buyersSome operators of suburban medical marijuana clinics say there may not be enough customers for them to survive. Reasons include:
• Tight restrictions on eligibility; almost 40 illnesses qualify -- but not chronic pain, which accounts for the majority of users in other states.
• Gov. Bruce Rauner's administration has blocked proposals to add eligibility for conditions such as chronic pain and PTSD.
• Rauner vetoed legislation to extend the program beyond the end of 2017.
• Less than total buy-in to the program by the medical community.
Source: Daily Herald interviews