New York Companies Prepare to Join “Pot-Com Boom”
Host 1: Medical marijuana is allowed in a total of 24 states. New York is among them. The Cuomo administration is now in the process of drafting regulations…. Including the selection of five companies that will have exclusive rights to grow and sell the drug.
Host 2: That makes for the possibility of some VERY big money. Camille von Kaenel hears from those hoping to cash in on what some are calling a “pot-com boom.”
How big will the big money be? Matthew Karnes wanted to know, so he launched a research firm called GreenWave Advisors. Based on sales data from states like Colorado and California, he estimated that the national market could balloon at least eightfold in the next five years.
KARNES: We expect that to rise from about 2.8, 2.9 billion today, or 2014, up until 21 billion by the year 2020.
For comparison, that’s about twice the annual revenue of the National Football League.
KARNES And we believe we’re conservative.
In New York, he guessed we could see up to 240 million in sales of medical marijuana, just in the first year.
He’s hoping shifting mentalities will spur further industry growth. Take his Aunt Betty for example. She lives in Arizona, where medical marijuana is legal, and she had chronic nerve pain.
KARNES I said, Aunt Betty. Get a medical marijuana card. Just try it, see what happens. And she’s really enjoying her life now.
Improving the lives of New Yorkers with similar conditions is the main purpose of New York’s Compassionate Care Act. Regulations must be drafted before sales can start, including picking the companies who will be licensed to grow, process and sell legal marijuana. Only five companies will be chosen to serve the entire state, explains Evan Nison, the director of the New York Cannabis Alliance.
NISON And each of those winners will be allowed to have at least four dispensaries.
That’s about one store for every million New Yorkers. The race for the licenses will be fierce – and expensive. Companies must prove there’s cash backing their business plans.
NISON Between consultants and lobbyists and lawyers and the real estate and putting your plans together and everything that goes into that, it’s likely the real serious players will be spending over a million.
One of those players is KannaLife Sciences. Dean Petkanas heads the firm, which was founded only five years ago.
I met Petkanas in an oyster bar in east midtown. He holds meetings there when he’s in Manhattan. He’s a Wall Street guy – and he looks the part, clean-cut, well-tailored suit and a checkered tie. He has decades of experience in corporate finance, and now he’s into legal marijauna.
PETKANAS We’re a pharmaceutical company.
KannaLife is developing cannabis-based treatments for neurodegenerative diseases, including
PETKANAS Chronic traumatic encephalopathy.
– a disabling disease that affects football players who have suffered multiple concussions.
The treatment will be in the form of pills, oils or patches. New York’s law favors this type of processed, cannabis-based medicine. You won’t see anyone lighting up, like in California. No legal joints in New York.
PETKANAS What I think differentiates New York from other states is that the design of the regulations set forth kind of skip over that part of it, in the sense that you can’t have flower.
Or “bud” in more familiar jargon. No Smoking; no edibles, like cannabis laced brownies. And only patients with the most severe conditions will gain access. And the Department of Health will fix the price.
Another company hoping to get one of the coveted licenses is called TerraTech. Adam Scavone, an attorney, is working on its application. He says the Department of Health still has some kinks to work out before the state opens for business. For example, draft regulations so far do not explain how the twenty stores will be able to service the whole state.
SCAVONE It looks like we are going to need some sort of delivery mechanism.
According to the law, the commissioner of health could license additional companies to deliver or sell the marijuana in retail stores. All the product, though, would come from the five big cultivators.
Basically, there’s still some wiggle room. But one thing is for sure already.
SCAVONE If you get one of those licenses, your chances of seeing a return on your investment are pretty good.
And for those lucky five companies, it’s just the lucrative beginning for this budding industry.
Camille von Kaenel, Columbia Radio News.