Illinois Market Watch: High Fees and Low Patient Count Complicating Business

Illinois Patient Update

By Marguerite Arnold

Despite an ongoing national trend showing that acceptance of marijuana, particularly for medical use, is continuing to swing upwards, there are continued signs of a marijuana backlash in some states. This is affecting not only patients but the business community that aims to support them.

In Illinois, this could not be any better illustrated than the current trials and travails facing both. The unbelievably low number of patient registrations to date has led one company who had won a state license to return it. Green Thumb Industries, the original owner of the license, did not want to pay both the $200,000 registration as well as commit to the required $2 million escrow.

Illinois has now offered the license to PharmaCann LLC, which already has one cultivation permit and four dispensary licenses in the state. As a result, PharmaCann is poised to become the largest state-permitted marijuana operator in Illinois. That is not the only casualty, however, of what at minimum has been an expensive process that has so far yielded no tangible on-the-ground results.

How is this possible right now as the House of Representatives continues to pass reform bills in Washington, D.C., and support for legalization has never been higher? Overall acceptance of reform, according to the Pew Foundation’s April 2015 survey, shows that 53 percent of Americans support marijuana legalization for some purpose. In 2006, just 32 percent supported reform, while close to 60 percent remain opposed to it. Polling at 41 percent, the most frequently cited reason for supporting legalization is for specific medical use.

That said, public polling data about the continued rise in overall support for change often still leaves those who both sell and use the drug legally in a difficult position around the country. Patients, more than any others, are all too often caught in the impossible Catch-22 of policy guinea pigs as further state and eventually federal reform rumbles forward.

While patients in states like Colorado now have at least the fig leaf of the protection of a state law legalizing use and a wide infrastructure of dispensaries and rec shops, the most recent state supreme court employment law decision on the issue—that patients can still be fired for using marijuana even under a doctor’s supervision—show that policy has a long way to go in catching up with not only public opinion but nascent state law. That decision came from the state supreme court in Colorado—one of four states plus the District of Columbia where recreational use is also legal. Around the country, patients enrolled legally in state programs are still being fired with no legal remedy to fight termination based on the same.

That obviously also affects business, especially in medical-only states. Nowhere is this showing up more clearly right now than in Illinois, where patient registrations are far lower than anyone expected. As of May, 10 months after the first state registrations started, Illinois has approved only 2,500 patients state-wide.

According to the Associated Press, of the 21,800 people who had logged onto the patient application website, only about 3,100 have submitted an actual application—or 600 more patients than the state currently has approved. This is also despite the fact that the state appears to be on track to approve 11 new conditions to the list of qualifying medical conditions that include PTSD and migraine headaches.

Patients in Illinois must undergo background checks and fingerprinting, and they must pay $150 per year for a special photo ID per state regulations. They also face one of the toughest driving laws in any state—a so-called “zero tolerance per se” law which by definition precludes patients from driving. The tough penalties for marijuana possession—it is not yet decriminalized in the state—mean that patients are putting themselves in a dangerous position. Many advocates in particular are afraid that patients are afraid to sign up. That in turn is creating havoc for marijuana businesses.

Market development in Illinois also looks much like that in neighboring Minnesota, where a highly restricted market and slow patient signups, along with a reluctant-to-prescribe medical community are not only excluding most business development but also making patients wary of “coming out of the medical marijuana closet.”

That does not bode well for the flourishing industry that hopes to serve them.

Many industry watchers point to the fact that there is no legal dispensary open yet in Illinois. That is expected to happen later this year. “Without an access point for medicine, many people won’t go through the process or spend the money to become a patient,” said Kris Krane, co-founder and managing partner of 4Front Ventures, which helps finance marijuana businesses across the country. “We’ve seen in other states that patient populations rise with the opening of retail dispensaries.”

After that occurs, it may be that patient registration will increase. That said, with fear and stigma high, access limited, and slow patient growth, state-legal marijuana dispensaries face another quandary: the medical program in Illinois is still a “pilot program” that can be canceled as soon as 2017 if the numbers don’t add up.

Medical advocacy groups, like Americans for Safe Access, are also doing what they can to help the situation with on-the-ground presence and educational materials. “In states with relatively new medical cannabis programs we sometimes see lingering stigma and a general lack of knowledge about medical cannabis among patients and even doctors,” said Christopher Brown, ASA press secretary. “Americans for Safe Access recently did a patient summit in Illinois to help people understand the new medical cannabis program.”

While it is highly unlikely that any state medical program will be canceled at this point, given the overwhelming drumbeat for federal legalization, market development in medical states like Illinois is still a highly tenuous and expensive proposition for all who plan to serve this market, let alone consume the products.

Guest Contributor designates a writer who is guest publishing content with MJINews.

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