Congressional Entrepreneur Bidding for Dispensary Licenses

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A former Congressman from Massachusetts is applying for a dispensary license in the state. Bill Delahunt, who represented Massachusetts’ 10th congressional district from 1997 to 2011, is bidding for licenses in the cities of Mashpee, Plymouth and Taunton.

The involvement of a former Congressman in a medical marijuana company should change the perception of the industry and also could lead more professionals to get involved.

Delahunt claims that marijuana is a better alternative for pain relief than drugs like OxyContin.

“No one has ever died from an overdose on marijuana,” Delahunt told the Boston Business Journal, adding that it has to be regulated “in a way that people have confidence in it.”

Of the remaining applicants, 17 propose opening a dispensary in Middlesex County, followed by Worcester (14) and then Norfolk (10).

No more than five dispensary licenses will be awarded per county.

Start-up costs can run into the millions

Starting a medical marijuana business in Massachusetts will be very expensive.

One company that received two of the 20 provisional dispensary licenses says its startup expenses and initial operating costs will come to $8,000,000.

New England Treatment Access is a new company that will open retail outlets in Brookline and Northampton, plus a cultivation facility in Franklin. Kevin Fisher and Arnon Vered, the owners, anticipate that roughly $3.8 million will cover infrastructure costs while another $5.2 million will be required to achieve break-even point in the first quarter of 2015.

Fisher and Vered estimate the business will bring in $9.8 million in 2015, assuming that each patient will purchase 1.6 ounces per month with an average price of $4,800 per pound. They hope to see revenues of up to $19 million by 2017, with a peak patient count of 3,200 in 2016.

Financial risks include price fluctuations, market size and lower than anticipated purchasing habits.

First-generation medical marijuana entrepreneurs in less restrictive states such as Colorado, California and Washington State have started their businesses for merely tens of thousands of dollars. This level of investment will not obtain in newer markets such as Massachusetts, Nevada and Illinois, where entrepreneurs are expected to have to spend millions to get underway.

About Douglas Slain

Doug received a JD from Stanford Law School, a MA from the University of Chicago, and a BA from DePauw University (Phi Beta Kappa). After practicing real estate and finance law at then Pillsbury, Madison & Sutro, he founded four national monthly law reporting titles now owned by Thomson-Reuters. He served two consecutive terms as chairman of the American Bar Association’s General Practice section’s Professional Responsibility Committee. Slain was an ABA-appointed rule of law consultant to the Ministry of Economy for the Republic of Latvia as its secured transactions adviser. He taught briefly at Stanford Law School as an adjunct clinical law professor. Slain has been the managing partner of Private Placement Advisors since August 2009. In January 2013 he founded Outliers Network.

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