Compassion centers eye expansion

GROWING TRENDS: Gerald McGraw Jr., CEO of the Thomas C. Slater Compassion Center, in the main retail room. The center plans to increase growing capacity. / PBN FILE PHOTO/RUPERT WHITELEY
GROWING TRENDS: Gerald McGraw Jr., CEO of the Thomas C. Slater Compassion Center, in the main retail room. The center plans to increase growing capacity. / PBN FILE PHOTO/RUPERT WHITELEY

When Rhode Island lawmakers voted to legalize medical marijuana in 2005, then nonprofit medical dispensaries four years later, it put the state among the forerunners of an increasingly progressive national attitude toward the drug.
As things turned out, it would be four years between the time the General Assembly approved dispensaries, known as “compassion centers,” and the first one opened its doors. By that time, western states like Washington and Colorado had taken marijuana decriminalization far beyond purely medical use and made Rhode Island’s policy appear comparatively conservative.
Concern that Rhode Island dispensaries would become high-volume, commercial pot superstores drawing customers from around the region caused the state to move slowly and cautiously with compassion centers. Gov. Lincoln D. Chafee feared Rhode Island compassion centers would be targeted by federal law enforcement, which still considers medical marijuana illegal.
But with calls from advocates for full legalization growing louder and compassion centers unable to meet patient demand, lawmakers this past summer loosened what had been a 99-plant limit on how much the dispensaries could grow themselves.
As a result, the last of the three dispensaries approved by the state, Summit Medical Compassion Center in Warwick, opened its doors last month and two established centers are planning major expansions.
“The biggest challenge hands down has been providing consistent access to product for our patients due to state law that limited how much we can produce ourselves,” said Seth Bock, founder and CEO of the Greenleaf Compassion Center in Portsmouth, which opened June 2013. “The governor’s budget permitted us to produce as much as we need. We are now ramping up and have a new facility that we are in the process of seeking approval [for].” With the growing limits in place, Bock said his dispensary has had to obtain most of its inventory by buying excess marijuana from individual, licensed caregivers, who were each allowed to grow up to 12 plants.
This scattered supply chain involving so many small growers caused variations in quality and drove prices higher than what would be possible with larger, commercial-scale production.
When the new grow-house is operational, Bock said Greenleaf will produce about 90 percent of what it sells, with the remaining 10 percent taking advantage of some of the unique techniques and strains developed by small-batch cultivators.
The Thomas C. Slater Compassion Center in Providence, which became Rhode Island’s first dispensary when it opened in April 2013, also has plans to increase its growing capacity, said spokesman Chris Reilly.
“The overall goal of expansion is to have greater control of our supply, which leads to enhanced quality and more favorable pricing,” he said.
Calls to the Summit compassion center and its attorney, Terence M. Fracassa, were not immediately returned.
In their applications, Slater estimated sales after three years of $3.6 million, Greenleaf $1.2 million and Summit $23.4 million.
Under the current system, dispensaries are unlikely to be too lucrative as they operate under state law as nonprofits and are subject to both the 7 percent state sales tax and a 4 percent marijuana surcharge on “net patient revenue,” which excludes “returns and allowances.”
In fiscal 2014, which started July 1, 2013, the state collected $269,156 from the marijuana surcharge, according to the R.I. Division of Taxation. In the first four months of fiscal 2015, even before Summit opened or the centers opened their new grow houses, the surcharge pulled in $123,388, which projects to $370,164 over a full year. Currently there are 9,298 licensed medical-marijuana patients in Rhode Island, according to the R.I. Department of Health. A majority of them are registered with the Slater Center, which has 4,914 patients, compared with 1,699 patients at Greenleaf and 55 patients at the just-opened Summit.
Last winter, Attorney General Peter F. Kilmartin called for a ban on compassion-center marketing and promotions in response to Slater Center advertising emails.
Bock at Greenleaf said he has personally been pleased that dispensary sales have been somewhat limited in the startup years as it’s given his organization, which had modest experience in retail, pharmaceuticals or agriculture, time to become more efficient.
JoAnne Leppannen, executive director of the Rhode Island Patient Advocacy Coalition – one of the major proponents of the state’s medical-marijuana program – said the restrictions on compassion centers to this point – both the taxes and plant limits – have left them short of their potential.
“The biggest complaint I have heard is no one can afford compassion centers, because they’ve mostly had to operate as resellers with extraordinary overhead and taxes,” Leppannen said.
As they did this year, lawmakers are expected to submit legislation next session that would allow legal, recreational use of marijuana, although its chances of passage appear slim at this point.
Leppannen said the results of Colorado’s legalization have been positive for medical users in reducing the price of the drug. She said she has worked with sponsors of the Rhode Island bill to make sure patients’ needs are considered.
Even with legalization, there would be a place for the existing compassion centers, Leppannen said, and their investment is protected in proposed legislation with an option of first recreational distribution rights. •

No posts to display