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NJ Medical Pot Startup Companies Well Connected

Mon, 04/04/2011 - 4:58am
GEOFF MULVIHILL,Associated Press

TRENTON, N.J. (AP) — The aspirations of New Jersey's first medical marijuana businesses range from modest to potentially massive, but marijuana advocates say the state's startup dispensaries have stronger ties to traditional medicine than most — and an unusual number of politically connected people involved in them.

Last month, the state issued licenses for its first six alternative treatment centers — not-for-profit organizations that are allowed to grow and sell marijuana to patients with certain medical conditions. They're expected to begin sales to the public later this year, but no sooner than late summer.

"These are not people that we're used to seeing apply for licenses. They're coming from a different background. They have different skill sets," said Lauren Payne, the legal coordinator and regulations analyst for Americans for Safe Access, which works on behalf of patients who believe marijuana may help them. "Some of them may or may not have an idea of what they're getting themselves into."

The fledgling medical marijuana industry was closely watching who would get New Jersey's licenses. It has a bigger population than all the 14 other states that have legalized pot for patients, except California. And it's launching its version of the business with tighter restrictions than have been tried anywhere else in the U.S.

The state's proposed regulations are so tough — limiting even the potency of the medical cannabis, which no other state has done — that a number of groups that had considered applying for licenses were scared off. Some said that their prospective patients would be more likely to get marijuana illegally than buy it legally under New Jersey's system.

They complained that the state's rules would give the traditional pharmaceutical industry a serious toehold into a world heretofore populated largely with more down-home players seeking holistic treatments rather than traditional medical approaches.

Still, 21 groups applied for licenses. A number of them applied in more than one region of the state. And state Health Department officials said they were happy with the quality and variety of the applicants.

Chris Goldstein, a medical marijuana advocate who serves as the spokesman for the Coalition for Medical Marijuana of New Jersey, had concerns about the winners.

"These are the most politically connected medical marijuana operators in the country," he said.

Well-connected figures appear among the boards of trustees or advisers of several of the licensees.

David Knowlton, a onetime acting commissioner of the state Health Department whom Gov. Chris Christie appointed as chairman of his transition team's health care subcommittee in 2009, is a member of the board for Compassionate Care Foundation Inc., which received a license to run a southern New Jersey treatment center.

William Thomas, the CEO of the foundation, said Knowlton's name on the application likely didn't win any favors from the Health Department when it chose its licensees. "Dave Knowlton is sort of a gadfly to the Health Department," Thomas said. "We were almost afraid to put him on the board."

Knowlton said he didn't talk to anyone in the governor's office or health department about his application and hasn't spoken to officials formally or informally about his views on the proposed regulations.

"I recognize that I'm a former public official," he said. "I was very circumspect."

Kevin Barry, picked by Christie last year to be chairman of the board of trustees at the University of Medicine and Dentistry of New Jersey, is a medical adviser at another center, the similarly named Compassionate Care Centers of America Foundation, which is setting up a center in New Brunswick. Barry did not return a call.

Board members and advisers at other centers include Webster Todd Jr., the brother of former Gov. Christine Todd Whitman and a chairman of the National Transportation Safety Board in the late 1970s; and Thomas Giblin, a union official who is a Democratic member of the state Assembly.

Giblin said he's not getting any financial benefit from his role as a medical adviser to the Greenleaf Compassion Center (slogan: "A higher standard of care") in Montclair. "They thought it would be helpful in terms of vouching for their integrity," he said. Giblin said his role there is no different from his position on several other local boards.

Todd did not comment, but Andrei Bogolubov, a spokesman for Compassionate Sciences Alternative Treatment Center, which is looking to open in Camden or Burlington County, said in a statement that nothing was amiss with his involvement.

"We are proud of Webster Todd's public policy experience, which will help us serve patients and their physicians with excellence in keeping New Jersey's medicinal marijuana program," Bogolubov said.

The number of establishment figures involved in the startups probably speaks to the state's model of dispensing medical marijuana.

Christie and former Health Commissioner Poonam Alaigh, who resigned abruptly last week, citing the illness of a close family member, said they wanted the state to follow a medical model.

Christie has often criticized the wide-open way the medical marijuana business works in places like California and Colorado.

New Jersey's law called for only six grower-dispensers to start. And the proposed regulations, which some lawmakers say do not meet the Legislature's intentions, make it clear that medical marijuana here will be a quiet business.

Under the regulations, the clinics would not be able to advertise their prices; their signs couldn't specify that they're selling marijuana; and patients would have to show long-term relationships with doctors who recommend the drug.

While those regulations discouraged out some medical marijuana advocates who were imagining dispensaries with the feeling of coffee shops or offering other services like acupuncture, they lured in people familiar with the business side of the medical industry.

Among the principals in groups receiving licenses are people who have run a health insurance company, a firm that sold pharmaceuticals to nursing homes, and a company that developed a system for delivering chemotherapy. One organization, the Compassionate Care Centers of America Foundation, has close ties to Meadowlands Hospital Medical Center.

Veterans of medical marijuana businesses elsewhere are also getting involved in New Jersey — though none seem to be operating as branches of operations elsewhere. Some of the enterprises with the strongest connections to the medical business are being run by veterans of dispensaries in Montana, Colorado and California.

Thomas, of Compassionate Care Foundation Inc., says that if the rules were more lax, his group would not have formed.

He said his organization plans to make marijuana plants into lozenges, topical lotions and a form that can be taken through a vaporizer or by smoking.

"We're not a pot shop, we're not a head shop," Thomas said. "There are no bongs for sale."

Thomas said it's not clear where his group will operate, though it has looked at a place in Camden County's Bellmawr.

According to the organization's application, it's expecting to have annual revenues of nearly $68 million and a staff of more than 200 by the end of 2013.

Unlike most organizations that sell medical cannabis in the U.S., his group intends to have a major research component. It says it's applying for grants from the National Institutes of Health to research marijuana's medical effects. Knowlton said the research could help find more applications for marijuana — and that could increase sales.

The Coalition for Medical Marijuana of New Jersey's Goldstein said he believes groups like that anticipate research as the main focus of their business — not treating patients.

Some of the other groups asked the state to redact more details of their business plans before distributing them to the media and other interested parties. Most have declined to be interviewed or have not returned calls to The Associated Press.

But not all of them have such ambitious projections.

Breakwater Alternative Treatment Center, which plans to grow its buds on an organic farm in New Egypt and sell them in Manalapan, anticipates revenue by 2013 of under $2 million. And by then, it expects to have just 13 employees.

Morgan Fox, a spokesman for the Marijuana Policy Project, which advocates for the legalization of marijuana, said that in some states, medical pot dispensaries range from "shady little pot shops to cutting-edge pharmaceutical facilities." But in New Jersey, he said, the heavier regulations will mean that patients will be able to expect professionalism.

"The nice thing about New Jersey is that they are a very strict," he said. "They all meet a certain level of criteria."

 

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