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By P L JETER
Progress in Florida's burgeoning medical marijuana industry has been slower than anticipated since the state law that made full strength marijuana legal for medical use went into effect last July. Now, as a sign of the ongoing troubles in the Office of Medical Marijuana Use, its director Christian Bax, has resigned his position.
Michael C. Patterson, founder and CEO of U.S. Cannabis Pharmaceutical Research & Development of Melbourne, has become a go-to guy consultant for the development of the medical marijuana industry nationwide and in Florida.
He serves as a consultant to Gerson Lehrman Group, New York and helps educate GLG partners on specific investment strategies and public policy regarding Medical Marijuana in the U.S. and Internationally.
Medical News chatted with Patterson about business challenges - healthcare and beyond - associated with implementing the relatively new law.
MN: How has Florida's medical marijuana market progressed since state lawmakers legalized it?
MP: It's developing quicker compared to other states, but slower from a regulatory and implementation aspect. For example, the state was supposed to award five new licenses by Oct. 3, 2017, and it still hasn't been done. They're almost a year behind for various reasons - lawsuits, hurricanes, and the gap between the legislative year (July 1 to June 30) and fiscal year (Oct 1 to Sept. 30) that affected funding the state Office of Medical Marijuana Use (OMMU), which only had three employees to get everything done.
Also, about 1,600 Florida doctors have signed up to write medical marijuana recommendations but that doesn't mean all of them have done it. Every Friday, the state updates the number of patients and doctors concerning medical marijuana. The updates can be found at: http://www.floridahealth.gov/programs-and-services/office-of-medical-marijuana-use/ommu-updates/
MN: Lawsuits?
MP: Current license holders applied in 2015, when the state awarded five licenses. Now there are 13 providers. Here's what happened: the people who didn't win a license sued the state. Because the state had such a terrible grading structure of the applications, every single challenge was lost.
MN: Why is Florida's medical marijuana license the most valuable in the U.S?
MP: Florida has vertical integration, meaning a licensee must grow it, process it, transport it, and sell it in stores. Until 2020, every license holder can open up to 25 stores statewide. After that, there's no limit. To show you how valuable a Florida medical marijuana license is, a publicly traded company, MedMen (CSE: MMEN), just purchased one for $53 million from a reseller.
By comparison, Colorado isn't vertically integrated; the state doesn't have a limit on the number of licenses. An average grower license typically sells for one-times-revenue. If that grower is generating $3 million a year, the license will sell for $3 million.
As a result, a medical marijuana license to sell in states with vertical integration and restricted licenses is more valuable.
MN: Could Florida's medical marijuana climate lead to a monopoly?
MP: I'd call it oligarchy, a somewhat limited monopoly to a certain number of groups. For example, of 13 providers, only eight are producing and selling product. The others are just getting up and running. Those eight serve 130,000 patients, with the average sale of product now at $300 to $400 a month. You do the math.
MN: What other challenges are impeding the growth of the medical marijuana industry in Florida?
MP: Banking. Because medical marijuana is federally illegal, some banks choose not to work with medical marijuana companies. Too much red tape. But the amount of money changing hands is astronomical, millions of dollars daily. If we don't have a banking system in Florida that's open to medical marijuana companies, we could have utter chaos.
Taxes. IRS Code 280-E says you're not allowed to deduct the cost of the sale of an illegal item. If you have a dispensary and purchase cannabis for $50 from a supplier and sell it for $100, you pay taxes on $100. This federal law of the tax code is stunting growth. A bill in Congress - the States Act - sponsored by Senators Corey Gardner (R-Colorado) and Elizabeth Warren (D-Massachusetts) would keep cannabis federally illegal but allow states to fix the banking and tax issues. President Trump said he'd sign it. We'll see what happens.
Education. When the state wrote the new medical marijuana law in 2017, $10 million was originally allocated to educate the public. Last minute, funding was slashed. Then, Florida Highway Safety took $5 million to create billboards "Drive Baked; Get Busted." That was the extent of the state's education program.
MN: What's your role in the development of Florida's medical marijuana industry?
MP: To educate the masses. For instance, I spoke July 30 at the Florida FBI National Academy State Convention to educate law enforcement about medical marijuana. We're also educating physicians and other healthcare workers about the gap between the law and implementation into our societal and healthcare network. We bridge that gap to help people understand how medical cannabis is considered just another form of healthcare, like a pharmacy or laboratory, and importantly, what it is and what it isn't.
One of our goals is to work through medical schools to educate students on the science of cannabis because we feel strongly that going forward, most people will be on cannabis rather than opiates or anti-depressants. In states where medical cannabis is legal, patients who use it typically decrease their prescription meds.
MN: Describe the average medical marijuana patient.
MP: In the U.S., it's between 42 and 48 years old. In Florida, the average medical marijuana user is over 50, maybe early fifties. Some doctors think younger people wanting to get high will want medical marijuana, but it's exactly the opposite. Medical marijuana is lab-tested and created under pharmaceutical-grade conditions. Early adopters have been seniors. That age trend will continue as seniors who don't understand marijuana began to understand its usefulness, especially with pain management. Even though it's $300 to $400 a month now, as more patients sign up and prices come down, by this time next year, you should see it more like $200 to $300.
MN: What are the greatest challenges to physicians prescribing medical marijuana?
MP: Dosing. Many doctors are accustomed to pharmaceuticals such as antibiotics, where they may prescribe a patient 25 milligrams and if that doesn't work, take two and call it a day. With cannabis, the challenge is the body's endocannabinoid system; marijuana has cannabinoids. It's a lock and key system in the body. That's why nobody has died from cannabis.
Also, everybody responds differently to cannabis. For example, you could take 20 milligrams that could leave you on the couch not wanting to get up. For another person, 20 milligrams won't affect the body at all.
Some older doctors are holding onto preconceived notions of previous ideologies because they haven't learned about cannabis and don't fully understand its benefits. Younger physicians are typically more open-minded. Ironically, there's more research on cannabis than any other prescription medication. Much of the study has been in Canada and perhaps surprisingly, Israel, the world's leading area for cannabis research.
Finally, many doctors no longer own their practices. More physicians are hospital-employed. Health systems in general won't allow doctors to write medical marijuana recommendations. Doctors who are signing up to write recommendations either have independent offices or work in small, privately-owned walk-in clinics.
MN: How are insurance companies handling medical marijuana claims?
MP: Because medical marijuana is federally illegal, the state isn't required to pay for it. That's slowly changing. Earlier this year in New Jersey, a judge ruled in a worker's compensation case that insurance must pay for medical marijuana.
MN: How do you view medical marijuana usage long-term in Florida?
MP: For physicians and nurse practitioners, this isn't going away. Medical marijuana will keep increasing on a regular basis. About 3,000 patients are signing up for it every week. We're already at nearly 145,000 patients using medical marijuana. By the end of this year, we're anticipating 200,000 patients. The medical system needs to get on board because it's beneficial for their patients and it's not going to hinder their progress.
MN: How will the landscape change if state lawmakers legalize marijuana for recreational use?
MP: Our concern is to make sure people still use cannabis for its wellness or medicinal capacity. The problem is, if recreational marijuana is legalized, people are not necessarily going to a doctor anymore. Eventually, if it does go recreational, it's going to happen fast.
Typically, states that convert from medical to recreational marijuana notice medical marijuana numbers drop by 50 to 75 percent and that affects cost. If patients are paying an estimated $200 for a doctor's visit for medical marijuana, they'll stop paying for the doctor.
When Colorado legalized recreational marijuana in 2012, about 120,000 to 150,000 patients were using medical marijuana. By early 2018, the number dropped to 30,000 to 40,000. Those patients converted to recreational because they don't want to pay extra for the doctor's visit and deal with the hassle when they can go right to the door.
Weekly Update from Florida Office of Medical Marijuana Use August 3
- Qualified Patients: (Active ID Card): 109,749
- Total Patients: 144,557
- Qualified Ordering Physicians: 1,596
- Amount of Medical Marijuana Dispensed (July 27 - August 3): 32,448,202 mgs
- Amount of Low-THC Cannabis Dispensed (July 27 - August 3): 1,602,217 mgs Approved Dispensing Locations: 46
For more information visit www.flhealth.gov/ommu
OMMU Call Center: 1-800-808-9580
