Article

NEW YORK IS IN THE GAME ...

November 12, 2018

 

on two fronts.


An exclusive article in today’s Daily News by Kenneth Lovett, New Albany Bureau Chief, requires our feature review and commentary.

With New York becoming a battle state for recreational marijuana use, State Senior Diane Savino, (D-S.I.)  has cried foul, claiming that medical marijuana programs will suffer as more and more states grant recreational use.  We have argued the same points since day one and suggested that the current business model for medically focused companies should be abandoned, as a “no-win” situation since sustained profit margin are not possible. As reported,  Savino's finders confirm our analysis, when she said, “I have an interest in making sure whatever we do in New York doesn’t disrupt the medical marijuana program, which has happened in other states."

Savino is traveling this week to Nevada to meet with various officials on the subject. Some states, including Oregon and Washington that legalized recreational pot for adult usage saw their existing medical marijuana programs being devastated with a dramatic drop in products and dispensaries – to the detriment of patients.

We continued to preach that recreational and medical marijuana are not the same product, and must be viewed separately. Medical marijuana, which by federal law cannot be covered by insurance, is more expensive because of testing, development, and processing. Thus, it is “tailored” to address a patient’s specific set of symptoms.  With recreational use, cultivators are growing more marijuana for the legal markets, which means prices are flattening and leakage is occurring into the black market.  This inversion factor has compromised the incentive to grove medical marijuana. Pharmaceutical-grade marijuana is cost intensive while the demand for the products are limited.  Public companies in the medical-pot trade are unable to structure their business models to make a profit and hide that fact at the expense of their stockholders.

Case in point is New York: It’s medical program, created in 2014, only covers a limited number of illnesses and does not allow patients to smoke the drug. They must ingest it by vaping or using oil, pills or edibles.  There are no incentives to spend millions of dollars obtained a license, establishing a business enterprise, growing, developing, processing and marketing a limited product base with restricted uses.  To create a useful business model for medical marijuana, the officials of the state who regulate the industry must offer incentives and not merely focus on taxable enforcement and burdensome regulations.

We have reviewed legal recreational marijuana laws and regulations of the sanctioned states, and our investigation and analysis determined that Nevada has designed excellent programs for each sector --- medial and recreation.  From a business standpoint, the regulations do not compromise the quality and quantity of marijuana, while allowing the entrepreneur to earn a profit.  Nevada’s referendum on adult recreational use is the best example for a unified national model. If New York State applies the Nevada paradigm, it would endorse the values of Nevada’s programs and establish a quasi-standard.

 

 

Look for New York to agrees on the marijuana issue for recreational use in the 2019-2020 budget due to be enacted by the end of March. Governor Cuomo called marijuana a “gateway drug” and commissioned a study by the state Health Department, which conclude that the benefits of legalizing recreational marijuana would outweigh the negatives. Based on such findings, Cuomo appointed a panel to develop recommendations on potential legislation that could be acted on as soon as the coming legislative session. We expect a bill to sanction recreational marijuana use before March 2019 and included in the 2019-2020 budget.
 

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