The state Health Department has chosen the five winning applicants ”” including a newly formed women-owned company in Westchester County ”” that will make up the first wave of businesses in the state to produce and distribute medical marijuana in what is expected become a more than $1 billion industry.
“Today”™s announcement represents a major milestone,” New York State Health Commissioner Dr. Howard Zucker said in a statement announcing the successful applicants on July 31.
That milestone could open the floodgates to a medical marijuana industry projected to pull in $1.4 billion for the state by 2020, Crains New York reported, citing research by GreenWave Advisors.
None of the five companies propose to locate their manufacturing sites in Westchester. Each selected company will open one manufacturing facility and four dispensaries across the state.
The closest grow operation is slated for Queens County by Bloomfield Industries Inc., while PharmaCann LLC plans to grow marijuana from a facility at Hamptonburgh in Orange County.
Katonah-based Etain LLC will produce marijuana in Chester in Warren County, and Empire State Health Solutions, based in Johnstown in the Adirondack foothills, will manufacture and grow its products in nearby Perth in Fulton County.
The final winner, Columbia Care NY LLC, has plans to manufacture in Rochester in Monroe County.
Two of the companies, Etain and Empire State Health Solutions, will open dispensaries in Westchester County. Etain reportedly plans to dispense the medical drug at a Nepperhan Avenue location in Yonkers, in addition to upstate sites in Albany, Ulster and Onondaga counties. Empire State Health Solutions reportedly plans to fill prescriptions at 217-219 E. Post Road in White Plains as well as at offices in Queens, Albany and Broome counties.
The medical marijuana dispensaries will be scattered from Erie County in western New York to Clinton County on the northern border with Canada and Suffolk County on Long Island. The boroughs of Manhattan, Queens and the Bronx all will have dispensaries.
Etain LLC is breaking more new ground as a women-owned, family-operated company led by CEO Amy Peckham, of Katonah, and her two daughters, Hillary and Keeley, the company”™s chief operating and horticulture officers, respectively.
According to the Compassionate Care Act, whose passage last year opened the doors for medical marijuana in the state, registered organizations will only be able to sell non-smokeable forms of marijuana to patients with specific severe, debilitating or life-threatening diseases and associated conditions. The drug will be taxed at 7 percent of gross sales, with proceeds split equally between the state and the counties where the drug was sold and manufactured.
Evaluation process
A total of 43 applications were reviewed by the Health Department, which gave top priority to applicants”™ ability to produce and manufacture products and to quality assurance and staffing.
Dr. Kyle Kingsley, CEO of Empire State Health Solutions, said the most important factor in the state evaluation was the prospective companies”™ ability to produce products in the relatively tight time frame set by the state, which aims to have the medical marijuana program operating by January 2016, 18 months after adoption of the Compassionate Care Act.
“We knew if it was a merit-based process we would be in the top five just because of the merit we brought to the application,” Kingsley said. On the Health Department”™s website listing applicants”™ ratings, Empire placed second behind top-ranked PharmaCann.
Kingsley credited the company”™s success in the New York competition to its seasoned team that incorporated lessons from Empire”™s successful bid to be one of the first medical marijuana distributors in Minnesota, which has similarly strict regulations for its program.
Purchase-based Valley Agriceuticals and Silverpeak NY were among the 38 applicants who failed to win a license. Valley Agriceuticals had begun construction on an approximately 100,000-square-foot marijuana production facility in Wallkill in Orange County, while Silverpeak had partnered with the Northshore-LIJ Health System as a research center and metropolitan health care network for its proposed medical marijuana enterprise.
A representative for Valley Agriceuticals said the company had no comment regarding the Health Department”™s awards or what the company will do with its Wallkill facility.
“The structure we”™re building will be consistent with the community”™s rural nature, so if we”™re not awarded a license, the building will fit in,” Erik Holling, president of Valley Agriceuticals, previously said during the application process.
Northshore-LIJ does not know why Silverpeak, which runs a successful medical marijuana operation in Colorado, failed to make the cut here, said Terry Lynam, Northshore-LIJ vice president of public relations and chief communications officer. “I am sure it was an objective review process; we have no reason to believe otherwise,” he said.
In the end, failed bids like that of Silverpeak proved that it was not the partnerships or financial backing that decided who came out on top of the application process, Kingsley said. “The proven track record is what”™s important,” he said.
The road ahead
While the new crop of medical marijuana producers races to meet the January deadline, rejected applicants are likely biding their time to see if the Health Department issues more licenses, Lynam said.
“Although Silverpeak was not chosen to administer the program, we support the state”™s efforts and fully anticipate Northshore-LIJ physicians and patients will be participating in the program,” he said.
Still, with hundreds of thousands if not millions of dollars invested in failed applications, attorneys like David Marquez of Mineola are expecting phone calls from competing companies who feel they were unjustly denied a license.
“I have spoken to three of them and there will be more,” Marquez said. “The ones I have spoken to are sufficiently annoyed to want to take some form of legal action.”
The state”™s approved plans were criticized as too little, too late by Drug Policy Alliance, a New York City-based nonprofit advocating drug law reform.
“There are huge areas of the state where patients will have to travel enormous distances to get medicine,” Julie Netherland, deputy state director for the alliance, said in a statement. “This is especially problematic given that many medical marijuana patients are sick and disabled and low- income.”
