If all 600 submitted retail license applications are approved and each business manages to open its doors, the ratio of medical marijuana patients to dispensaries in Oklahoma would be about 12 to 1.
Although those numbers could signal the start of a competitive marketplace that enjoys light regulations, industry figureheads differ on whether a de facto free-for-all landscape is good in the long run.
“We need to be careful about how our market evolves,” said Bud Scott, director of the trade group New Health Solutions Oklahoma. “But this is what the people voted for and our Legislature decided not to take any real actions to implement control we’ve seen in other markets, so now here we are. It’s kind of survival of the fittest to see who makes it and who doesn’t.”
The Oklahoma Medical Marijuana Authority publicly releases statistics each Monday on how many license applications it’s received and approved. In an update given to the Tulsa World on Friday, the OMMA has received 7,329 patient applications, along with 243 applications for processors, 600 for dispensaries and 918 for growers.
“We’re basically in a situation where the market is still so underdeveloped,” Scott said. He also said he doesn’t expect commercial license fee revenue to sustain itself at the same level each year, especially if patient license numbers don’t rise to meet demand.
Commercial applications cost $2,500, regardless of type.
But a prominent medical cannabis activist said the current framework puts entrepreneurs on equal footing, which can benefit both patients and businesses.
“I think everyone with $2,500 and the ability to buy (cannabis) should get to go into business,” said Chris Moe, who works with grass-roots group Green The Vote and has had input on proposed regulations provided to lawmakers this summer.
“Whether they’ll actually make it, I don’t know. But they all deserve that opportunity.”
Moe said he understands why the law as it stands could make it difficult for businesses to make a profit. For example, retailers’ products will likely all be on the shelves at once, which he said would almost certainly drive prices down.
However, Moe asked, “Why should this be different than any other industry? Why should it not be the free market?”
Medical trade groups such as the Oklahoma State Medical Association and the Oklahoma Hospital Association, which supported the anti-SQ 788 campaign, lobbied for a cap on 50 dispensaries statewide until patient license numbers match demand.
However, the state Board of Health opted not to include a dispensary limit in emergency rules after determining it didn’t have authority to create such a restriction. Since then, the medical groups have asked lawmakers in a medical marijuana working group to implement their request, noting other states with successful programs have set business limits.
The working group will hold its 12th meeting Wednesday regarding medical marijuana issues. Lawmakers in the group are expected to vote on recommendations for product testing that the group will send to the OSDH in hopes the state Board of Health adopts them before products hit the market.
The health board approved emergency rules for SQ 788 on Aug. 1 that remain in effect. The Legislature likely won’t get to make changes to the law until their next session begins in February.
Money spent, received for marijuana-related licenses
While entrepreneurs ready their businesses for operation, the Oklahoma State Department of Health has already garnered about $5 million in medical marijuana application fees as of Oct. 1.
The amount is more than enough to cover costs the agency has incurred during its efforts to implement the fledgling program. The Health Department designated the OMMA as a regulatory office once SQ 788 passed.
Interim Health Commissioner Tom Bates told lawmakers in August his department at that time had used about $3.5 million to set up online licensing applications and hire permanent and temporary staff, some of whom work in a customer-service call center. That money, he said, came from a $30 million emergency appropriation provided by the Legislature when the Health Department was in the midst of a financial scandal.
Health Department spokesman Tony Sellars said Friday afternoon that it will be “several more months” before the agency will truly know all the costs associated with the new program, as it has only been in place for less than two months.
“Now that the system is operational and we are accepting fees, we will now be using those for the program going forward,” Sellars said. “We will have ongoing conversations with legislative leaders to determine if fees coming in can continue to support the program. If and when the Legislature is ready to request the return of the emergency appropriation, the funds will be available.”
Lawmakers, though, did not explicitly determine during their last session which type of fund should house that revenue if voters passed the ballot initiative.
When asked about the issue, Office of Management and Enterprises spokeswoman Shelley Zumwalt pointed the Tulsa World to an older statute that created the OSDH Public Health Special Fund. The statute indicates the fund receives “all monies, fees and revenues collected, authorized or received from any source” by the health department or its commissioner from the exercise of any law or provision of the Oklahoma Public Health Code unless either the code or state law say otherwise.
Zumwalt said that would include fees created by enforcement of SQ 788 and said the OSDH can use the money immediately, as it doesn’t need approval from the Legislature to access money held in revolving funds. The health commissioner may budget or expend money in the Public Health Special Fund to pay for OSDH operations, according to the statute.
A new and different fund, the Oklahoma Medical Marijuana Authority Fund, will hold taxes received from medical marijuana sales through the Oklahoma Tax Commissioner.
The state question says if tax proceeds exceed the costs of running the OMMA, 75 percent of the surplus will go toward the General Revenue Fund “and may only be expended for common education.” The other 25 percent, according to the law, will go to the OSDH with an earmark for drug and alcohol rehabilitation.
A newly-created OSDH “Drug and Alcohol Rehab Fund” will hold that money, Zumwalt said.