How to Succeed in Connecticut Cannabusiness (Involves a Lot of Trying)

Open for business, kinda.
Open for business, kinda. // Creative Commons

According to David Kimmel, the best way to understand medical marijuana is to think of orange juice.

It’s a simple analogy. If you’re suffering from a cold, you won’t get much Vitamin C from a single orange. But squeeze the citrus into juice, and suddenly you’ve got a more efficient dose: eight oranges in one glass.

It’s the same, so to speak, with medical marijuana. Kimmel explains that the active chemicals in cannabis can be potent pain-relievers. But for patients seeking palliative care, “one orange doesn’t do much like one joint doesn’t do much,” he says. Smoking marijuana — combusting the plant — isn’t particularly effective. That’s why the drug needs to be concentrated, delivered without a bong or pipe.

Kimmel founded Vintage Foods Ltd., a health and wellness company, in 2010. Come this spring, he hopes to open and operate a medical marijuana production facility in Norwich, an hour east of New Haven. In the city’s industrial park, at 9 Wisconsin Ave., he and his team plan to produce a standardized, unit-based medication from the active oils in cannabis. If they succeed, they’ll be among the first businesses to bring medical marijuana to the state of Connecticut legally — and they’ll be doing it Tropicana-style.

Kimmel’s interest in medical marijuana stems from his professional background. A veteran of the food and beverage industry, he gravitated toward projects in the health sector. “Food is medicine,” he says early on in the conversation. That philosophy guides him as he prepares for this next professional venture.

Over the phone, he’s all science. He eagerly relays the latest developments in medical cannabis research (from Israel), and describes in detail marijuana’s “synergistic” health benefits (from its flavonoids, terpenoids and cannabinoids, he explains). He describes Vintage Foods as a “fledgling pharmaceutical company,” which underscores that its potential customers aren’t druggies, but patients: people with serious illnesses. They’re not interested in getting high, Kimmel says — “they want to get better.”

But whether Kimmel will realize his professional ambition is still unclear. By the end of next month, the Connecticut Department of Consumer Protection will distribute licenses approving the state’s first medical marijuana production facilities and dispensaries. Competition is steep. Of the 16 companies that hope to become producers, the Hartford Courant has reported that likely three will receive approval. Just three to five dispensaries will open from among the 21 businesses applying.

For most applicants, this round of vetting is yet another hurdle. Connecticut’s medical marijuana laws are some of the nation’s strictest, which has irrevocably altered the experiences of industry business owners in the state. Other difficulties, often rooted in the stigma surrounding pot, can similarly complicate the market.

Understood fully, efforts to legalize medical — even recreational — marijuana are best understood as stories of economics and politics, science and health care. There is also real emotion at their center: not only that of patients and caregivers, but also farmers, pharmacists and entrepreneurs, many of whom have hinged future and fortune alike on a recent wave of marijuana-related economic activity known popularly as the green rush.

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A century ago, marijuana was just a plant.

In colonial times, hemp was as ubiquitous as churned butter. The Virginia Colony grew cannabis by the bushel, and both George Washington and Thomas Jefferson cultivated the crop at their estates. Its use climbed steadily throughout the next two centuries, according to Martin A. Lee’s “Smoke Signals: A Social History of Marijuana.” Hemp-based tinctures and elixirs, once popular folk remedies, moved into the mainstream, and in 1854, Indian hemp made its first appearance in the U.S. Pharmacopeia, providing some evidence of medicinal use. Then, three years later, The New York Times dubbed hashish a “fashionable narcotic.”

But the good vibes wouldn’t last forever. Around the turn of the century, the American public soured to marijuana use. A variety of hypotheses have since formed: a surge in anti-immigrant racism, suggests Lee the author; William Hearst and the plastic lobby, explains Kimmel the grower; the ubiquity of “Reefer Madness”-style propaganda, goes another popular theory. Around that time, the ladies of the Meriden, Connecticut women’s club could even attend a community meeting on the so-called “menace of marijuana,” according to ad copy in The New York Times.

In 1937, Congress passed the “Marihuana Tax Act,” effectively banning cannabis. Public opinion would shift yet again, at least in favor of medical marijuana. In particular, the AIDS crisis catalyzed a generation of patients and activists eager to use cannabis for palliative care. California became the first state to legalize medical marijuana in 1996. Now, 20 states and Washington, D.C. have medical programs, and recreational pot is now famously legal in Washington State and Colorado.

Connecticut is a far cry from Colorado. In fact, the Constitution State has been relatively conservative in its path toward medical marijuana, which came to Connecticut in 2012: six years after Rhode Island; two since D.C.; one after Delaware.

In May 2012, the state legislature legalized medical marijuana. That October, patients could register for licenses, but the path to establish a regulatory framework for growing and selling took much longer. Applications for producers and dispensary facilities did not open until September 2013.

From the start, state officials had emphasized the program’s strict limitations, arguing that such guidelines were critical protection against a marijuana free-for-all. In a June 2012 press release, Governor Dannel Malloy wrote that he did not want Connecticut to “follow the path” of states with medical programs that “essentially legalized marijuana for anyone willing to find the right doctor and get the right prescription.”

In other words, Connecticut was no Colorado — and it wouldn’t be California, either.

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Under no interpretation is the term “medical” a euphemism in Connecticut law. According to Morgan Fox, the communications manager at the Marijuana Policy Project, the state’s rules concerning patients are among the “most restrictive” in the nation.

Under Connecticut law, patients must be over 18. They must reside within the state, and they must not be incarcerated. Most importantly, they must suffer from one of 11 pre-approved medical conditions, which range from post-traumatic stress disorder to cancer to epilepsy. Connecticut’s list of eligible ailments is comparatively slim. In Illinois, a state also currently in the process of establishing its medical program, patients with any one of 30 medical conditions are eligible. Connecticut law also prevents patients from growing their own marijuana, which is permitted in many other states with medical programs.

Like the people they serve, Connecticut’s producers and dispensaries will be heavily regulated. As they prepare to open this spring, businesses will face a host of restrictions governing products (no THC-spiked candies or chocolates); packaging (must be child-resistant); and even advertising (pot leafs okay, unless on building exteriors or illuminated signs).

Just entering the market is a challenge. Hefty fees, including a non-refundable $25,000 application fee for producers, priced out many potential business owners. Individual towns, which are not required to consider or permit applications from businesses in the marijuana industry, also proved a particularly powerful roadblock. Statewide, cities have banned or denied en masse applications from potential producers and dispensary owners. Some local officials have cited the relative newness of the medical program as justification. Others have expressed caution regarding its opposition to federal law. The Drug Enforcement Agency still classifies marijuana as a Schedule I drug with “no currently accepted medical use.”

“There’s always going to be a conflict between patients who want to have increased access and people who are afraid of medical marijuana being abused,” says the Marijuana Policy Project’s Fox. Citizens and local governments should have “some say” in determining the kinds of businesses permitted in their communities, Fox maintains. But he adds that in many cases, residents base their decisions on “misconceptions about both medical marijuana itself and the nature of the industry.”

“It really comes down to whether or not people really want to take medicine away from seriously ill people, and when you put it in those sorts of terms, people really start second-guessing the local bans,” Fox explains. “Once they start seeing the tax revenue that comes from allowing the marijuana industry to operate within their borders, they’re going to start changing their tunes really quickly.”

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There’s a lot of money in medical marijuana, but most of it is to be found elsewhere. According to Marijuana Business Daily, a leading industry journal, Connecticut’s market will total “$6 million to $10 million annually in revenues” once facilities finally open. Those sums are small potatoes compared to profits out in Colorado, where recreational pot sales exceeded $5 million within the first week of 2014.

According to Brendan Kennedy SOM ’05, cannabis should be treated as a “mainstream product consumed by mainstream people.”  Kennedy is the CEO of the Seattle-based Privateer Holdings, a private equity firm dedicated exclusively to what’s billed as the “cannabis space.” In other words, it’s the Blackstone of bud. Founded in 2010, its roots, in part, are in Connecticut; Kennedy and his co-partner, Michael Blue SOM ’05, are Yalies, have Connecticut investors and “pay close attention” to the goings-on in the state.

Alongside growers and business owners, the firm, with its sleek professionalism, suggests another kind of green rush career path. The proliferation of consulting firms, financial organizations and even start-ups within the marijuana industry speaks to a corporatization of cannabis possible only in a nation with rapidly changing drug mores. Marijuana, says Kennedy, is “no longer a subculture,” as evidenced by the proliferation of new products, from high-end vaporizers to innovative marijuana edibles.

“It’s a giant experiment in democracy,” says Kennedy of the many different medical marijuana laws across the country. He adds that it will be “interesting to see how the Connecticut experiment plays out.”

The latest stage in the waiting game is almost over, when applicants will learn the fate of their prospective businesses. For these entrepreneurs, the politics of marijuana remains personal. Vintage Foods founder David Kimmel says he’s at the “edge of his seat” waiting for word about his application. If this facility falls through, he’ll probably explore the hemp seed business. “One ounce of hemp seed is ten grams of vegetarian protein,” he says, which means that the curious seed is another superfood worth making into medicine. The medical marijuana market remains his first choice, but the green rush doesn’t have room for everyone — especially in Connecticut.

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