Should you establish a medical marijuana dispensary?


If your inner entrepreneur is hollering to get out, maybe you should go for it.

I know the exact moment my inner entrepreneur roared into life. It was Sunday evening, Oct. 21, 2012. I was watching a segment on 60 Minutes about the medical marijuana industry in Colorado.

I’ve been interested in the medicinal benefits of botanicals since learning about them in pharmacy school. So I paid attention when California became the first state to legalize the medical use of cannabis in 1996. I continued to take notice as more states passed medical marijuana legislation.

However, the 60 Minutes segment inspired me to turn my interest into a business. I decided to apply for one of 60 licenses to open and operate a medical marijuana dispensary in my home state of Illinois as soon as they become available in 2014.

That was my first step into an exciting new industry.

Many other steps had preceded it. I’m a registered pharmacist with an MBA and more than 15 years of pharmacy and business experience. I’ve held senior director of pharmacy positions with major procurement and distribution companies. I have a passion for sales, marketing, negotiations, business development, and relationship management, and have used my entrepreneurial spirit to create new business lines, call centers, retail outlets, and services - all for other people.

I decided those days were over.

Industry challenges

Opening any new business, even in a mature industry, is complicated. However, opening a medical marijuana dispensary in a brand-new industry with significant challenges goes beyond complicated. Here are a few reasons:

  • Even in states that have legalized medical marijuana, licensed and registered medical marijuana growers, distributors, and patients are breaking federal laws under the Controlled Substances Act every day.

  • Because of warnings from the U.S. Justice Department, banks are reluctant to open bank accounts for or lend money to legal medical marijuana businesses.

  • By enforcing section 280E of the tax code, the IRS denies legal medical marijuana companies the ability to take standard business deductions on their federal taxes. It’s difficult to find investors for companies that can be audited and taxed out of existence.

  • There are no consistent standards, rules, or regulations for any aspect of the medical marijuana business. The conditions it can be used for, the amount of drug a patient can possess, where it can be cultivated – these considerations and more vary wildly from state to state.

  • Beginners should expect to go to more meetings and hearings than they could ever imagine with people and agencies they never heard of before. This business requires networking on steroids.

  • Many of the cultivators (i.e., suppliers) are less than reliable.

  • There are legions of people who claim to know how to help business owners and who are more than happy to take their money. Very few people actually know anything and are able to provide good counsel. Finding them is a bear.

A growing industry

In spite of substantial roadblocks, state legislatures continue to pass laws legalizing medical marijuana. They want - and need - the tax revenue and jobs.

Forbes estimates that the medical marijuana market was worth $1.7 billion in 2011 and expects it to be a $9 billion industry. That doesn’t count revenue from recreational use.

There may be more than 2.4 million medical marijuana patients currently registered in the United States. Forbes suggests that there may be 24.8 million potential patients.

Obvious candidates

The more I learn about the circumstances and challenges connected with dispensing medical marijuana, the more convinced I am that pharmacists are the best candidates to own and operate dispensaries.

We have the training, skills, experience, and patient-focused mindset. We are accustomed to adhering to regulations. We already know how to protect children, create a safe and secure environment, deal with difficult suppliers, maintain quality and inventory controls, educate patients, comply with rules and laws, and more.

In Connecticut, patients can obtain medical marijuana legally only from dispensaries licensed by the state, and only licensed pharmacists can apply for and obtain a dispensary license. The Connecticut statute also reclassified marijuana as a schedule II substance.

Whether other states and their regulatory agencies use Connecticut as a guide or not, they should at least enlist pharmacists to help them develop rules, standards, and practices.

The National Association of Specialty Pharmacy, NASP, has established a task force to explore - and help its members capitalize on - the opportunities offered by medical marijuana. Certification and insurance reimbursement are two of the items on the task force’s extensive agenda.

Some history

Marijuana in various forms has been used for medicinal, religious, and ceremonial purposes - and probably for recreational purposes as well - for thousands of years.

Marijuana is thought to have been cultivated since the dawn of agriculture 10,000 years ago. The pharmacopeia of Chinese Emperor Shen Nung, who lived circa 2,700 B.C., recommends marijuana use to treat more than 100 ailments.

Colonial Americans were ordered by the king of England to raise marijuana for export. George Washington grew marijuana at Mount Vernon.

In the United States, the criminalization of marijuana began in the 1930s. Recreational use had skyrocketed during Prohibition, during the years 1920 to 1933. Although opposed by the American Medical Association, Congress passed the Marijuana Tax Act in 1937. Possession of marijuana for recreational use became illegal for the first time, and an excise tax was imposed on cannabis for medical and industrial uses.

The U.S. Supreme Court declared the 1937 law unconstitutional in 1969. The government countered by passing the Controlled Substances Act in 1970, claiming that marijuana has no medicinal applications, is unsafe, and has a high potential for abuse.

Marijuana was thereby declared a schedule I substance. Doctors are not allowed to prescribe marijuana; they can only “suggest” it. Pharmacists endanger their licenses if they have marijuana on site.

However, as of October 2013, medical marijuana is legal in 20 states and Washington D.C., and more states are considering legalization. Washington and Colorado have already legalized its recreational use.

Classification challenges

People have been challenging the classification of marijuana for years. In August 2013, Sanjay Gupta, a respected neurosurgeon, chief medical correspondent for the CNN media network, and 60 Minutes correspondent, joined their ranks.

In an essay for CNN, Dr. Gupta publicly apologized for his previous opposition to medical marijuana. He explained that his research has proved to him that there never had been any scientific basis for the government’s claims. He went on to say that he was sorry for his part in helping the government mislead the American people for decades.

Gupta stated that many clinical studies have established that marijuana has "very legitimate medical applications” and “doesn’t have a high potential for abuse. In fact, sometimes marijuana is the only thing that works."

Medical benefits

Reliable scientific studies by reputable organizations and universities have proven over and over again that marijuana can:

  • Alleviate chronic pain, especially nerve pain caused by diabetes, amputation, HIV, AIDS, multiple sclerosis, and hepatitis.

  • Lower intra-ocular eye pressure caused by glaucoma.

  • Relax muscle tension, decreasing muscle spasms and reducing shaking caused by multiple sclerosis and other neuromuscular disorders.

  • Act as an anti-nausea and anti-vomiting agent, especially for people receiving chemotherapy.

  • Stimulate the appetites of people with AIDS, cancer, and eating disorders.

  • Relieve acute anxiety, insomnia, and other sleep disorders.

Researchers continue to discover and confirm additional medicinal uses for marijuana. For example, marijuana may have properties that enable it to starve cancer tumors.

Catch-up needed

A recent Gallup poll showed that 58% of Americans believe that marijuana use should be legal. The federal government’s resistance to public sentiment and scientific proof is crumbling slowly.

On August 29, 2013, U.S. Attorney General Eric Holder announced that the Department of Justice would no longer enforce federal marijuana laws in states where marijuana use by adults is legal. Although he directed this statement to Washington and Colorado, it is seen as a major policy shift.

At the same time, Holder warned that states must have - and enforce - “robust controls and procedures” or face the risk of renewed federal enforcement. For example, states must prevent marijuana distribution to minors, ensure that criminals and gangs do not receive revenue from marijuana sales, and prevent marijuana from being sent to other states where it is not legal.

A 2010 memo sent by the IRS reminded the members of Congress that section 280E makes no exception for “medically necessary marijuana.” Congress needs to amend the code and exempt medical marijuana – at least in states that have legalized it. That action would finally allow legal and licensed medical marijuana companies to deduct standard business expenses on their federal taxes.

So far, all such bills submitted to Congress have died in committee.

The vision

I have no idea whether I will be granted a license to open a medical marijuana dispensary in Illinois. But that doesn’t stop me from imagining my one-of-a-kind, state-of-the-art dispensary.

My dispensary will be welcoming, patient-focused, and safe, and will be in strict compliance with all rules and regulations. It will offer various forms of medical cannabis, along with ancillary services and homeopathic remedies. There will be a comfortable seating area dedicated to patient and community education. There will be written material and touch screens to help patients access the latest information.

If your inner entrepreneur is clamoring to be set free, consider establishing a medical marijuana dispensary. It’s a challenging and exhilarating new field - and a perfect choice for pharmacists.

Joseph Friedman is a registered pharmacist with extensive corporate and retail experience. He received a B.S. degree in pharmacy from the College of Pharmacy, University of Illinois – Chicago and an MBA from Lake Forest Graduate School of Management. Contact him at


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