Connecticut’s medical marijuana prices to be set by ‘competitive market’ Growers to offer quality, safety, state says

(Photo by Peter Hvizdak ó New Haven Register) David Lipton, left, and Marc Gare, both of Advanced Grow Labs, a successful applicant to produce medical marijuana in Connecticut, speak to the media after Gov. Dannel P. Malloy and Department of Consumer Protection Commissioner William M. Rubenstein announced last week that four applicants have been chosen as the first-ever producer of medical marijuana in Connecticut during a press conference at the future West Haven site of Advanced Grow Labs, LLC at 400 Frontage Road in West Haven. less (Photo by Peter Hvizdak ó New Haven Register) David Lipton, left, and Marc Gare, both of Advanced Grow Labs, a successful applicant to produce medical marijuana in Connecticut, speak to the media after ... more Photo: New Haven Register Photo: New Haven Register Image 1 of / 3 Caption Close Connecticut’s medical marijuana prices to be set by ‘competitive market’ 1 / 3 Back to Gallery

WEST HAVEN >> David Lipton has run businesses before, but launching a marijuana-growing operation is “something totally unto itself.”

Lipton, who Tuesday was awarded the rights to run one of four pot-production facilities in Connecticut, said this is different from “anything I’ve ever done in my life. … We’re really creating an industry.”

It’s an industry that is legal in 20 states and the District of Columbia, but only five, including Connecticut, do not allow home cultivation, requiring state-regulated growing sites and dispensaries, according to procon.org.

Lipton is managing partner of Advanced Grow Labs, which will emerge in an empty industrial space at 400 Frontage Road over the next 180 days. The company will sell cultivated marijuana flowers for smoking or vaporizing, as well as baked goods and probably tincture or extracted oil, also used in a vaporizer. There will “probably be a lot of cookies,” Lipton said.

One aspect that will be similar to other businesses is pricing. That will be set by the market, according to William Rubenstein, commissioner of the state Department of Consumer Protection.

“We’re hoping that a competitive market produces prices that are as close to the cost of production as we can get them,” Rubenstein said, although the four producers and three to five dispensaries — yet to be awarded — will be profit-making companies.

Compared with the black market, “We would expect prices to be lower” for a higher-quality, safer product —overseen by a “director of plant science” in Advanced Grow Labs’ case.

One big difference is financing. “There’s no banking. That’s still a way off in this industry,” Lipton said.

Possession and growth of marijuana, after all, is still against federal law.

According to a memorandum from Deputy Attorney General James M. Cole issued Aug. 29, 2013, the U.S. Justice Department is implicitly leaving medical marijuana growers alone, focusing on distribution to minors, “preventing revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels” and preventing marijuana from being used as a cover “for the trafficking of other illegal drugs or other illegal activity,” among other issues.

Tied for third

Rubenstein said the process of evaluating the 16 applicants included a scoring system that evaluated the companies’ business plans, locations, agricultural and production experience and other factors to be sure they will be viable.

(Advanced Grow Labs came in tied for third with Curaleaf in Simsbury, after Theraplant in Watertown and CT Pharmaceutical Solutions in Portland.)

Lipton wouldn’t disclose financial details but pointed out that “you have to park $2 million” in an escrow account. “That’s not even working capital.” Then there’s the expense of turning an empty warehouse-like space into an agricultural facility. “There’s a large capital investment,” he said.

Lipton said he got into the business when a friend, who was suffering from seizures, said his doctor suggested it as an up-and-coming venture. Lipton’s first choice was to run a dispensary, he said, “so this is kind of a double situation.” Advanced Grow Labs will cultivate a variety of strains of the drug, since some are better for a particular disease than others.

The General Assembly approved prescriptions for medical marijuana to treat 11 diseases, including HIV/AIDS, epilepsy, cancer, glaucoma and Parkinson’s disease.

Lipton, 45, of Westport, has been owner of family planning clinics that include abortion services and optometry shops. “I believe in health care and medical choice,” he said, admitting, “It’s something that ignites some people in a negative way.”

West Haven Mayor Edward O’Brien said that when the proposal came before the Planning and Zoning Commission, “a big concern of the residents was security.” He said, though, that it’s “pretty high-level security, pretty much the same we had up at Bayer,” the pharmaceutical company formerly situated on the West Haven-Orange line.

Rubenstein said the “fairly stringent security requirement” includes vaults and dual alarm systems, but not 24-hour manned security.

In July, the West Haven PZC gave unanimous approval. “The city of West Haven has just been excellent,” Lipton said. That wasn’t the case in Fairfield, where Lipton applied to run a marijuana dispensary and was rejected. He has an application with the state to open one of the dispensaries but wouldn’t say where it would be located.

If Lipton is awarded a dispensary license, he’ll have another set of rules to follow. Rubenstein said, according to law, each producer must sell its marijuana products to any dispensary at the same price, with no price discrimination. That competition among producers, and then among dispensaries, will be the main price-setting mechanism, Rubenstein said.

The three to five dispensaries will be awarded in the next two months, according to a DCP release, and they are likely to be scattered across the state. “Locations are more important to us (for dispensaries) than they are for producers,” because that’s where the 1,684 registered users, at last count, will go to buy their products.

The number of dispensaries could change too, Rubenstein said. “We’re taking a careful look at how quickly these numbers (of patients) are rising and accelerating,” he said.

“We’re also mindful of having dispensaries that are economically viable,” he said, though “it’s possible any business can fail.”

Research emphasis

Each producer has a slightly different focus. While Advanced Grow Labs’ response to the request for application relies heavily on the business experience of its principals, CT Pharmaceutical Solutions in Portland points to its “experience in research related to improving the consistency and efficacy of marijuana-based products.”

“Substantial research is needed to transform medical marijuana from an imprecise medication to one aligned more closely with conventional pharmaceuticals,” its response states. The company plans to commit 25 percent of net revenue to research and has hired Alan Shackelford of Denver, “a nationally recognized authority on the use of medical marijuana,” as director of research.

CPS’s operations manager is Andrew Bozzuto of the Northford section of North Branford, an organic farmer and owner of 3B Ranch. Bozzuto is also president of John’s Refuse and Recycling. His brother, Dennis Bozzuto, was sentenced to a year in prison for racketeering connected with the business, but Rubenstein said Andrew’s background check was clean.

“We didn’t find anything with regard to this individual that caused us concern,” he said. “Andrew’s record is clean under the checks that we have done.”

Bozzuto did not return calls seeking comment.

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