Regulators express concerns that state is 'setting up these cultivators for failure,' though the state now has 19,161 medical marijuana patients, a 17 percent increase from one year ago.

PROVIDENCE, R.I. — More than 8,430 pounds of marijuana have been produced and sold through the state's medical marijuana dispensaries and cultivators this year, translating into some $27 million in retail sales.

Nearly one-quarter of that marijuana was grown by the state's new cultivators — licensed businesses only allowed to sell the drug to the state's three dispensaries. To date, 18 such businesses have been approved to operate in the the state, according to data from the state Department of Business Regulation.

Dozens more are waiting in the wings for their chance to get into the burgeoning industry.

Forty applicants have passed the first stage of the process but are still awaiting a license, and another 53 applicants are behind them in the pipeline. The state has collected nearly $1 million in licensing and application fees from these new marijuana-growing businesses.

"It seems a large number of cultivators. That's always been my concern ... we're setting up these cultivators for failure," Rep. Scott Slater, D-Providence, said at a meeting of the state's medical marijuana oversight commission Tuesday.

The number of marijuana-growing businesses would make sense, Slater said, in a recreational marijuana market. But in the state's current setup, he hypothesized that many will fail. Greenleaf Compassionate Care Center in Portsmouth and Summit Medical Compassion Center in Warwick together have purchased roughly half of the medical marijuana sold this year from cultivators. The state's largest dispensary, the Thomas C. Slater Center in Providence, has not purchased any marijuana from cultivators.

Norman Birenbaum, the state's top medical marijuana regulator, said the state hopes that for safety and quality-control reasons eventually more patients will shift from growing marijuana in their homes to buying it from dispensaries. There are currently more than 61,500 marijuana plants being grown in the state by medical marijuana patients and caregivers.

Meanwhile, the state now has 19,161 medical marijuana patients, a 17-percent increase from one year ago. The number of patients in the program typically grows between 20 percent and 30 percent each year. Roughly 65 percent of patients qualify with severe, debilitating or chronic pain.

But Birenbaum agreed that many cultivators will potentially fail. The state chose not to cap the number of cultivators, in part because doing so would require a competitive evaluation process for applications that almost inevitably would end up in court and could have resulted in shortages in the supply of medical marijuana.

Dr. Todd Handel, a physician who sits on the oversight panel, questioned what the state is doing to control the profit margins of the state's dispensaries, which are state-registered nonprofits.

Birenbaum cautioned against making generalizations about the dispensaries' profits. He noted that the dispensaries cannot take many normal business deductions on their taxes because the federal government still considers selling marijuana to be illegal. He also noted the significant costs of growing marijuana.

The average wholesale price of medical marijuana produced by the licensed cultivators is $4.16 a gram, according to state data. An average retail price was not available because some marijuana flower is turned into other products such as edibles and oils that are not sold in a form measurable by grams.

Still, it's clear there is a markup. On Tuesday, Greenleaf was offering three strains grown by cultivators for $15 a gram.

— jbogdan@providencejournal.com

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On Twitter: @JenniferBogdan