EDITOR’S NOTE: On Dec. 4, NJ Cannabis Insider hosts a networking event in Red Bank, featuring a key lawmaker and business leaders in the medical marijuana and legal cannabis industries. Tickets are limited.

Gov. Phil Murphy’s administration will help lower the cost of medical marijuana by requiring for-profit companies entering the market to show how they will cut prices before the the Health Department allows them to operate.

With premium dried weed costing as much as $500 an ounce and no insurance company willing to cover the expense, many of the state’s 60,000 registered patients struggle to pay for their medicine every month.

In an email sent Tuesday to New Jersey’s six nonprofit alternative treatment centers — the formal name for licensed growers and retailers in New Jersey — Assistant Health Commissioner Jeff Brown explained that if they apply to change their status to a for-profit venture, they’ll need to submit a plan explaining how they will cut costs and expedite the opening of new dispensaries.

“We want to see them accountable to what they pledge to do with these plans,” Brown told NJ Advance Media.

In July, Murphy signed a law that allowed medical marijuana providers to voluntarily switch from operating as a nonprofit to a for-profit. The nonprofit owners asked for the amendment because they have struggled to find investments and were forced to pay exorbitant interest rates on loans. Marijuana possession and distribution remains a federal crime, despite state law permitting it.

The six nonprofit operators must submit a “price-reduction plan,” a “mobilization plan” for every satellite location of the original six intends to open “quickly.” The principals in the new for-profit must also undergo a background check, according to the memo.

The department performed a cost analysis in its latest biennial report and found bud prices varied from $360 to $500 an ounce. There are seven retail dispensary locations operating across the state, serving a patient base that increases by about 2,000 a month.

On the black market, the average price of an ounce of marijuana is $298 for “medium quality” and $343 for “high quality,” according to priceofweed.com.

State Sen. Joseph Vitale, D-Middlesex, also recently said he’s drafting a bill that would enable state-funded programs to pick up some of the tab.

Prices are depressing sales, according to the report. Patients on average are buying a half-ounce every month, far less than the 2-ounce limit allowed at the time, the report said.

“For a patient in New Jersey, buying an ounce of whole flower per month without a discount could cost as much as $6,000 per year,” according to the report.

Gov. Phil Murphy’s administration in December granted permits for six new grower and retailers to join the market, but none has opened shop yet, citing issues with acquiring local approvals and securing financial backing.

On Monday, Compassionate Care Foundation in Egg Harbor took the first step in the process of becoming a for-profit by announcing its managing partner, Acreage Holdings, a national company, intends to acquire the business.

Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio. Find NJ.com Politics on Facebook

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