Maine’s Marijuana Dispensaries: Profiteering ‘Nonprofits’?


Maine’s new voter-approved medical marijuana dispensaries are expected to make cannabis more accessible to disabled and ill patients — but making it reasonably priced may be another matter.

​Concerns about affordability are arising as the state’s state-licensed dispensary operators have set their prices high, in what they claim is an effort to prevent resale on the streets.

The newly licensed dispensaries in Maine have revealed they plan to sell their cannabis for $300 to $400 an ounce, comparable to California dispensary prices, reports John Richardson at The Portland Press Herald.

At those prices, a typical patient with cancer or multiple sclerosis could easily spend $500 to $600 or more each month just to relieve symptoms — with a medication that is not covered by insurance.
“I think $300 and $350 is way too much for a weed that can grow outside,” said Andrea DiAnni, a southern Maine resident who uses medical marijuana to treat nausea and pain from a chronic illness. “I know what it’s like to have to go without medication (because) there were times I couldn’t afford it.”
Dispensary operators claim the reason is what lower prices — say, $100 or $200 an ounce — would encourage patients to sell excess marijuana on the black market.
“There is an unfortunate fact that there is still this black market for this commodity,” said Rebecca DeKeuster, chief executive officer of the Northeast Patients Group, which plans to set up dispensaries in Portland and three other Maine communities this fall.
“If our prices are too low, it encourages diversion,” DeKeuster said.
But patients in other states say that affordable prices haven’t resulted in any such problems.
“Here in Washington where you can go into a patient collective to access medicine, it’s available for $200 to $280 an ounce, and I don’t think we are seeing the kinds of problems that are mentioned,” said Seattle-area patient Allison.
“Where is the compassion?” Allison said. “I’m so glad I live in Washington, and want to thank all the providers in our state that have worked hard to provide quality medicine for under $300 an ounce.”
Some have argued, in fact, that high dispensary prices — not low ones — will encourage people buy the drug illegally on the street. Patients who buy legally from a dispensary also have to pay for a doctor’s visit for their authorization, and have to pay a $100 annual “registration fee” to the state of Maine.
Dispensaries are required to incorporate as nonprofits. But that doesn’t mean they are charities, or that they can’t make lots of money, reports John Richardson of the Maine Sunday Telegram. It doesn’t even mean they have to reveal the salaries paid to officers and directors.

“I think the term nonprofit is often misunderstood,” said Rob Levin, a Portland, Maine-based attorney specializing in nonprofit law. “I have no idea what the Legislature had in mind, but it wouldn’t surprise me if more oversight was envisioned than what is required under (Maine law).”

Photo: Maine Senate
Sen. Stan Gerzofsky: “We expected total transparency”

​Public oversight is exactly what state officials wanted when they included the nonprofit requirement, according to Sen. Stanley Gerzofsky (D-Brunswick).
“We expected total transparency,” Gerzofsky said. “We talked about it. We would want to make sure they were truly nonprofit and not ‘nonprofit’ in name only.”
Gerzofsky and other officials now say the rules may need to be clarified.
The dispensaries are incorporated as nonprofits under Maine Title 13-B, which specifies they cannot give out profits in the forms of dividends or shares, and that salaries must be “reasonable.”
“Nonprofit doesn’t mean you can’t make a profit; it means the profit has to stay with the organization… or with another nonprofit,” Levin said.
Maine’s marijuana dispensaries are incorporated not as charitable nonprofits (like homeless shelters and fire departments), but rather mutual benefit nonprofits, in the same category as condominium associations or private golf clubs.
They have to meet fewer requirements, therefore, and because they are not seeking any charitable tax exemptions, they do not have to disclose salaries or other financial details under Maine law.
Even if the Maine Attorney General’s office gets complaints that a mutual benefit nonprofit is overpaying its president or board of directors, the state considers that a civil matter for the members or customers to sort out.
Attorney Levin said the existing nonprofit requirement imposes more limits on profiteering than dispensaries face in some other states, even though it may not be exactly what lawmakers had in mind.

Photo: Kevin Bennett
Jonathan Leavitt: “Anybody providing patients marijuana at $400 an ounce needs to get out of the business of working with patients”

​Jonathan Leavitt, who led the referendum effort last fall which legalized marijuana dispensaries in Maine, said the ability to see the financial details is critically important.
“We need to have some guarantees in place that if this is medicine, that it’s working for the patients and not for the shareholders and investors,” Leavitt said. “The best way we can guarantee that this is working for the patients is to continue to open up the process.”
Operators of the newly licensed dispensaries said they expect the state to demand transparency, and will comply.
“It remains to be seen what the state might require,” said Tim Smale, president of Remedy Compassion Center, which is expected to open in Wilton, Maine.
“These nonprofits need to operate in full public view and we need to make sure that we’re serving patients,” Smale said.
Smale is projecting a price of $400 per ounce at his dispensary in the first year of operation, but estimates prices will decline to $324 by the third year as start-up costs decline and sales grow.
Smale said Remedy Compassion Center will also offer discounts, or even donated medicine, for patients who can’t afford those prices.
Some hope that market competition among the eight licensed dispensaries — along with more patients growing their own or getting cannabis from small-scale caregivers — will help cause prices to go down.
“With multiple dispensaries and a multitude of options outside of dispensaries, these dispensaries are going to have no choice but to offer reasonable prices,” Leavitt sai
“Anybody providing patients marijuana at $400 an ounce needs to get out of the business of working with patients,” Leavitt said. “I think the numbers should come in significantly lower than that.”