TheTimesTribune.com, Corbin, KY

Community News Network

May 13, 2014

Cashing in on pot market proves a pipe dream for traditional pharmacies

NEW YORK — Americans seeking medical marijuana for anything from pain to seizures must turn to a patchwork of small startups for help as U.S. laws keep traditional pharmacies out of a market that may exceed $6 billion by 2019.

While more than 21 states have legalized pot for medicinal use, the drug remains illegal under federal law and banks are hesitant to accept money from its sale. That's keeping drugstore chains CVS Caremark, Walgreen and Rite Aid, out of the market, leaving local entrepreneurs in control.

"We aren't going to see a big guy enter this market within the next few years," said David Yang, an analyst with research firm IBISWorld. "There are just too many regulations and too many elements that make this impossible for them."

In one state alone, Colorado, more than 400 companies are licensed as medical marijuana centers, with government officials predicting sales there could soon reach $1 billion. For Colorado businessman Kayvan Khalatbari, a former electrical engineer who started his business with just $4,000, federal limitations on the drug are a major benefit.

Khalatbari, who has poured $500,000 into pot production and $150,000 into a store, started in the industry by delivering medical marijuana door to door. This year, he expects sales of almost $2 million, which may rise to $5 million once he can also begin selling the drug commercially under Colorado law, he said.

"We're making money, we're employing people, we're being a beacon of light for this industry and showing it can be done professionally," Khalatbari said in a telephone interview. "That to me is a success."

Traditional pharmacies, meanwhile, face a hurdle that keeps them from competing with entrepreneurs like Khalatbari. Even though almost half of states and the District of Columbia accept the drug's use for medical purposes, marijuana isn't deemed legal by the federal government. The drug is classified as a Schedule I controlled substance, defined as having a high potential for abuse with no accepted medical use.

Schedule 1 drugs, which includes heroin, can't by law be prescribed or dispensed. Pharmacies must register with the U.S. Drug Enforcement Agency to dispense controlled substances, making it illegal for them to sell medical marijuana.

Walgreen, Rite Aid and CVS said in separate statements they have no plans to sell medical marijuana. Doing so, according to CVS spokeswoman Carolyn Castel, would violate the company's registration with the DEA.

 That may change if the U.S. Congress sees taxes on the drug as a way to raise money, said Brad Barker, an analyst with Bloomberg Industries in New York.

 "The second this is legalized they will start rolling out the marijuana cigarettes the next day," Barker said. "I think the same thing can be said with everything else. Then you'll have all the big boys jumping into this space."

More pharmacies would sell medical marijuana if drug companies created cannabis products that can be approved by federal regulators, like drugs or tobacco products, said Mark Kleiman, a professor of public policy at the University of California at Los Angeles School of Public Affairs.

"It's not drug stores that have to make these decisions, its pharmaceutical companies that have to decide if they want to make cannabis products," Kleiman said in a telephone interview. Eventually, that could fuel a "big threat to the medical dispensary business model."

Existing pharmaceutical cannabis products include Marinol, a prescription pill made with synthetic cannabinoid for uses including treating nausea associated by chemotherapy, sold by AbbVie, and Sativex, a spray form of marijuana produced by GW Pharmaceuticals, a Britain-based medical marijuana research and development company. Sativex isn't available in the U.S.

Shareholders are already investing in publicly traded marijuana companies like GW Pharmaceuticals and Advanced Cannabis Solutions, a company that leases growing facilities to licensed growers and dispensaries. Barker said he's tracking 160 public marijuana companies.

American depositary receipts for GW Pharmaceuticals have increased more than sevenfold in the past 12 months to $69.77, raising the company's market capitalization to $1.24 billion. Shares of Colorado Springs, Colorado-based Advanced Cannabis Solutions, with a market value of about $210 million, has risen more than ninefold to $15.75.

Next Gen Metals Inc., a mineral exploration company, is among the investors preparing to put private capital into marijuana startups.

"You can certainly believe the large industries, the large pharmaceutical companies, that they're looking into it," Jay Oness, Next Gen's chief operating officer, said. "When the time is right, I'm positive they'll want to be a part of it either through acquisitions or by themselves."

Until legalization or more products are marketed by pharmaceutical companies, it will be an industry dominated by small dispensaries set up to serve about 1.4 million medical marijuana cardholders using the drug to treat their symptoms.

Three states allow medical marijuana companies to make a profit from the sale of pot. The remaining 18 states that approve of the use of medical marijuana require distribution only by nonprofit organizations and cooperatives, according to the Marijuana Policy Project.

         

1
Text Only
Community News Network
  • Dangerous Darkies Logo.png Redskins not the only nickname to cause a stir

    Daniel Snyder has come under fire for refusing to change the mascot of his NFL team, the Washington Redskins. The Redskins, however, are far from being the only controversial mascot in sports history.  Here is a sampling of athletic teams from all areas of the sports world that were outside the norm.

    July 28, 2014 3 Photos

  • 'Rebel' mascot rising from the dead

    Students and alumni from a Richmond, Va.-area high school are seeking to revive the school's historic mascot, a Confederate soldier known as the "Rebel Man," spurring debate about the appropriateness of public school connections to the Civil War and its icons.

    July 28, 2014

  • Fast food comes to standstill in China

    The shortage of meat is the result of China's latest food scandal, in which a Shanghai supplier allegedly tackled the problem of expired meat by putting it in new packaging and shipping it to fast-food restaurants around the country

    July 28, 2014

  • wd saturday tobias .jpg Stranger’s generosity stuns Ohio veteran

    Vietnam War veteran David A. Tobias was overwhelmed recently when a fellow customer at an OfficeMax store near Ashtabula, Ohio paid for a computer he was purchasing.

    July 28, 2014 1 Photo

  • Screen Shot 2014-07-28 at 1.33.11 PM.png VIDEO: High-dive accident caught on tape

    A woman at a water park in Idaho leaped off a 22-foot high dive platform, then tried to pull herself back up with frightening results. Fortunately, she escaped with only a cut to her finger.

    July 28, 2014 1 Photo

  • CATS-DOGS281.jpg Where cats are more popular than dogs in the U.S.-and all over the world

    We all know there are only two types of people in the world: cat people and dog people. But data from market research firm Euromonitor suggest that these differences extend beyond individual preferences and to the realm of geopolitics: it turns out there are cat countries and dog countries, too.

    July 28, 2014 1 Photo

  • How spy agencies keep their 'toys' from law enforcement

    A little over a decade ago, federal prosecutors used keystroke logging software to steal the encryption password of an alleged New Jersey mobster, Nicodemo Scarfo Jr., so they could get evidence from his computer to be used at his trial.

    July 25, 2014

  • Russia's war on McDonald's takes aim at the Filet-o-Fish

    Russia said earlier this week that it had no intention of answering Western sanctions by making it harder for Western companies to conduct business in Russia.
    But all bets are off, apparently, when you threaten the Russian waistline.

    July 25, 2014

  • cleaning supplies Don't judge mothers with messy homes

    I was building shelves in my garage when a neighbor girl, one of my 4-year-old daughter's friends, approached me and said, "I just saw in your house. It's pretty dirty. Norah's mommy needs to clean more."

    July 25, 2014 1 Photo

  • Arizona's prolonged lethal injection is fourth in U.S. this year

    Arizona's execution of double-murderer Joseph Wood marked the fourth time this year that a state failed to dispatch a convict efficiently, according to the Constitution Project, a bipartisan legal group.3

    July 24, 2014

Front page
NDN Video
'Hunger Games: Mockingjay Part 1' Sneak Peek GMA: Dog passes out from excitment to see owner Chapter Two: Designing for Naomi Watts Baseball Hall of Famers Inducted Florida Keys Webcam Captures Turtles Hatching Morgan Freeman Sucks Down Helium on 'Tonight Show' Robin Wright Can Dance! (WATCH) She's Back! See Paris Hilton's New Carl's Jr. Ad Big Weekend For Atlanta Braves In Cooperstown - @TheBuzzeronFox Chapter Two: Becoming a first-time director What's Got Jack Black Freaking Out at Comic-Con? Doctors Remove 232 Teeth From Teen's Mouth Bradley Cooper Explains His Voice in 'Guardians of the Galaxy' Deja vu: Another NYPD officer choke-holding a suspect 'Fifty Shades of Grey': Watch the Super Sexy First Trailer Now! Reports: Ravens RB Ray Rice Suspended For 1st 2 Games Of The Season Air Algerie plane with 119 on board missing over Mali Diamond Stone, Malik Newman, Josh Jackson and others showcase talent Free Arturo - The World's Saddest Polar Bear A Look Back at Batman On Film Through The Years
AP Video
Raw: 2 Shells Hit Fuel Tank at Gaza Power Plant Raw: Massive Explosions From Airstrikes in Gaza Giant Ketchup Bottle Water Tower Up for Sale Easier Nuclear Construction Promises Fall Short Kerry: Humanitarian Cease-fire Efforts Continue Raw: Corruption Trial Begins for Former Va Gov. The Carbon Trap: US Exports Global Warming UN Security Council Calls for Gaza Cease-fire Traditional African Dishes Teach Healthy Eating 13 Struck by Lightning on Calif. Beach Baseball Hall of Famers Inducted Israel, Hamas Trade Fire Despite Truce in Gaza Italy's Nibali Set to Win First Tour De France Raw: Shipwrecked Concordia Completes Last Voyage Raw: Sea Turtle Hatchlings Emerge From Nest Raw: Massive Dust Storm Covers Phoenix 12-hour Cease-fire in Gaza Fighting Begins Raw: Bolivian Dancers Attempt to Break Record Raw: Israel, Palestine Supporters Rally in US Raw: Air Algerie Flight 5017 Wreckage
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Twitter Updates
Follow us on twitter
Facebook