Pubdate: Sun, 27 Dec 2015
Source: Washington Post (DC)
Copyright: 2015 The Washington Post Company
Contact:  http://www.washingtonpost.com/
Details: http://www.mapinc.org/media/491
Author: Fenit Nirappil

BUSINESSES SEEK NOVEL PARTNERS IN MARIJUANA

Small Town Will Share in Pot Company's Profits

At least two Maryland state universities are jumping at the chance to 
work with marijuana growers to research the medicinal application and 
cultivation of cannabis. A tiny Western Maryland town says it would 
happily accept a 5 percent share of profits from a company that hopes 
to operate there.

As competition to join Maryland's burgeoning medical marijuana 
industry intensifies, some out-of-state entrepreneurs are forging 
partnerships with local institutions even before securing a license to operate.

The entrepreneurs say it is better to be a pillar of the community 
than a pariah. And while Maryland's top cannabis regulator says 
community engagement efforts will not give applicants an edge in 
landing one of the 15 highly coveted growing licenses, she also says 
that such partnerships can't hurt.

"It's not an element that's formally weighted in the application, but 
it helps them in their communities and local governments," said 
Hannah Byron, executive director of the Maryland Medical Cannabis 
Commission. "It makes good business sense."

State regulators plan to start distributing licenses to marijuana 
growers and processors in the summer, with medical cannabis probably 
becoming available by early 2017.

Peak Harvest Health, which has secured a 152,000-square-foot 
warehouse in Western Maryland, has announced a research arrangement 
with Frostburg State University. Ethan Ruby, the company's chief 
executive, who operates a growing plant in Connecticut, says working 
with the local university is part of being a good neighbor.

"Unfortunately, there' s a stigma attached to this industry and 
people who are operating in it that does need to be changed," Ruby 
said. "You want to have a host community that is understanding what 
you are doing and welcoming of the idea."

Maryland universities would be among the first in the nation to 
partner with marijuana businesses for research purposes, industry veterans say.

Universities have been wary of joining such efforts, concerned about 
running afoul of federal prohibitions on using marijuana and losing funding.

Schools in Colorado and Oregon, states where recreational use of 
marijuana is legal, have prohibited cannabis research. There are 
cannabis research programs run by state health departments, while a 
program at the University of California relies on marijuana provided 
by the federal government.

"We obviously have examples of universities being very uncomfortable 
with those sort of relationships, largely out of self-preservation," 
said John Hudak, a governance studies fellow at the Brookings 
Institution who has tracked the issue.

Any research conducted at Frostburg would be contingent on Peak 
Harvest getting a license to grow and would have strings attached. 
Cannabis wouldn't be allowed on campus grounds, nor could the 
university bring specialized equipment to Peak Harvest facilities. 
Students would not be allowed to do internships for academic credit.

"We are trying to navigate some very muddy water," said Joseph 
Hoffman, dean of Frostburg's College of Liberal Arts and Sciences.

On the other side of the state, the University of Maryland Eastern 
Shore has signed an agreement with grower Wellness Farms to research 
topics of mutual interest, from developing new strains of cannabis to 
preventing youth use. Dominick Murray, a university administrator who 
oversees business partnerships, says the legal questions will be 
sorted out down the line, if Wellness Farms is granted a license.

Jason Walsh, an Illinois-based consultant, is chief executive of 
Wellness Farms, which has eight marijuana business licenses in other 
states. He says the university partnership is part of a broader 
strategy to positively impact the struggling Somerset County region.

"Our philosophy was to pick one of the most impoverished communities, 
where we felt like we could make the biggest difference," Walsh said. 
"Make no mistake, there's a lot of money at stake, but we are in it 
for right reasons."

Wellness Farms is also partnering with McCready Health, which 
operates the region's only hospital, to expand health-care access. 
Walsh has floated the idea of helping the health company operate a 
van that goes to rural stretches of the county to offer preventive 
disease screenings. The van would not offer medical cannabis.

Most marijuana growers boast about the jobs and tax revenue their 
business would bring to a community. Arizona-based Harvest Inc. is 
going a step further by actually offering a share of its potential 
profits to the town where it hopes to set up shop.

Hancock, Md., (population 1,500) would have a 5 percent stake in any 
growing, producing or dispensary facility that ends up licensed by 
the state. Steve White, the company's chief executive, said the 
arrangement was crafted so the town would not have a voting share in 
a company engaged in activity that the federal government still 
considers illegal, but would receive 5 percent of future annual 
profits and proceeds if the company is sold.

"We wanted to forever put to bed fears that people had about our 
commitment to the town, so we permanently tied ourselves to the 
town," White said.

Hancock officials say they were happy to welcome the company and its 
jobs without the stake, which ended up more as a sweetener. The offer 
initially raised eyebrows but passed legal vetting.

"It could be significant dollars down the road for our little 
community," Hancock Mayor Dan Murphy said. "It's the same as Bayer 
moving to make aspirin tablets in Hancock."

Cannabis advocates and business insiders say partnering with 
community institutions are an important way of legitimizing their 
industry. Casinos also have forged profit-sharing arrangements with 
the jurisdictions where they locate, for some of the same reasons.

"When you have a controversial business, it changes the way people 
think about it," said Tinglong Dai, an assistant professor at Johns 
Hopkins Carey Business School.
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MAP posted-by: Jay Bergstrom