With Strict Regulation, Is Vermont's Medicinal Marijuana Program Viable?

Dec 7, 2016

When Vermont legalized medical marijuana sales, the new law put restrictions on the dispensaries that sold the product. And now some growers and distributors are having a hard time raising capital and meeting the challenges of running a business under such a restricted climate.

All of Vermont's medical marijuana dispensaries are closed to the public, and you have to be on the medical registry — and have a card — to even walk through the doors.

Shayne Lynn operates the dispensaries in Burlington and Brattleboro.

And now he's opened stores at both locations where the public can come in for products made from cannabinoid, or CBD. The product, made from hemp, is used as a digestive aid, a muscle relaxant and even in some cancer therapies. It's legal to grow hemp in Vermont, and so consumers can purchase CBD products without any special registration or card.

Lynn says it's one way to try to grow his business as Vermont's medical marijuana industry struggles to find the balance between healthy policy and a viable business model.

"We are trying to build an organization here, and we weren't seeing the growth that we had anticipated," Lynn says. "So we did see this opportunity with CBD, in that it's beneficial for a lot of people."

Related: Vermont Group Makes $250,000 Investment In Hardwick-Grown Hemp

When Vermont legalized medical marijuana dispensaries in 2011, the law required them to be run as nonprofits, which means the operators can't offer equity to investors — making it hard to raise capital.

And compared to other states, Vermont has a somewhat limited list of conditions that allow a patient to purchase marijuana. Further, Lynne says some doctors and potential patients are still shying away from using the therapy.

So Lynn, who also grows marijuana, has to make payroll and invest in the enterprise, but he says the state's law and restrictions are making it hard to run a viable business.  

"To do indoor growing, it's expensive," he says. "You have to have a lot of HVAC. A lot of lights and a lot of electricity — all of that takes a lot of money. And so it's been a challenge."

In other northeast states that allow medicinal marijuana, Lynn says about 1 to 1.5 percent of the potential users take part in the program. But in Vermont, use has been stuck at less than 0.5 percent.

The operator of Southern Vermont Wellness in Brattleboro hopes the new public shop will encourage people to come in and ask questions about Vermont's medical marijuana law.
Credit Howard Weiss-Tisman / VPR

Vermont doesn't allow dispensaries to advertise, and Lynn hopes his new public CBD shops can encourage people to come in and ask questions about the medical program.

"We're trying to have a space that is open to the public, that you can come in and talk to us about cannabis," Lynn says. "We want to tell people how to use it correctly and if it's the right thing for you. They need help with the process of how you locate a health care professional that'll work with you."

Bennington Sen. Dick Sears is chairman of the Joint Legislative Justice Oversight Committee, and he lead a series of hearings recently on the state's marijuana laws.

Sears says the state may or may not advance legalization during the upcoming session, but when lawmakers return to Montpelier he hopes the Legislature can address the problems with the dispensary rules.

"I think that the current medicinal system needs improvement and that we need to deal with that. That's a separate issue, to me, from legalization." — Sen. Dick Sears

"Certainly I think that the current medicinal system needs improvement and that we need to deal with that," Sears says. "That's a separate issue, to me, from legalization."

But Sears says it won't be an easy fix.

There are parts of the state that need better access, but dispensary operators aren't sure if more outlets are viable without making big changes to who's allowed to buy marijuana.

And convincing doctors to write the prescriptions could be a very tough hurdle to get over.

"I don't want to get into specific ailments, or specific diseases at this point," says Sears. "But I think that we would certainly consider either by rule, or through legislation, expanding the number of people who are available. But I think one of the hindrances right now is that we are hearing a lot of reluctance from prescribers."

Ray Martin lives in Dover, and he's had a marijuana card for about three years. He says the last thing he wants to see is the Brattleboro shop having to close down.

"It's been a godsend, because we used to have to go up to Montpelier or Burlington before the shop opened, and the different assortments they have there are fantastic," Martin says.

Earlier this year, Vermont's medicinal law was expanded to include chronic pain, and there are about 2,700 people registered in the program.

Dispensary owner Shayne Lynn says he'd like to see that number up above 6,000 statewide.