OUT-OF-STATERS EAGER TO INVEST IN MEDICAL POT

Maine's new medical marijuana law has two key conditions for those
who want to open one of the state's first dispensaries.

Operators have to be Maine residents, and they have to register as
nonprofits.

Neither condition, however, has kept investors and entrepreneurs from
coming from outside the state to be part of the new industry.

Several of the groups that applied for operating licenses last week
are led by recent arrivals from California or other states where they
learned the medical marijuana business. One group with California
connections even hopes to open five of the state's eight dispensaries
- -- and, to improve its odds, it hired the Augusta lobbyist who helped
write Maine's new law. Local applicants say they've been called by
investors from around the country who want to help finance the
dispensaries.

The interest from away raises questions about just how lucrative the
nonprofit businesses will be. And, while some in Maine welcome the
interest and business experience from away, others say the newcomers
only want to benefit themselves.

"It's not outside people coming to help patients. It's outside people
coming to take money out of the state," said Charles Wynott of
Westbrook, a medical marijuana patient and one of the advocates who
helped pass Maine's new law.

State officials are now reviewing 29 applications to operate eight
dispensaries, one in each of the state's public health districts. The
Department of Health and Human Services plans to award the eight
licenses July 9, and the first dispensaries are expected to open for
business this fall.

Meeting the Maine residency requirement is as easy as moving to the
state, as a number of aspiring dispensary operators have done in
recent months.

The not-for-profit requirement means that dispensaries cannot issue
shares of stock or pay out profits in the form of dividends to investors.

However, Maine law allows a dispensary to pay "compensation in a
reasonable amount to its members, directors, or officers." The law
does not define a reasonable salary and doesn't set any specific
limits on pay.

Some say the state's rules, and a limited market size, mean medical
marijuana won't be the lucrative business here that it is in other
states. Maine also has relatively tight limits on who qualifies to
buy medical marijuana, although the list of illnesses and conditions
can be expanded in the future.

"I think a lot of that (out-of-state interest) is wishful thinking,"
said state Sen. Stan Gerzofsky, D-Brunswick, a member of the task
force that shaped the final state law. "I don't see a lot of profit
to be made because I don't see a lot of volume. I don't see a lot of
patients."

'THERE'S MONEY HERE'

No one knows how many patients will buy marijuana from the
dispensaries. However, advocates say tens of thousands of ill and
disabled people qualify in Cumberland County alone. And while dosages
are much smaller for some people, a patient is allowed to buy as
much as 2.5 ounces -- about $700 worth -- every 15 days.

"There's money here," said Wynott. "Once this thing gets legalized,
there's going to be a lot of people waiting to get their medicine."

And even if a dispensary can't pay out profits in dividends, he said,
"you can still pay your board of directors and employees."

Brendan McGann of South Portland said out-of-state groups clearly see
dollar signs.

McGann is a director of the Maine Wellness Group, which applied for
licenses in three districts and is positioning itself as a home-grown
operation run by local medical marijuana patients and caregivers.
Although the Maine Wellness Group has been getting calls from
out-of-state investors wanting to put money into the startup and get
on the payroll, he said, "We've just essentially been turning them
all down."

CALIFORNIA CONNECTIONS

McGann is especially critical of the Northeast Patients Group, which
has connections to Berkeley Patients Group in California and has
applied for licenses in some of the same districts as his group.
Northeast is led by a recent California transplant and represented by
Dan Walker, an Augusta-based attorney and lobbyist with Preti
Flaherty who served on the state task force that drafted the state
law.

"They've been spending money hand over fist since the day they showed
up here," McGann said. McGann recently confronted Walker outside a
meeting and accused him of unofficially lobbying for the Berkeley
Group even while he served on the state task force.

Walker denied having a conflict of interest and said last week he
didn't sign on with Northeast Patients Group until after the law was
voted on by a legislative committee. "I worked on the task force
until it ended and never accepted a dime," he said.

Walker said he chose to work with Northeast Patients Group over other
groups who wanted to hire him partly because of its California
connection and proven track record there. One of Berkeley's
directors, Tim Schick, is from Maine and helped advise policy makers
here.

"He really felt a responsibility to help Maine not make the mistakes
California did," Walker said.

Northeast is a Maine nonprofit with four Mainers on its board of
directors, and the money it earns and gives to charity will stay in
Maine, too, he said. "The model that we're working on is you pay
everyone a salary, you invest the money back in (the business) and
you donate the money back into the community," Walker said.

Ken Altshuler, a Portland attorney who also served on the state task
force, said he has declined to represent dispensary applicants,
although he would not second-guess Walker's decision.

IS PROFIT A PROBLEM?

Altshuler doesn't believe where an applicant comes from is important,
especially if it has a good track record like the Berkeley group
does. And he's not concerned that money might be motivating applicants.

"The dispensaries are going to make money, we know that. So do drug
companies. If we're not going to care about them what makes pot so
special?" he said. "Nobody who runs a dispensary has an altruistic
motive. Money is always the motive and I'm OK with that. I just want
people to get the quality medicine they need."

Patient advocates say they will be watching closely to see whether
Maine's dispensaries become the kind of patient-friendly operations
that the rules were written to encourage.

Jonathan Leavitt, who led the campaign to pass the medical marijuana
law last fall, said Maine has a chance to create a new model, but it
may require some more changes in the law.

"How do we prevent these things from coming under the control of a
whole corporate economic world?" Leavitt asked.

"I think we need to implement some other mechanisms that guarantee
that these dispensaries are here to take care of patients first and
foremost."