Marijuana sales stall over approval of testing labs

More than a year after the state awarded its first eight medical marijuana dispensary licenses, three companies have each harvested their first crop, but not a single bud has been sold.

The holdup is the state Health Department, which hasn’t certified any laboratories to test the quality of the marijuana. Until that is done, the dispensaries cannot sell the drug.

“We just kind of got (the marijuana) vac­uum-sealed and in storage,” said Helen Cho, director of integrated strategy for Aloha Green Holdings Inc., one of the three Oahu dispensaries. “We’re ready to go.”

Health Department officials say they are working to make sure the dispensaries are safe and secure. They expect the first dispensary to open this summer.

Meanwhile, costs are piling up for the dispensaries, and patients are still having to buy from illegal dealers.

“It’s been an expensive endeavor, without a doubt,” said Teri Freitas Gorman, spokeswoman for Maui Grown Therapies.

Maui Grown, Aloha Green and Pono Life Sciences Maui LLC have marijuana ready to sell. A fourth company, Manoa Botanicals LLC, is growing pot but hasn’t harvested it yet.

Patients and dispensaries are “a little frustrated” with how long it’s taking to open, said Manoa Botanicals CEO Brian Goldstein. He has leased property at 1308 Young St. in the former Krazy Karaoke space for his first dispensary.

“We’re very hopeful that we’re going to be able to open and we’ll be serving qualified patients certainly by later this year,” Goldstein said. “There’s a lot of curiosity about when the dispensaries are going to open. There’s some frustration in the community. We totally understand. In this industry, without a doubt between the dispensaries and labs, we’re losing well over a million dollars a month.”

The companies paid the Health Department $50,000 each to renew their dispensary licenses, which were set to expire May 31. That’s in addition to the initial licensing fee of $75,000.

“All eight renewed, which is $400,000, and none of us have sold anything,” said Cho of Aloha Green, which has about 30 employees. “Every day we’re still operating a business, and on top of the overhead, cost of salaries, rent and utilities, every licensee is under some sort of construction. Not only are we continuing to spend money, but there’s no cash flow. These were not part of our original projections. So it’s been very difficult not only for us, but for all of the dispensaries. Every month we’re losing tens of thousands of dollars. This level of uncertainly just comes with the territory of being the first dispensaries in the industry.”

‘Ready to roll’

Aloha Green announced last month it would open a retail dispensary selling non-THC products Thursday on the ground floor of the Interstate Building at 1314 S. King St. Initial plans were to begin sales of tinctures, oils, lotions and capsules with cannabidiol (CBD), derived from hemp but without any THC, or tetrahydrocannabinol, the psychoactive compound found in marijuana.

The company later dropped the plan to sell CBD products, saying it wanted to remain compliant and supportive of the Department of Health. It will instead use the space for patient education and community outreach for the time being.

“We don’t know when we’ll be able to sell the THC marijuana products because it all depends on when the labs get certified,” Cho said.

Gorman at Maui Grown Therapies, which plans to open at the Maui Lani Village Center at 44 Paa St. in Kahului, said the company is “ready to roll.”

“We certainly thought we would have been open and operating right now,” she said. “These delays actually impact human beings that have faces and families and stories — that’s the hard part.”

Pono Life Sciences, which has had retail space at 415 Dairy Road next to Costco in Kahului since July, has already harvested and cured flowers and is starting work on manufactured products, said CEO Michael Takano.

“It’s cured, and it’s pretty much ready for sale,” he said. “There’s a way to preserve it, and that will be just fine for consumers for the next two months. We can preserve for quite some time, not forever.”

The other four licensees — Cure Oahu, Hawaiian Ethos LLC and Lau Ola LLC on the Big Island; and Green Aloha Ltd. on Kauai — haven’t yet received approval to grow.

The Health Department is certifying three laboratories to test the marijuana’s potency and purity: PharmLabs Hawaii, Clinical Laboratories of Hawaii and Steep Hill Labs. The labs must test 70 different compounds in the marijuana before it can be sold to qualified patients.

The DOH said it has fully connected its seed-to-sale tracking system with the state’s patient registry to ensure consumers do not purchase more than four ounces in a 15-day period.

“All of these pieces are really beginning to come together, so we’re excited about that,” said Keith Ridley, chief of the Health Department’s Office of Health Care Assurance, adding that dispensaries must receive a final inspection from the DOH before they can open. “Retail locations having final approvals are contingent on the dispensaries being ready to have us inspect them.”

Hawaii legalized medical cannabis in 2000, but patients had no legal way to obtain the drug. There are more than 16,000 patients registered with the state. Act 241, passed in 2015, allowed the state to issue eight licenses for a total of 16 production centers and 16 dispensaries: three on Oahu, one on Kauai and two each on Maui and Hawaii island. By law dispensaries were allowed to open as early as July 15, 2016.