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Iowa medical marijuana outlets look longingly at Illinois

Company with Cedar Rapids ties to join legal pot sellers near Chicago

The Iowa Relief medical marijuana manufacturing facility in southwest Cedar Rapids was under construction July 17. (Liz
The Iowa Relief medical marijuana manufacturing facility in southwest Cedar Rapids was under construction July 17. (Liz Martin/The Gazette)
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Players in Iowa’s tightly-controlled medical marijuana market are looking, some with longing, at Illinois’ new recreational marijuana market, where hundreds of products and potentially millions of customers are expected to generate up to $2 billion in annual sales.

One company with Iowa ties expects to start selling recreational products on New Year’s Day in Illinois.

Acreage Holdings, the parent company of Iowa Relief, which is manufacturing a medical cannabis tincture at a factory in southwest Cedar Rapids, says it will be licensed to sell recreational products at its Nature’s Care dispensary in Rolling Meadows, a Chicago suburb, when Illinois launches its adult cannabis program Jan. 1.

“Our mission is to get safe, affordable cannabis in the hands of anyone who wants or needs it,” said Charles Amadin, Illinois general manager for Acreage, a New Jersey-based company that reports having marijuana licenses in “20 U.S. states and counting.”

Acreage was one of 19 companies included in a Nov. 15 lottery for established pot operators who want to open another store in the Chicago area, the Chicago Sun Times reported. Acreage got an early pick of 31 total selections and chose to locate in the Chicago West District, Amadin said.

In June, Illinois became the 11th state to legalize recreational marijuana. The law, which takes effect Jan. 1, allows people 21 or older to buy cannabis products from licensed dispensaries.

Illinois residents may possess twice the volume as out-of-state buyers to discourage people from taking pot across state lines. Recreational marijuana is illegal in Iowa.

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While only companies that already had medical marijuana licenses in Illinois were considered for licenses to sell recreational products starting next week, the state plans to award licenses for up to 75 new dispensing organizations May 1.

More products lead to more customers

Iowa operators say there are financial benefits to operating in a state with a recreational market, which caters to a larger audience and has more products, including pot-infused food and beverages.

Owners of the Iowa Cannabis Company, which has a medical marijuana dispensary in Waterloo, operate three large recreational cannabis stores around Spokane, Wash. Those stores, Cannabis & Glass, sell 2,000 products, including edibles, beverages, vapor, pre-rolled cigarettes, tinctures and creams. Profits from the Washington state stores support the Waterloo dispensary, which so far isn’t making money, said Aaron Boshart, director of operations for Iowa Cannabis.

“No dispensary in Iowa is seeing enough patients to keep them independently funded,” Boshart said.

He and other medical marijuana players in Iowa are critical of Iowa’s law, which caps at 3 percent the tetrahydrocannabinol, or THC, allowed in medical marijuana products and limits the medical conditions for which a patient can secure legal products.

Iowa Gov. Kim Reynolds in May vetoed an expansion of the law that would have removed the THC cap and instead limited the amount of medical marijuana a patient could be prescribed at any one time.

“It’s honestly incredibly sad for the patients of Iowa and, as an operator, it’s incredibly frustrating,” Boshart said.

Boshart would not say whether his company plans to pursue a recreational marijuana license in Illinois. “Licensure is highly competitive,” he said. “We don’t talk about licenses until they are confirmed.”

Medpharm’s major investment in Iowa

MedPharm Iowa, the state’s first medical marijuana manufacturer, has not considered applying for an Illinois license, in part, because its money is tied up in the Des Moines operation, said General Manager Lucas Nelson.

MedPharm, owned by Kemin Industries, spent more than $10 million in 2018 rehabbing 15,000 square feet in an old warehouse into a state-of-the-art facility to cultivate, grow and dry medical marijuana and manufacture products that started to be sold Dec. 1, 2018, in Iowa.

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“Even if we wanted to, until this program takes off, this is the way we will be able to grow or expand,” Nelson said. “While I think we’d have a lot to offer a market like Illinois, not from a recreational standpoint, but with medicinal products, the small scope of this (Iowa) program isn’t going to lend itself to that.”

The non-refundable application fee for an early approval cultivation license in Illinois is $100,000, and an approved business must pay 5 percent of total sales, not less than $250,000, to the state. The fee to apply for an early approval dispensing license in Illinois is $30,000 and these stores must pay 3 percent of total sales to the state.

Some operate in both marijuana markets

Nelson said it would be relatively easy for a company to transition from medical to recreational products. Cannabis oils made for creams and capsules could just as easily go into gummies or brownies.

“A lot of it is how you approach your marketing efforts, how you pitch your products,” Nelson said. “If MedPharm was ever to enter a state that was recreational, we’d have the same products and be dosing them the same way, but making them available to a wider audience.”

Acreage Holdings’ website highlights several brands it might sell in Illinois. These include Prime, which appears to be medical cannabis vapes; Live Resin Project, which focuses on cannabis concentrates made from fresh frozen plants; and Natural Wonder, a “lifestyle brand of fast-acting, discreet and effective breath sprays” with cannabis.

Comments: (319) 339-3157; erin.jordan@thegazette.com

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