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1st Intermission

100 applicants seek marijuana-dispensary licenses in final round

Voters approved the use of medical marijuana last fall.

Brennan Linsley/Associated Press

Voters approved the use of medical marijuana last fall.

The list of companies vying to open Massachusetts’ first medical marijuana dispensaries has been pared down significantly, with 100 organizations submitting applications by Thursday’s deadline.

Roughly one-third of those that survived the state’s first-round review of proposals in September chose not to go forward in the highly competitive process.

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Only a maximum of 35 permits will be awarded in this cycle — the first after voters approved a ballot initiative last fall that legalized using marijuana for medical treatment. State officials are aiming to name the winners by the end of January.

Many prospective applicants were apparently knocked out by recent rule changes that required each of the nonprofit companies to prove it has $500,000 cash in the bank for start-up costs. Earlier, regulators merely required applicants to show that the money was pledged by investors in commitment letters.

Valerio Romano, a Boston attorney who represents seven companies hoping to win permits in Eastern Massachusetts, said the tighter rules forced some applicants to incur hefty fees without knowing if it will pay off in the end.

“They are asking the person to liquidate their retirement, or whatever account, and they will pay capital gains tax or some sort of penalty,” Romano said. “That’s asking a lot of an applicant who doesn’t have a permit yet.”

Valerio also said the complexity of the application process in this final round likely discouraged some candidates. Applicants were required to submit mountains of material, including evidence of local support in the community where they want to open, a first-year operating budget, a three-year business plan, lists of references, and names of staffers they intend to hire.

Catherine Cametti, a real estate appraiser and Norwood native who submitted an application to open a dispensary in Franklin, said the financial rule change forced some of her investors to tap their home equity lines of credit to ensure the $500,000 was available.

“Those investors now will have to pay interest on that line of credit, without even knowing if we have a license or not,” Cametti said.

Scott Hawkins, a public affairs consultant who has worked with five applicants, said one of his clients was unable to secure the necessary money.

“That demonstrates the challenges of raising capital for a not-for-profit operation,” Hawkins said. “Those left in the running should represent a high caliber class of potential operators.”

State rules required applicants to set up nonprofit entities, and ensure that “revenue of the [dispensary] is used solely in furtherance of its non-profit purpose.”

Dr. Madeleine Biondolillo, director of the state health department bureau that oversees the awarding of permits, said she is encouraged that there is a “robust” number of companies still in the running.

“There are a number of strong applicants who are willing to go through the process, and can assure us they can meet all the requirements, that they have the wherewithal financially and otherwise to be able to be set up a coherent and effective business,” she said.

In September, her bureau whittled the list of candidates from 181 to 158. Later, it allowed one additional applicant that had been rejected to continue in the process, bringing the total to 159 eligible to compete in the final round.

Biondolillo’s bureau is in the process of assembling a selection committee that will review the applications, starting in early December, with a projected target date of Jan. 31 to announce the names of those chosen to open dispensaries.

She said that committee will scrutinize factors such as the level of community support and whether sites are far enough from where children have regularly scheduled activities.

Companies awarded permits will still have to pass a final inspection by the state health department and ensure they are complying with any local permitting requirements.

The state is expected on Friday to release the names of the 100 remaining applicants and the communities where they hope to locate.

Kay Lazar can be reached at Kay.Lazar@globe.com Follow her on Twitter @GlobeKayLazar.
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