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High fee proposed for marijuana dispensaries

Dispensaries granted a ­license to sell marijuana for medical use in Massachusetts will be required to pay a $50,000 annual fee under proposed regulations unveiled Friday by the state Department of Public Health.

The regulations, which also include a $50 annual registration fee for patients to use marijuana, is intended to create a “self-financed medical marijuana industry that supports ­patient access without relying on taxpayer resources,” the depart­ment said in a press ­release.

The department said it will use the fees to hire staff and train inspectors to monitor the industry.

Consultants to the marijuana industry said proposed fees for dispensaries in Massachusetts are higher than those charged in a number of other states, while patient advocates said the fees for consumers ­appear to be lower than the norm.


Under the draft regulations, dispensaries would also pay nonrefundable application fees totaling $31,500.

“In most states we see [dispensary] application fees between $5,000 and $25,000, so it’s a little on the high side, but not exorbitant,” said Kris Krane, managing partner of 4Front Advisors, an Arizona-based consultant that has helped businesses open marijuana dispensaries in other states.

In Arizona, dispensaries are charged $5,000 for an initial registration and $1,000 for ­annual renewals, according to the state’s website.

Krane said his company has been hired by three companies hoping to obtain dispensary permits in Massachusetts and is talking to about a half-dozen others who are interested. He declined to identify them.

Massachusetts voters ­approved a referendum last fall legalizing marijuana for medical use, and state regulators ­finalized rules earlier this month to implement the law. Those rules took effect Friday.

While Massachusetts dispensary fees appear to be on the higher end, businesses may recoup the money more quickly than in other states because they are likely to do a brisk business, Krane said. That is because Massachusetts regulations are more expansive than many in defining which ­patients would qualify for medical marijuana use — essentially any patient whose doctor certifies a condition as being debilitating — creating a large potential client base.


Under the state’s proposed fee structure, dispensaries would also be required to pay an annual $500 registration fee for each of their employees. That is similar to the system in Arizona, where the first dispensaries began opening just a few months ago.

Krane said that charge could add up quickly for larger companies, which would be unlikely to pass the cost on to their employees, many of whom may be paid relatively low retail-level salaries.

Massachusetts took a different tack from Arizona in its ­patient fees, charging $50 ­annually, compared with the $150 in Arizona. Both states, however, ease the burden for low-income patients, with ­Arizona halving the cost and Massachusetts providing a waiver, subject to approval by the state health department.

“We oppose fees on patients in principle, although the suggested registration fee is not onerous and we appreciate the proposal that it can be waived for patients facing financial hardship,” said Matthew Allen, executive director of the Massa­chusetts Patient Advocacy Alliance.

The state’s proposal would charge patients an additional $100 annual fee if they applied for a license to grow their own marijuana, claiming financial or other hardship.

Allen said that charge “does not make any sense, since these patients have already demonstrated limited income.”


State regulators have said the program is crafted to discourage home-growing by making dispensaries accessible to most patients, with discounts for those with low ­income, and by allowing dispensaries to deliver to patients with mobility or transportation problems.

Landlord groups and public safety officials had lobbied against allowing patients to grow marijuana at home, citing concerns about crime and damage to their property.

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