In what could be one of the most convincing financial arguments for the legalization of recreational marijuana yet, the state of Utah has announced that cannabis cultivators will face a licensing fee from between $75,000 to $100,000.
“The program has to be self-sufficient and pay for itself,” said Andrew Rigby, who is program manager for the state’s marijuana industry. Utah’s Department of Agriculture and Food, the cannabis industry’s regulatory body, has estimated that legalizing medical marijuana will cost the state over $563,000 in 2020. All the same, at the current fee rates, applications and licensing has been forecasted to bring in $1.1 million.
Regardless of the math, such high fees will certainly present a challenge to small marijuana businesses without a lot of capital with which to open up shop, and put the ball squarely in the court of larger or more monied firms.
“It could be a barrier for a few people,” Rigby allowed to Utah publication The Spectrum. In addition to the licensing fee, cannabis entrepreneurs will also be responsible for an application fee between $5,000 and $10,000.
Utah has seen its share of cannabis political turmoil since voters passed Proposition 2, which authorized medical marijuana. After the election, legislators took input from the Church of Latter Day Saints to re-draft the bill during a special session, resulting in a lawsuit from cannabis advocates against the state that the attorney general has requested be dismissed. But patient groups say that the new legislation is insufficient, and caution against inappropriate levels of influence from the Mormons over state affairs.
“Let’s go back to actual legislation and not theocracy,” said Doug Rice, president of the Epilepsy Association of Utah, one of the suit’s plaintiffs.
Though dispensaries won’t be opening until next year, Utah’s number one healthcare provider, Intermountain Healthcare, has already instructed its doctors that they will be able to recommend marijuana to qualified patients. Cannabis advocates had hoped that this announcement would encourage legislators to focus on the relief that marijuana provides patients, instead of the concerns of religious lobbying groups.
Compared to other southwestern states that have regulated marijuana previously, Utah’s are high figures. In Nevada, application fees run at $5,000 and growing facilities pay licensing fees of $3,000. Arizona charges a similar application fee, with an approval to operate fee available for $2,500. Granted, Nevada is able to recoup its program’s operating fees from taxes on the sale of recreational cannabis (see how that makes sense, now?)
Rigby countered such comparisons by pointing to Utah’s strict cap on marijuana businesses. At the moment, only 10 grow facilities will be able to operate in the state, so those 10 firms will be essentially taking on the program’s entire operating costs, which include staff hours and the purchase of equipment needed to oversee the industry.
“The math is very simple,” Rigby commented. “I think applicants will find that it is a fair price.”
Should you be in Utah and like to weigh in on these proposed program guidelines, there is a public hearing taking place at 350 N. Redwood Road in Salt Lake City at 5 p.m. on June 5.
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