Michael Irish is a longtime Oahu businessman best known as CEO of Diamond Head Seafood Wholesale and Keoki’s Lau Lau.

But next year, he may be involved in a different industry — growing marijuana and selling it at Hawaii’s newly legalized medical cannabis dispensaries.

Three weeks ago, the owner of nine kimchi and four sauce companies registered a new limited liability company, Hawaiian Isles Marijuana, with the state Department of Commerce and Consumer Affairs.

Dispensaries won’t be operating for another year, and the state Department of Health isn’t even accepting applications for licenses to grow and sell marijuana until January. But potential licensees are already acquiring land, entering partnerships and raising money to boost their chances of obtaining one of the eight licenses that will be available.

Glass artist Mark Nowicki sits at his booth O.G. Tubes Hawaii featuring his hand made glass art at he Marijuana Expo. Hawaii Conventioin Center. 19 july 2015. photograph Cory Lum/Civil Beat

Glass artist Mark Nowicki displays his handmade bongs at the O.G Tubes booth at the marijuana expo at the Hawaii Convention Center on July 19. Several industries see economic potential in Hawaii’s coming medical marijuana dispensaries.

Cory Lum/Civil Beat

Many expect the state-sanctioned oligopoly to be lucrative, as each licensee will be allowed to open two production centers with up to 3,000 marijuana plants and two retail locations.

Dispensary owners aren’t the only ones who will benefit. People who work in industries as wide-ranging as real estate, agriculture, security, insurance and law are all poised to cash in on the establishment of dispensaries. Some — particularly lawyers and consultants — already are.

Considering the expected patient increase, medical marijuana sales in Hawaii are likely to generate tens of millions of dollars in total revenue for the eight companies that receive licenses.

Nationally, legal marijuana is America’s fastest-growing industry, valued at $2.7 billion in 2014, according to the cannabis industry investment firm The ArcView Group.

In Hawaii, about 13,800 people are currently registered to carry medical marijuana cards. But the state Department of Health expects that number to double once dispensaries open.

Hawaii just added post-traumatic stress disorder as a qualifying ailment for medical marijuana, making more patients eligible to receive cards. Other qualifying conditions include cancer, glaucoma, HIV/AIDS, wasting syndrome, seizures, severe nausea, severe and persistent muscle spasms and severe pain.

It’s hard to put a dollar figure on the sales potential because patients will buy variable amounts. Under state law, patients can purchase as much as eight ounces in a month or four ounces within 15 days.

Comparing Hawaii’s emerging market to other states is also tough because regulations vary in terms of the number of dispensaries permitted, the qualifying health conditions, fees and taxes. In Hawaii, dispensaries won’t be subject to more taxes than any other business, but the relatively high cost of land and electricity are likely to drive up costs.

Pacific Business News estimated the sales potential at more than $30 million annually based on the assumption that 13,000 patients would buy one ounce of marijuana a month for $200.

But medical marijuana could be a lot pricier than that. According to a website that crowdsources data on the price of weed worldwide, the average price of an ounce nationally is $257 to $300. In Illinois, which recently legalized medical marijuana, an ounce is expected to cost $400.

Considering the expected patient increase, medical marijuana sales in Hawaii are likely to generate tens of millions of dollars in total revenue for the eight companies that receive licenses.

Competition is expected to be heavy for the licenses, and will require significant upfront costs.

The cost of an application alone is $5,000. Within a week of being chosen, companies have to cough up $75,000 for a license fee. They also have to prove that they have $1 million in the bank, and $100,000 more for each dispensary they are licensed to open.

Estimates for the start-up costs range from $2 million to $7 million.

That isn’t stopping people like Brian Goldstein, a local technology consultant, from applying.

“I think it’s well past time that our policymakers recognize the medicinal uses of cannabis,” he said. “It’s a drug that patients deserve access to and I want to be part of that effort.”

Vying for a License

For several hours during the past legislative session, it appeared House Bill 321, the medical marijuana dispensary bill, was dead.

That’s when David Cole, the former CEO of Maui Land and Pineapple, reached out to one of the lawmakers on a conference committee, asking for the bill to be resurrected.

He wasn’t the only one — the bill’s temporary demise was upsetting to advocates who have been fighting to legalize dispensaries since Hawaii approved medical marijuana 15 years ago. Since then, patients have had to grow their own, get it from a caretaker or turn to the black market.

In an unusual move, legislative leaders bent the rules to revive the measure, and Gov. David Ige signed it into law last month.

Cole said in an email that his interest in the industry is personal because he has several family members in Hawaii who have qualifying medical conditions, including cancer and PTSD. He hopes the dispensary program is physician-led and patient-centric.

Cole hasn’t decided yet whether or not he will invest in dispensaries, but he is one of many local business people from various backgrounds whose interest has been piqued.

Bill Jarvis, who has been working in the telecommunications industry for the past 30 years, started researching medical cannabis last year. The owner of Mobi PCS decided to apply for license after he realized the dispensary business has many similarities to starting a new cell phone company.

Marijuana Expo. National Cannabis Chamber of Commerce booth at the Hawaii Convention Center. 19 july 2015. photograph Cory Lum/Civil Beat

The National Cannabis Chamber of Commerce booth at the Hawaii Convention Center was crowded during the marijuana expo on July 19.

Cory Lum/Civil Beat

Jarvis is in the process of hammering out a partnership with a Colorado cannabis consulting group and is still looking for more partners locally in medicine and agriculture.

Bobbi A. Lee is one of several people who have already registered cannabis-related businesses. The owner of a Honolulu real estate company, she’s been thinking about getting into the medical marijuana dispensary business for years.

“I believe the competition for the medical marijuana dispensary licenses in Honolulu County is going to be fierce. I’m aware of a number of groups that have formed and I think it’s going to be a tough competition.” — Brian Goldstein

She is in the process of interviewing potential partners for her newly created limited liability company, Medical Marijuana Dispensary.

Like Lee, Goldstein has been preparing to enter the industry for years. He tracked the progress of the state’s 2014 medical cannabis task force, which developed recommendations for the dispensary system, and attended nearly every legislative hearing this year. He went to Civil Beat’s Civil Cafe on medical marijuana in February, and flew to national marijuana conferences in Denver and Chicago.

In May, Goldstein registered the company Manoa Botanicals LLC. He has hired one of the state’s top law firms for exclusive representation, and assembled a team of experts in cultivation, medicine, security and other areas. He was tight-lipped about who his partners are, but they include Alan Gottlieb of Second City Property Management.

Goldstein has already finished his first round of financing and is in the midst of his second effort to raise money from investors. He recently returned from visiting a $30 million, 60,000-square-foot medical marijuana facility in Canada as part of his research.

If Goldstein sounds prepared, it’s because he needs to be. The new law allows only eight companies to receive licenses statewide, three on Oahu, two each in Maui County and the Big Island, and a single one on Kauai.

“I believe the competition for the medical marijuana dispensary licenses in Honolulu County is going to be fierce,” he said. “I’m aware of a number of groups that have formed and I think it’s going to be a tough competition.”

Many potential applicants are reluctant to go public about their plans.

“It’s a very high stakes game and no one wants to show their hand, especially if they have a winning hand,” said one potential applicant who requested anonymity out of concern about tipping off the competition.

Economic Ripple Effects

Two months ago, Tom Keener was approached by a group of people who are vying for a Honolulu dispensary license.

Keener runs Blackhawk Security, a company that specializes in high-tech security systems.

Since then, he has signed letters of intent with that team and another on the Big Island, and is hoping to provide security for similar ventures on Maui and Kauai. He said he signed non-disclosure agreements and can’t identify the potential clients.

Keener was one of many representatives of industries ranging from contracting to solar power that attended a recent marijuana expo at the Hawaii Convention Center hoping to learn more about how they could benefit.

“Where there’s weed, there’s also a growing need for everything from greenhouses and fertilizer to pipes and vaporizers,” wrote the Los Angeles Times last year, describing what California residents were calling “the green rush.”

"Take it and Grow' grow kit on display at the Green Hands of Aloha booth at the Marijuana Expo. Hawaii Convention Center. 19 july 2015. photograph Cory Lum/Civil Beat.

“Take It and Grow” kits were on display during the marijuana expo at the booth. The company sells fertilizer and is one of many that could see a boost in business with the opening of dispensaries.

Cory Lum/Civil Beat

Demitri Downing, an Arizona lobbyist and dispensary owner who spoke at Hawaii’s recent expo, thinks the growth of ancillary industries in the Aloha State will be modest at first, because so few licenses are permitted.

Still, he expects the new production centers and dispensaries to create ripple effects that benefit a wide range of fields, including accounting, plumbing and paraphernalia sales.

Alan Chu of CF Insurance hopes insurance is one of them. He manned a booth at the recent expo to promote comprehensive insurance for dispensaries, even printing marijuana-themed cards for the occasion.

Like Keener, he already has a couple of clients and is hoping to attract more. He’s concerned about the industry’s negative stigma in some circles, but it’s not enough to deter him.

“We’re looking to make it an integral part of our practice,” he said.

Mainland Interest

Hawaii’s medical marijuana law requires that 51 percent of the owners of a company that applies for a license must prove that they’ve been local residents for the past five years. But that still opens the door for many people from the mainland to get involved.

Many of the vendors at the expo flew in to market their services, such as Medicine Man Technologies, a consulting company from Denver that has two Hawaii clients.

Patrick Vo, the chief technology officer at BioTrackTHC, led seminars at the expo that advertised his company’s seed-to-sale tracking system, which is used by states including Washington, New Mexico and New York.

In addition to marketing the system to potential licensees, the company is planning to apply to manage Hawaii’s computer software tracking system, which the state Department of Health is required to maintain. That’s an important part of the state’s new program given that U.S. Department of Justice wants states with legal marijuana to ensure that their programs are tightly controlled and the drug doesn’t leave the regulated system.

BioTrackTHC pins on display during the Marijuana Expo held at the Hawaii Convention Center. 19 july 2015.  photograph Cory Lum/Civil Beat

BioTrackTHC gave out pins to advertise its seed-to-sale software during the marijuana expo.

Cory Lum/Civil Beat

There’s also a lot of networking behind the scenes between Hawaii business people and mainland companies hoping to form partnerships.

Gina Berman, principal officer and medical director at The Giving Tree, an Arizona-based medical marijuana company, said she was contacted in May by a Hawaii company interested in working together to apply for a dispensary license.

She’s still in the midst of talks with a couple of potential partners, and said she is proceeding cautiously to ensure that they have the same vision and philosophy.

Keoki Kamakanaokeola Wing is another Arizona dispensary owner who is hoping to get involved in Hawaii. An Oahu native, Wing has worked in Arizona’s medical cannabis industry for the past three years and has been interviewing various Hawaii investors.

“It’s an opportunity to go back home and bring something to the community,” he said.

Concerns Despite the Hype

While the looming industry is attracting a lot of interest, there are many unknowns. The state Department of Health won’t release its administrative rules until the end of the year, about a month before the application process closes. And even potential investors are worried about the program’s potential negative stigma and legal risk.

One woman who is planning to apply for a license said she didn’t want to reveal her plans before licenses are awarded because she is worried her intentions would hurt her in her current job.

Hawaii passed an anti-discrimination bill for medical marijuana patients this year, but left out protections for employees.

And there’s always the possibility a new president could use federal laws to crack down on state-approved marijuana companies.

UFCW Local 480 union display at the Marijuana Expo held at the Hawaii Convention Center. 19 july 2015. photograph Cory Lum/Civil Beat

UFCW Local 480 union hopes to represent employees at Hawaii’s medical marijuana dispensaries.

Cory Lum/Civil Beat

For some, the lure of the industry’s potential profits isn’t worth it. Jeff Stone is a well-known local developer who owns Ko Olina Resort and a luxury hotel in north Kauai. He said he has turned down people who have approached him about a medical cannabis partnership.

He said medical marijuana is “not appropriate for the business that I’m in.” In fact, he trademarked several names, including Hanalei Cannabis and Hanalei Weed, to prevent others from using the names and negatively affecting his resorts.

Even Irish from Diamond Head Wholesale said that although he’s planning to apply for a dispensary license, he’s concerned that he won’t know the administrative rules until the end of the year.

He is worried about whether too many regulations will drive up costs, and is more skeptical than most about the industry’s potential profitability.

But to Irish, medical cannabis is about more than profits. His mother died of cancer in 1968 when he was 14. She was 41.

Irish remembers she was in so much pain during the last three years of her life that his father would bring in a hypnotist to help her. She spent the last week of her life in a hospital, incoherent from morphine.

“If we’re trying to help people, that’s one thing, if we’re trying to create a new cash crop, that’s a totally different subject,” he said. “You want to make sure that the price is affordable to everyone who needs the medical attention, from the little girl to the little old lady.”

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