Hawaii’s newly approved medical marijuana dispensary program is expected to fuel a multi-million-dollar industry starting next year.

But a lot remains to be decided about program rules and how the state Department of Health will choose companies to receive eight coveted licenses to grow and sell cannabis.

It’s been only a month since Gov. David Ige signed the measure, and the department is still in the process of hiring staff to manage the program. It is charged with adopting rules to clarify criteria and procedures for selecting eight licensees that will be allowed to run two production centers and two dispensaries apiece.

Two big questions are how much input — if any — the public will have in the rulemaking process, and how much transparency there will be in the selection process.

Rep. Della Au Belatti during a Hawaii Medical Marijuana Dispensary Task Force meeting at the Hawaii State Capitol on September 9, 2014.

Rep. Della Au Belatti during a medical marijuana dispensary task force hearing last fall. Now that the bill has become law, Belatti wants to be sure that the public has a chance to weigh in on the rule-making process.

PF Bentley/Civil Beat

Because lawmakers exempted the program from the state’s usual rulemaking requirements to expedite the opening of dispensaries, the department isn’t required to hold a public hearing or accept public comments.

Still, the bill’s writers want to give the public a chance to weigh in on the guidelines. Rep. Della Au Bellati said she plans to send a letter to the department early next week requesting a public comment period.

Some lawmakers want even more public input. Sen. Will Espero thinks there should be two opportunities for people to submit comments in the next four months, and Sen. Josh Green wants there to be public hearings on each island.

“There’s no reason why they should want to shut the public out.” — Sen. Will Espero

Whether any of that happens is up to the Department of Health, which isn’t planning to publish interim administrative rules until Dec. 30. That would give companies only a month to fine-tune their plans before applications are due.

Bill Jarvis, a telecommunications business owner who is planning to apply for a license, said he still has many questions about the program, including whether the requirement that medical cannabis be grown in an “indoor facility” precludes greenhouses. He hopes he’ll have a chance to get some clarity on the law sooner rather than later.

“Every entrepreneur right now is making assumptions and decisions based on the bill as any of us have interpreted it,” Jarvis said. “I think that leaves a lot of room for mistakes and just heading down the wrong path.”

Numerous people who stopped by the National Cannabis Chamber of Commerce booth at a recent expo at the Hawaii Convention Center said they are interested in applying for a license, but worried the process would be rigged.

The department is still figuring out how it will choose licensees and isn’t yet sure how much information it will make public about applications and how they’re evaluated. DOH spokeswoman Janice Okubo said in an email that the agency will confer with the attorney general about what information may be disclosed and when.

Any perceived missteps by DOH during the selection process could trigger expensive lawsuits for the state. Legal challenges could also prevent medical marijuana dispensaries from opening next year, forcing patients to continue to rely on growing their own or buying from the black market.

Espero, who helped draft the medical cannabis dispensary bill, said public input and transparency are essential.

“There should be as much transparency as possible, period,” Espero said, “so that there’s not even a hint of favoritism or corruption.”

Public Input in Rulemaking

While the new law permitting dispensaries includes some criteria and guidelines for potential dispensary owners, the administrative rules written by the DOH will be key.

For instance, the law says applicants must have a minimum of $1 million in the bank, but the department could impose additional financial requirements or proof of financial stability.

The rules will also specify what type of security requirements marijuana-growing operations will need and what kinds of laboratory standards they’ll need to comply with.

Espero said he has sent the Department of Health a list of questions about the law that he hopes it will answer in the rules. Among them: Can two grow sites be side by side? Will applicants’ names be made public? If so, when?

Sen Will Espero speaks to Sen Les Ihara before hearing on marijuana dispensary meeting on 4 may 2015. photograph by Cory Lum/Civil Beat

Sen Will Espero, left, speaks to Sen. Les Ihara before a hearing on medical marijuana dispensaries last May.

Cory Lum/Civil Beat

The department hasn’t answered all his questions, but he’s received a few responses. For example, a licensee would not be able to grow cannabis in a greenhouse if it’s defined as “a non-solid structure made of somewhat temporary framing and covered by light fabric or material which allows filtered sunlight to penetrate.”

“I read that as, they don’t want it to be a tent,” Espero said, noting that it’s still up in the air whether a production center could have a glass ceiling or a retractable roof.

Many applicants are eager to get clarification on the rules because they’re raising money, acquiring property and entering partnerships to ensure that if they’re chosen next April, they can start selling medical cannabis July 15.

“This is a good opportunity for Hawaii to dispel the concerns that only insiders or people with a political leg up are winning.” — Sen. Josh Green

Companies that are preparing now won’t have a lot of time to change their plans if the rules aren’t made public until Dec. 30. The application process opens Jan. 12, 2016, and closes Jan. 29, just a month after the interim rules will be published.

Belatti, who was instrumental in writing the legislation, said she exempted the dispensary program from the state’s usual rule-making process because that usually takes two years. She wanted to establish the dispensaries as quickly as possible, given that patients have waited 15 years for the program after medical marijuana was legalized in 2000.

But even though the department doesn’t have to accept public input, Belatti said it should.

“We need to have rules and regulations that folks can work with and are practical,” she said.

Belatti plans to organize legal education courses in October along with the Hawaii State Bar Association around the topic of medical marijuana and what the new law means. She plans to invite the attorney general and the Department of Health to participate.

Espero would like the department to solicit public input while writing the rules, publish a draft version of the rules in October or November, accept more public comments and revise the rules by the end of the year.

“They are basically going to be accountable for any rules that will be made and whether those rules succeed or fail,” Espero said of the DOH. “There’s no reason why they should want to shut the public out.”

Carl Bergquist, executive director of the Drug Policy Forum of Hawaii, which advocated for the dispensary bill, said it makes sense that there are still many questions about the program at this point.

“It will be very unfortunate if until January we continue to have nothing to go on, but I think it’s understandable this early,” he said, noting the the administrative rules for the existing medical marijuana program without dispensaries took two years to finalize.

“Ultimately we want the patients to be able to access the medicine at the dispensaries as soon as possible,” Bergquist added. “It won’t happen if the Department of Health is swamped with inquiries, so it’s kind of a balancing act.”

Transparency in Selection Process

During the last few weeks of the session, as legislators wrangled over the medical marijuana dispensary bill, Green said he was concerned that a merit-based process for choosing licensees would make the state vulnerable to lawsuits.

Instead, he wanted to establish a first-come, first-served selection process, something dispensary advocates like Bergquist opposed.

Green was ultimately overruled, and the Big Island senator now says that he has faith that the DOH will do its best to create a fair process.

“This is a good opportunity for Hawaii to dispel the concerns that only insiders or people with a political leg up are winning,” Green said.

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

Still, he thinks transparency will be necessary to achieve that. He said that publicly posting applications and scores during the selection process could help discourage lawsuits.

Okubo from the DOH said in an email that it’s likely that the selection process for dispensary licenses will be similar to the state’s Request for Proposal process, which generally relies on an evaluation committee and a point-based system.

Green points to Massachusetts, where a lack of transparency helped fuel numerous lawsuits that prevented a medical cannabis program from opening for two and a half years.

“You have to allow the regulators to do their scoring without people jumping the gun.” —Rep. Della Au Belatti

Medical marijuana programs in New York and Chicago have also been criticized for their lack of transparency.

But Belatti cautioned against making too much information public, saying “there has to be a balance between transparency and privacy.”

“In one jurisdiction they put up all the applications and there was a public vetting of who should or should not get a license,” she said. “I don’t think that’s practical either, because you have to allow the regulators to do their scoring without people jumping the gun.”

Espero said that the biggest question he has is whether the applicant names will be made public and when. While he hopes the DOH will be as transparent as possible, he thinks some people are always going to believe there’s favoritism and corruption.

“At this stage, outside of telling people that we’re going to do our best and make this as open and transparent as possible … what else can you do?” he asked.

“This is going to be the most regulated, watched industry in the next year,” Espero said. “This is now in the hands of the Ige administration, and I don’t think they want anything inappropriate or improper to happen.”

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