Utah agriculture officials say medical cannabis initiative may impossible to administer, eventually could cost Utah taxpayers big

State agriculture officials are worried they won’t be able to meet deadlines mandated by the medical marijuana ballot initiative, which they say will lead to unregulated cannabis cultivation by the public.

A powerpoint presentation to Governor Herbert’s cabinet obtained from the Utah Department of Agriculture and Food through a GRAMA request shows state officials have severe misgivings about being able to implement rules for medical cannabis cultivation and regulation by January 1, 2020. The analysis says the initiative would be impossible to administer effectively because of “vague language, poor drafting and a complete lack of rulemaking.”

They also say the costs to businesses wanting to obtain a license to grow medical cannabis would be too burdensome, which would put a financial drain on state budgets.

“We’re really concerned about the timeline,” says Utah Department of Agriculture and Food Deputy Commissioner Scott Ericson. 

If voters approve the initiative in November, the department will have just 13 months to write seven separate rules for medical cannabis sales and cultivation. That rulemaking process includes public comment periods. Additionally, the department must issue an RFP for a computer system to handle sales and inventory for medical marijuana. Currently, the department is going through the process to write seven rules for the regulation of industrial hemp for CBD oil and medical cannabis as a result of legislation passed by the 2018 legislature. The first set of three rules should be ready later this month, a process that has taken four months. If the medical marijuana petition passes in November, it would require an entirely separate rulemaking procedure.

“We’re looking at 18 months to get through the whole current rulemaking process,” says Ericson. “It’s not fair for us to put out an RFP and ask companies to bid without them knowing what the rules are.”

If the department fails to issue the RFP and complete the rulemaking in that 13 month period mandated by the initiative, then Utahns would be able to grow their own medical cannabis or contract with someone to do it for them outside of state regulations.

“There would be no state control, no regulation of that substance at all. People would be able to self-medicate with no quality control. You can do whatever you want with the product with very little oversight. It would be highly concerning to have a federally controlled substance that would be basically unregulated throughout the state,” says Ericson.

DJ Schanz with the Utah Patients Coalition, the group behind the medical cannabis initiative, says there’s no reason why the state can’t get their act together and meet that 13-month deadline.

“We wanted to give the department every incentive to get this done in time. 31 other states have been able to implement a medical cannabis initiative, Everything is almost boilerplate at this point,” he says

Another issue raised by the powerpoint presentation is the potential drain on the state’s general fund if the initiative passes. The initiative mandates that the entire medical cannabis program will be paid for by fees, but Ericson says their analysis concludes that cost would be prohibitively high for any business.

“We’ve been working with the fiscal analyst to see what it would cost. The licensing cost for a company that wanted to cultivate medical cannabis would be $185,000 every two years. That’s way too much,” he said.

Ericson added the $185,000 estimate from the Legislative Fiscal Analyst would just be for the Department of Agriculture component. There would be additional licensing costs to cover the public health and public safety components. Needless to say, those licensing costs would be transferred to consumers to keep a business solvent.

“$185,000 is too much to make it viable for any business,” he said. “I don’t believe that’s fair. Over time it will have to move away from fees for it to make sense.”

The only way to avoid exorbitant fees on businesses and consumers is to have the state step in and subsidize the medical cannabis program with taxpayer money.

Schanz says he’s approached nearly every single day by businesses “champing at the bit” to get involved in the cultivation or distribution of medical cannabis in Utah, and the projected costs for licensing would not be a roadblock to those businesses.

“The market will say what’s fair and not fair. There are plenty of businesses that want to get involved here. They tell me these objections are the same ones they’ve heard over and over again. They make no sense. Our initiative is revenue neutral, meaning it won’t cost taxpayers anything,” he says.

State officials are ultimately worried the medical cannabis initiative, as written, will set the state up for failure, leading to the unregulated cultivation of cannabis throughout the state.

“We believe that medical marijuana and CBD oil have medical benefits. Our goal is to make them available in a safe and regulated manner, whether it comes through the legislature or the initiative,” says Ericson. “Regardless of what happens, this is still a federally controlled substance. There should be some restrictions.”