New Hampshire Might Allow Medical Cannabis Businesses to Transition to For-Profit Business Model

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New Hampshire Gov. Chris Sununu vetoed a bill in June that would have allowed the state’s licensed medical cannabis companies to transition from a mandatory non-profit business model to a for-profit structure, but on Sept. 18, lawmakers have the opportunity to override that veto in a move that would expand patient accessibility, according to Temescal Wellness Founder and CEO Ted Rebholz.

Regulations for New Hampshire’s Therapeutic Cannabis Program were drafted in 2013 and required all licensed operators be non-profit entities.

“It helped to give a couple more lawmakers the warm and fuzzies … to actually vote for it,” Rebholz told Cannabis Business Times. “If that is the reason why, that’s a reason that I think most reasonable people would agree that the time has come to change it.”

The non-profit model aligned with other states’ rules at the time it was written into law, including nearby Massachusetts, Rebholz said, but other states have since changed their regulations.

“New Hampshire didn’t change,” he said. “Massachusetts changed, others changed, and that begs the question: Why? The reason is because this is a really capital-intensive industry, and the sources of funding are really few and far between. … When you force a company to be a non-profit entity, … you’re … limiting them to only raising debt. That means, kind of like a home mortgage, you’d better make that payment every single month, in the right amount and at the right time. That leaves little flexibility for a start-up company that has really a long process to just start construction, not to mention to generate revenue and get on its feet.”

Equity, Rebholz said, is more patient—equity investors put capital into the cannabis industry with the understanding that licensed businesses need money and time in order to generate the revenue required to reward those investors.

In addition, a for-profit model would allow Temescal Wellness and other licensed cannabis businesses in the state to expand their reach and product offerings, as well as lower prices, to ultimately benefit New Hampshire’s patients.

“We’re responsible for consistently providing an expanding array of high-quality products to a growing body of patients. It’s a lot of effort,” Rebholz said. “We’ve got the drive. We’ve got the motivation. We’re mission-driven. We want to do it, but these non-profit shackles limit our ability to treat our patients the way they deserve to be treated.”

Photo courtesy of Temescal Wellness
Temescal Wellness’ New Hampshire location

Senate Bill 145 would have removed these shackles, and it received approval in the New Hampshire Senate and House before Sununu’s ultimate veto. Sununu, Rebholz said, cited concerns with larger tobacco companies acquiring the state’s cannabis operators and increasing the misuse of cannabis, a sentiment that Rebholz appreciates and even agrees with.

“However, there is a big misunderstanding in the governor’s office because the statute already provides him and the executive branch clear authority to deny any transfer of license ownership,” Rebholz said. “In other words, the control that he wanted to protect the public interest—which is important—was not threatened, was not changed at all … by S.B. 145.”

On New Hampshire’s Veto Override Day, scheduled for Sept. 18, lawmakers are expected to try to override Sununu’s veto on S.B. 145, countering his argument with a reminder that he can still protect the state’s cannabis industry from a Big Tobacco takeover. And Rebholz is optimistic that an override will be successful.

“I think there’s a very good chance, if we get the message out to the lawmakers that we need to get it out to,” he said. “More than two-thirds of the House approved S.B. 145. In the Senate, it was a solid majority—I think it was just shy of two-thirds. … Lawmakers need to understand that the governor’s office was motivated by the right things, but even with S.B. 145 passing, the governor is still going to have the power to protect the people as he has, and as he should.”

Should an override come to pass, Rebholz and the Temescal Wellness team have plans to improve patient access in the state through the opening of additional store locations, an expansion of product offerings and the introduction of lower price points.

“When you restrain … operators by this non-profit requirement, we have spent a lot of money every single month on debt service,” Rebholz said. “When you allow us to switch from non-profit to for-profit, all of a sudden, all those lenders become patient equity owners, and we don’t have to pay them every month. And those equity owners don’t want to us to pay them every month. That’s the thing—they don’t want to be lenders. Instead of debt service payments, they want us to grow our business, and they know that growing our business means opening new locations. They know growing our business means investing in production and investing in our workforce to expand our offerings. They know that growing our business actually means lowering our prices to a point where more people can actually afford therapeutic cannabis. We’ve been wanting to do all three of those things for years, and S.B. 145 is the opportunity to make that possible. »

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