Medical marijuana competition in NJ lowers prices, brings new business vibe

New Jersey's newest medical marijuana dispensaries have a different vibe - and offer deeper discounts - than the first crop of alternative treatment centers that opened in 2012 and 2013.

Gone are armed security guards at the entrances and rigid prices.

The two dispensaries that launched last fall have a more relaxed atmosphere for patients and offered discounts and specials that knocked the average price of $489 an ounce down to the $300 range, more in line with Western states.

The fresh competition has caused prices to tumble among the state's five dispensaries.

After opening in a Bellmawr industrial park in Camden County six months ago, Compassionate Sciences Alternative Treatment Center now appears to be the fastest growing and most innovative.

It boasts the most hours, being open seven days a week and a few evenings, and also holds classes to teach patients how to make marijuana cookies. Last week it had the most strains - 13, including the popular lavender.

"Meet and greets" with the growers give patients the chance to learn about the plants; other classes discuss how to choose a vaporizer. "It's nice to get the patients together," said Gretchen McCarthy, the dispensary director.

Compassionate Sciences also is the only dispensary to obtain state approval to construct a manufacturing room that will be used to produce a marijuana syrup for sick children, cannabis lozenges, and topical lotions. "We're already retrofitted and have purchased some of the equipment," said Michael Nelson, general manager of PalliaTech, which operates the dispensary. He hopes to begin selling the products in a few weeks but is waiting for final state approvals.

Health Department spokeswoman Donna Leusner said the dispensary still must pass an occupational health and safety evaluation and "satisfy the department that they have met the manufacturing standards."

Breakwater Treatment and Wellness Center, which opened in Cranbury in October, a few weeks after Compassionate Sciences, plans to submit similar manufacturing plans. Garden State Dispensary, which opened in Woodbridge in 2013, also is working on a proposal.

Currently, only cannabis flowers and buds can be sold in New Jersey.

Patients and advocates have pushed for oils and edibles, saying sick children and seniors can more easily use those types of cannabis. In Pennsylvania, a bill that would legalize medical marijuana would only allow oils, pills, and lotions, and would ban buds. Recently passed by both chambers, the bill is undergoing more review.

Some patients, however, prefer smoking marijuana because it provides quicker relief from acute pain. Compassionate Sciences sells 11 vaporizer types to give patients a safer way to inhale cannabis and get the same results, McCarthy said. "The vaporizer is the healthiest way to take the medicine," she said.

McCarthy said the classes create a friendly atmosphere in the dispensary and allow the patients to exchange recipes and learn how to use a $180 Magical Butter Machine, a cannabis crock pot. State regulations, however, prevent using actual marijuana in the demonstrations.

Patients at Compassionate Sciences also learn the differences between the 13 available strains, a significant increase from the three that were available when the first three dispensaries opened and when the law was stricter.

McCarthy said low-income patients qualify for a 20 percent discount, and military veterans get a 10 percent discount. Two strains are usually on sale, and last week there were more price breaks that allowed a low-income patient to buy an ounce for as low as $288.

Breakwater also offers discounts - 15 percent off for veterans, low-income patients, senior citizens, and minors. It too runs specials.

Andrew Zaleski, one of Breakwater's owners, said his dispensary helped spark the healthy competition that has lowered prices overall. "We were pioneers when it comes to trying to help the patient community, as far as making it more affordable," he said. He also said that the pre-rolled marijuana, which has smaller, less desirable buds, also is sold at a considerable discount.

For years, patients and advocates complained the Health Department's slow pace in approving the dispensaries had given the early facilities a monopoly and allowed steep prices. Last month the department issued a report that said the average price in 2015 was $489 an ounce, which advocates said is among the highest in the nation. When Compassionate Sciences opened in September, it immediately lopped $40 off the going price of $480 an ounce and announced discounts.

The report said Compassionate Sciences has 2,800 plants in active cultivation, the most among the dispensaries. It sold 105 pounds of cannabis in its first three months of operation. If the dispensary continues at that pace, it would be on track to become second in total sales volume, after Garden State Dispensary, which sold 635 pounds last year.

South Jersey's only other dispensary, Compassionate Care Foundation, in Egg Harbor Township, sold 302 pounds during the same 12 months. Greenleaf Compassion Center in Montclair sold 141 pounds that year. Breakwater sold 45 pounds between Oct. 15 and Dec. 31.

Compassionate Care, which opened in 2013 with much fanfare in a warehouse near Atlantic City, has struggled with its plans to expand. Its 2014 proposal to manufacture cannabis edibles failed to get state approval and was abandoned. Its announcement that it would triple its growing operation with a $357,000 state loan also fell through.

Frank Dagostino, the dispensary CEO, did not return calls for comment. According to its Facebook page, the dispensary had 10 available strains and one on special last week. A patient there reported he could purchase an ounce for $320 using a low-income discount.

In 2011, when the state approved permits for the five dispensaries and for a sixth that still has not opened, the operators had projected 100,000 patients would sign up. Only patients who have one of about a dozen ailments are eligible to use cannabis in New Jersey, and only about 7,000 have registered since the program's inception six years ago. Dispensary operators and patients blame the state's overly restrictive regulations, saying these have made the program too unwieldy and expensive.

The Health Department has defended its strict rules, saying it wanted to create a program in which patients would get a safe, quality cannabis product, and also wanted to prevent recreational use.

The dispensary operators say they are disappointed with the slow growth in the number of patients, but they hope the price cuts will help. They also anticipate the launch of the manufactured cannabis products will spark new business.

"It will change the industry completely," McCarthy said.

jhefler@phillynews.com

856-779-3224 @JanHefler