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$9M in Startup Costs for MA Dispensary

| May 1, 2014 | News

Starting a medical marijuana business in Massachusetts is not for the faint of wallet.

A company that received two of the 20 provisional dispensary licenses awarded by the state anticipates shelling out at least $9 million in startup expenses and initial operating costs.

New England Treatment Access (NETA) will open storefronts in Brookline and Northampton as well as a cultivation facility in Franklin later this year. The company’s two principles – Kevin Fisher and Arnon Vered – said roughly $3.8 million will cover infrastructure costs all those locations, while $5.2 million will float the entire operation until its projected break-even point in the first quarter of next year.

The funding comes via a loan from businessman Howard Kessler, who owns a financial services consulting company in Boston.

Fisher and Vered have ambitious revenue projections. They estimate the business will bring in $9.8 million in 2015 under the assumption that each patient will purchase 1.6 ounces per month with average prices of $4,800 per pound. The two hope to grow revenues to $19 million by 2017 and reach a peak patient count of 3,200 in 2016.

The numbers highlight the sizable financial risk of opening a dispensary in a restrictive market. NETA’s revenue projections could be impacted by unfriendly neighbors, price fluctuations, market size and patient purchasing habits, among other factors.

The figures also underscore the enormous capital costs required to open a medical marijuana business in a restrictive market. First-generation medical marijuana entrepreneurs in less restrictive states such as Colorado, California and Washington State often started their businesses for tens of thousands of dollars. That will not be the case in newer markets such as Massachusetts, Nevada and Illinois, where entrepreneurs are will need to spend millions to get started.

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