With the start of Illinois’ medical marijuana pilot program last year came a wave of enthusiasm for the cannabis startup scene in Chicago.
Startups around cannabis investing, social networking, real estate, and more began popping up, and there’s been enough interest to launch a monthly marijuana entrepreneurship meetup group at 1871 called CannaTech, which founder Zach Marburger says continues to bring in crowds of 100+ each month.
But the Illinois cannabis pilot has been off to a slow start–only about 5,600 patients are eligible for a medical marijuana prescription, a mere 18% of the nearly 30,000 people who have started an application. This is mostly due to the few number of qualifying conditions for patients to be eligible for the medicine, and the unwillingness of doctors to prescribe the drug to the patients that do qualify.
The number of medical marijuana users in Illinois is way below the expected 100,000+ figure that was originally projected, and there have been signs that Bruce Rauner isn’t thrilled about expanding the program. He has denied adding new qualifying medical conditions to the program, and the the future of the pilot–which ends at the end of 2017–has yet to be determined, said Marburger, who’s also the CIO of Cresco Labs, one of the marijuana cultivators in Illinois.
This makes for a tricky situation for Chicago’s cannabis startups, who are looking to grow their businesses while navigating the industry’s uncertain legislative waters.
“We have still quite a restrictive program,” said Marburger, who’s also the founder of Whaxy, a dispensary finder and cannabis resource. “We’re dealing with slower growth because of that. Until there’s some actual legislative changes of conditions added to the program, I think we can experience very similar slow, but steady growth.”
Marburger is optimistic that Chicago can have a thriving marijuana tech scene, and noted that Illinois’ laws don’t necessarily prohibit cannabis startups from launching in Chicago and serving more weed-friendly states like Colorado and Washington. One such startup, PrintaBowl.co, makes 3D printed smoking devices in Chicago, with a large customer base out west, Marburger said.
Chicago-based Kannatopia, a social network for cannabis users, is launching its beta version soon, and founder Kurt Akers said that while Illinois’ program has sputtered, there’s an increasing energy and enthusiasm from the local cannabis startup community.
“We’re establishing a cannabis culture,” he said. “The sky hasn’t fallen down.”
A big hurdle to adoption is getting acceptance from the physician community. The Healing Clinic, a medical marijuana advocacy center, surveyed 400 Illinois doctors and reported that 82% are not approving patients, according to the Chicago Reader.
“Cannabis is a new medicine for a lot of doctors,” Marburger said. “They’ve never recommended it before this program started as a method of treatment. And the lack of research makes it tough for some doctors to want to recommend it to their patients.”
Both Marburger and Akers believe that once Illinois expands its pilot program, entrepreneurs and technologists will become more willing to flock to the growing industry; Illinois medical marijuana sales hit $1.9 million in March, its highest figure to date. And startups like HerbFront, Cannafundr, and DispenseFirst have all launched in Chicago to be on the forefront of the cannabis industry both in Chicago and nationally.
But there’s still skepticism among those in the industry about the growth of the pilot program, or if it will even be extended at all, Akers said, leaving some to question the future of Chicago’s medical cannabis businesses.
“If this program goes down, it’s something like a quarter billion dollars of investment money into the space in Illinois is just gone,” Akers said. “What happens after that, I don’t think people really know.”
Correction: This piece was updated to reflect Akers’ accurate quote. The correct quote is, “something like a quarter billion dollars of investment money,” not “something like a quarter million dollars of investment money.”
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