Utah’s Cultivation License Scoring Methodology Favors Well Capitalized, Successful Businesses

The Utah Department of Health’s application window for medical cannabis cultivators opened on May 31, 2019, and applications may be submitted through July 1, 2019. Utah’s applications process is unique in that it is scoring methodology favors applicants that can articulate a strong business plan and demonstrate access to capital and the know how to harvest medical cannabis by the first quarter of 2020.

Utah voters approved Ballot Proposition 2 in November 2018 to legalize medical marijuana. The Utah legislation enacted the Utah Medical Cannabis Act in December 2018, which replaced the Ballot Proposition 2. The Medical Cannabis Act mandates the implementation of the medical cannabis industry by March 1, 2020. Opening the application window for medical cannabis cultivators is the first step in this process.

Below are four things to know about the application process in order to obtain one of the ten available licenses.

• Forty percent (40%) of the score is based on whether the applicant can demonstrate a strong business plan and show that it can harvest medical cannabis by March 2020. Applicants must show how they will become operational and make money given the size of Utah’s medical cannabis market. This includes disclosing pricing models, sales and marketing plans, cultivation analysis, and a project timeline for producing a harvest between January 1, 2020, and March 1, 2020.

• The timeline for producing the first quarter harvest will require applicants to build an indoor cultivation facility. The state is limiting the facilities to 100,000 square feet. The expense of building, staffing, and implementing operations within the required timeline will limit the potential licensees to those who can demonstrate they have access to the capital, know-how and track record for execution.

• Utah’s application scoring methodology takes a broader approach to social equity, which accounts for 15% of the overall points. Applicants must describe how they have positively impacted a local community, and if they obtain a license, how they will build a positive connection with the community in which it is based. This open-ended approach may produce creative and positive solutions for local communities.

• Utah’s emphasis on a business’ long-term viability is further reflected in the fact that the state will allow out of state investors to own and operate the cultivation facilities. In response to questions by bidders, the DOH indicated “[a]lthough the initial rule discussions included language of Utah residency. We are working to have that removed. At this time the State of Utah is not excluding non-residents of Utah.”