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Licensed medical marijuana growers say clinics pushing for referral fees

Joey Arsenault uncovers cannabis seedlings at Tilray a medical marijuana grow-op in Nanaimo August 14, 2014. (John Lehmann/The Globe and Mail)

John Lehmann/The Globe and Mail

One of Canada's largest licensed medical marijuana producers says it has repeatedly been hit up by specialized clinics asking for money in exchange for referring patients to them – a practice that underscores the lack of clear rules governing the relationship between consumers, their doctors and growers in the nascent industry.

While many of the provincial colleges that regulate doctors forbid physicians to charge patients or growers directly for marijuana prescriptions, it is less clear whether those restrictions apply to clinics that employ doctors. The federal regulatory regime implemented a year ago has sprouted a cottage industry of cannabis clinics for patients whose own doctors may be uncomfortable prescribing medical cannabis. (Pot dispensaries that have exploded in Vancouver and are popping up around the country operate illegally and are unregulated.)

Tilray, a U.S.-owned medical marijuana grower in Nanaimo, B.C., has pulled out of Canada's main industry lobby group over what it says is a lack of ethical guidelines for producers. Tilray is creating a competing association and calling for a national code of ethics that would forbid growers from paying fees for patient referrals, which it says can be as high as $400. (The Canadian Medical Cannabis Industry Association said the proposed code could make it harder for its members to sponsor research and could violate Canada's competition laws.)

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Fellow producers Whistler Medical Marijuana Corp. and CanniMed echoed Tilray's assertions that clinics had asked for referral fees.

A Health Canada spokesman said on Monday the department is "concerned about reports" of such fees and is "actively looking into the issue" to determine whether any licensed producers were in a conflict of interest. He added that Health Canada expects producers to "adhere to a high standard of ethical conduct."

At the beginning of last month, the British Columbia College of Physicians and Surgeons revised its professional standards to forbid doctors to charge patients or producers any fees for a medical marijuana prescription, as is the case in Ontario, Alberta, Nova Scotia, Newfoundland and Quebec. Since the change, the B.C. college has not had any complaints or informal inquiries regarding payments involving producers, doctors or clinics, senior deputy registrar Galt Wilson said.

"If you diagnose pneumonia and you prescribe an antibiotic, you don't get to charge extra for the prescription," Dr. Wilson said. "So, similarly, if you are prescribing cannabis for a medical condition, that as far as we're concerned is a prescription: Don't [charge for] it."

However, Dr. Wilson said the issue get murkier when clinics specializing in medical marijuana prescriptions charge growers for referrals.

"I anticipate some legal questions will have to be addressed," Dr. Wilson said when asked whether the clinics fall under the college's jurisdiction.

Greenleaf Medical Clinic in Abbotsford, B.C., charges new patients $333.50 for consultations with its experts, but president and CEO Fonda Betts said a visit and a prescription from the clinic's doctor are free and producers are not charged for referrals.

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She alleged many of her competitors in Ontario are asking producers for a referral fee or a slice of profits, which is often about 15 per cent of the value of the prescription. She said this can net a clinic about $650 a year for the average prescription of about a gram and a half of dried marijuana a day. Ms. Betts said Greenleaf is reviewing the business case for switching to that model because it would shift the financial burden from patients to producers while allowing the clinics to continue dispensing knowledge about the system.

"It's not like the patients can go to a pharmacy and ask questions, so the clinics exist because we're an educational resource for patients," Ms. Betts said.

Toronto doctor Danial Schecter sees an inherent conflict of interest if a doctor works at a clinic that makes money for each patient it passes on to a licensed producer. He said his small Eglinton Avenue medical marijuana clinic does not charge producers for referrals nor ask patients to pay for their initial consultation or prescription.

"If a physician starts getting a kickback for how much a patient will be ordering, there's a natural incentive for a physician to want to prescribe more and that's very very problematic because, at least in my clinical experience, patients often get a much better response when they use less cannabis and they don't use it every day," he said. "If they're only getting fees through [the provincial medicare plan] and they're not getting any kind of kickback whatsoever, then, sure, I don't really see how it matters.

"But you could always make the argument that they're working at the clinic [and] the management is going to encourage them to write higher [-dosage] prescriptions so that they can make more money."

Dr. Schecter said his clinic is looking to sign research contracts with licensed producers to generate research "that will actually be value-added."

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The pressure for clinics and producers to gain any competitive advantage will likely become more intense as demand for medical marijuana is expected to increase tenfold and fuel sales of $1.3-billion in the next decade.

Dr. Wilson said "the only way of accessing it legally is through the doctor, and imagine if you had to go to the doctor to get a case of beer: That's where the demand is in my view."

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