On April 17, Governor Wolf signed Senate Bill 3 (known as the Medical Marijuana Act) into law. The law went into effect on May 17, and Pennsylvania joined 23 others states by legalizing medical marijuana.
The Act aims to create a medical marijuana program, overseen by the Pennsylvania Department of Health, for patients suffering from a certain designated medical conditions. The program is expected to be implemented within 18 and 24 months, making medical marijuana available to qualified patients by early 2018.
The law has different impacts for interested parties – physicians and potential growers and dispensers. Here is part two of our in-depth series, with a focus on the latter.
What Does The Medical Marijuana Act Mean For Potential Growers and Dispensers?
“Growers/Processors” and “Dispensers” of medical marijuana are strictly licensed with strict limitations. Statewide, the Department may not issue permits to more than 25 growers/processor or more than 50 dispensaries. Further, each dispensary may provide medical marijuana at no more than three separate locations.
There is also a limit on the number of permits given to one person, as the department may not issue more than five individual dispensary permits or one individual grower/processor permit to one person. Finally, no more than five grower/processors may be issued permits as dispensaries.
There is a larger burden of responsibly placed on those looking to obtain a growing/processing or dispensary license. In addition to agreeing to comply with all applicable laws of Pennsylvania, to obtain a license, an applicant will be required to demonstrate that it will maintain effective control of and prevent diversion of medical marijuana; ready, willing and able to properly carry on the activity for which a permit is sought; and possesses the ability to obtain in an expeditious manner with sufficient land, buildings and equipment to properly grow, process or dispense medical marijuana. In addition, the applicant must prove there is public interest to grant the permit and he or she is of good moral character and has the financial fitness necessary to operate. In this regard the application process will include criminal background checks of the principals, financial backers, operators and employees of applicants. Finally, the applicant must be able to implement and maintain security, tracking, recordkeeping and surveillance systems relating to the acquisition, possession, growth, manufacture, sale, delivery, transportation, distribution or the dispensing of medical marijuana as required by the department.
Growers/Processors will be subject to a nonrefundable $10,000 application fee coupled with a $200,000 “permit fee” paid at the time of application but which is refunded if the applicant is ultimately unsuccessful. Prior to issuing a permit, the department is required to verify that the applicant has at least $2,000,000 in capital, $500,000 of which must be on deposit with a financial institution. Dispensers are subject to a nonrefundable $5,000 application coupled with a $30,000 “permit fee”. Verification requirements are $150,000 in capital, which must be on deposit with a financial institution. Licenses are non-transferable and are a “revocable privilege”.
Notwithstanding this state law, the cultivation, processing, distribution, possession and use of marijuana remain a federal crime with no exception for medicinal use. With that said, the risk of prosecution is currently low as federal prosecutors have been adhering to policy statements and guidance indicating that they not devote resources to prosecuting activities conducted pursuant to state legislation.
The new medical marijuana law is favorable for people who wish to do business within the industry, as a grower or dispenser. The legislation is broad and the upcoming regulations will provide greater clarity and direction on the process of obtaining licenses and permits. Consulting experienced corporate, banking and real estate legal counsel will be key to your success in these endeavors.