By Omar Sacirbey
Pennsylvania has moved quickly to issue draft regulations governing its new medical marijuana program, a sign the state is keen to get the MMJ industry off on the right foot.
The proposed rules are detailed and offer marijuana entrepreneurs a road map of where the program is headed, experts said.
Among other things, the proposed regulations aim to promote racial diversity within the state’s emerging medical cannabis industry, and they mandate the use of natural pesticides in what is expected to become a major MMJ market.
“The thing that shouldn’t be lost in this is the speed with which the government developed regulations. Everything so far has happened on schedule,” Michael Bronstein, the Philadelphia-based co-founder of the American Trade Association for Cannabis and Hemp, said.
Gov. Tom Wolf signed Pennsylvania MMJ’s legislation into law in April, making the state the 24th to have a workable MMJ program. (Ohio and Louisiana have since passed legislation setting up workable programs as well).
Brett Roper, chief operating officer of Medicine Man Technologies, a cannabis consulting firm in Denver, called the Pennsylvania Department of Health’s regulatory blueprint” robust and reasonably crafted,” although he’d like to see a few tweaks.
“Overall we’re pleased with what we’re seeing,” he added.
The draft regulations reflect the state’s MMJ law but also contain new details. For example:
- A business must have a diversity plan that includes information on how it plans to hire minority employees.
- Businesses cannot import out-of-state marijuana plants, but growers will have a 30-day window to import seeds for their first crops. Subsequent crops must be grown with seeds, clones or grafts produced at in-state facilities.
- Growers must report concentrations in plants of THC, CBD and at least seven other cannabinoids.
- Growers must implement a seed-to-sale tracking system and report real-time inventory tracking of seeds, plants, clones, grafts, marijuana ready for sale, and damaged or contaminated marijuana awaiting disposal.
- Growers must have a plan in place to recall contaminated marijuana; it must include notifying state regulators and the public about the contamination.
- Growers may only use about 50 pesticides, herbicides and fungicides approved by the Pennsylvania Department of Agriculture, including those containing ingredients such as cinnamon oil, garlic oil and white pepper.
Pennsylvania has a population of nearly 13 million people and a substantial list of approved medical conditions, including post-traumatic stress disorder and severe chronic or intractable pain – elements that could make it one of the biggest MMJ markets in the country. The pain conditions, however, contain the caveat that MMJ can be used only when conventional or opiate therapies are ineffective.
According to initial estimates by Marijuana Business Daily, Pennsylvania’s dispensary revenues could surpass $100 million a year – and potentially get much higher – a few years after the first dispensaries open. It could be two years or more before dispensaries open their doors.
The draft rules also reflect the following that were spelled out when the law was approved in April:
- Initially, 25 grower licenses and 50 dispensary licenses will be issued.
- Each company that wins a dispensary license can open up to three locations, meaning there could be up to 150 dispensaries.
- Up to five of the 25 grower licenses can be vertically integrated with dispensaries, while the overall number of grower and dispensary licenses could expand in the future.
- Growers must pay $10,000 to apply for a license, while the actual permit will run $200,000. Growers must then pay $10,000 annually to renew the license.
- Dispensary application fees will be set at $5,000, while dispensary licenses will cost $30,000 and be good for one year. Renewal fees will cost $5,000.
While pleased with the suggested rules, Roper said several points need clarification – something he hopes regulators will do in the months ahead.
For example, the draft regulations say a batch of flower must weigh no more than five pounds, but don’t specify whether that is dry weight or wet weight, Roper said.
It’s a small but important detail, because plants lose 80% to 90% of their weight in moisture over a couple of weeks after being harvested. And a wet weight would sharply the limit size of a batch. Roper believes omitting “dry” is a simple mistake, but one that should be corrected nevertheless.
The proposed rules also are overly stringent on background checks, Roper said.
For example, it’s understandable they mandate license winners to perform background checks on long-term permanent employees; but the draft regulations also require background checks for contractors and subcontractors, like construction workers or equipment installers who help build the business – but aren’t on the marijuana firm’s payroll when it opens.
The suggested rules also state that if regulators find mistakes or omissions in license applications, they will notify the applicant and give them 30 days to correct the application. On top of that, the draft rules say applicants can ask for a 90-day extension to file their application, Roper said.
“You can have six months of application back-and-forth before they even announce something,” Roper said.
Brian Fox, whose company Cannavations recently won a processing license in Maryland, is also eyeing Pennsylvania. He likes the speedy way the rules were released. And he likes the idea of having businesses in two neighboring mid-Atlantic states.
“It would be easy to expand into Pennsylvania with a lot of the same people,” Fox said. “It would be an advantage to have people who could help me in both states.”
But he’s also worried about the state’s product limitations, such as not being allowed to sell flower.
“There seem to be quite a few limits in what we can produce and what can go to the patient in the end,” Fox said. “I’m just not sure yet if Pennsylvania will be a great fit for us or not.”
Omar Sacirbey can be reached at [email protected]