Richard M. Evans and Michael D. Cutler: Looking Ahead to Medical Marijuana in Massachusetts

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The likelihood that a medical marijuana initiative will appear on the Massachusetts ballot this November – and the very real possibility that it will pass – make this an ideal time to explore the issue further. So we’d like to take a look at the opportunities, risks and hurdles that lie ahead for MMJ in the state.

If approved by a majority of voters, the new law will go into effect Jan. 1, 2013, providing immediate protection to patients and doctors. The Massachusetts Department of Public Health (DPH) then has until May 1 to define the process and criteria for issuing licenses to cultivate and distribute medicine.

Here are some highlights of the proposed law:

-The DPH will be authorized to issue up to 35 licenses (or “registrations”) for the operation of dispensaries, or “Medical Marijuana Treatment Centers” (MMTCs). At least one license will be issued in each county, and no more than five will be given out for any one county.

– Dispensaries must operate as “not-for-profit” entities. This requirement suggests two models: one benefiting an existing non-profit charitable organization, and one benefiting patients by reducing or subsidizing the price they pay at the counter. In either case, MMTC operators may budget and claim salaries commensurate with revenues.

– Dispensary registration may include a cultivation component, either on-site or in a separate location. Both the cultivation and dispensing facilities must be tightly secure, with access to medicine limited strictly to card-carrying patients and DPH-approved employees and staff.  The production and distribution of edibles to qualifying patients is contemplated under the law.

The Massachusetts initiative follows the lead of Maine and Rhode Island, tightly capping the allowable number of dispensaries and cultivation operations.It also calls for a regulated application competition.

While the DPH must still lay out the specific criteria for obtaining a dispensary registration, the successful applicant likely will have to satisfy two threshold conditions. First, the applicant will be expected to present a thorough, well-capitalized business plan that outlines solid management experience and demonstrates a capacity to provide marijuana in a way that serves not only the needs of qualifying patients, but also adheres to public health and safety guidelines.

The second condition is transparency. The DPH likely will require applicants to submit complete resumes and disclose the source and availability of startup funds. Transparency also will rule retail and cultivation operations, with strict recordkeeping and reporting requirements as well as extensive video surveillance.

The inscrutable obstacle is the federal government, which has cracked down on dispensaries and cultivators in some states, thwarted implementation of MMJ programs in others, and curiously left some alone. In Montana, dispensaries have been raided, with operators being harshly prosecuted. In Rhode Island, the U.S. Attorney threatened state employees with arrest merely for processing applications for patient cards and dispensary licenses. In Maine, however, three dispensaries are operating without federal interference and without incident.

If Massachusetts voters say yes to medical marijuana in November,  U.S. Attorney Carmen Ortiz will have to decide whether to deploy federal forces against qualified patients, their doctors and the suppliers of their medicine. She’ll also have to weigh whether or not to enlist the IRS and other federal agencies in the waning national crusade against marijuana. Making a decision on these matters might get much easier if voters in Colorado or Washington State approve the nonmedical legalization initiatives on their ballots, which would lead to an unavoidable upheaval in federal policy. But nothing is certain, and we can’t predict how Ortiz will respond to the implementation of medical marijuana laws in Massachusetts.

This industry’s quest for legal recognition – as well as its efforts to claim a place in the open marketplace, to be treated like any other business aiming to fill consumer needs, to create employment and to pay its taxes to achieve the economic and non-economic benefits of helping patients deal with debilitating conditions – is an anomaly. Never in American economic history have entrepreneurs met such fierce resistance from the government while trying to respond to the express wishes of voters.

A shakeup in marijuana laws is imminent. Prohibition is unsustainable. The challenge for medical marijuana businesspeople is not only to seize opportunities that changes in the law will offer, but to become responsible business citizens, validate the confidence of voters and build a solid foundation for the emergence and growth of the broader nonmedical cannabis industry.

Richard M. Evans and Michael D. Cutler are medical marijuana lawyers in Northampton, Massachusetts.