With Pennsylvania Medical Marijuana a Reality, Attention Turns to Regulations

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By Omar Sacirbey

The marijuana industry is toasting Wednesday’s passage of a sweeping medical cannabis bill in Pennsylvania, which is set to become the 24th state to legalize MMJ and the first to do so in nearly two years.

But now the heavy lifting begins for Pennsylvania regulators who must write page upon page of rules for the program, while aspiring entrepreneurs and existing cannabis business owners alike will start determining whether to get involved in a potentially lucrative new market that offers both promise and pitfalls.

State lawmakers officially approved the bill Wednesday afternoon after months of debate and back-and-forth. Gov. Tom Wolf will sign it into law on Sunday.

With nearly 13 million people, a lengthy list of approved medical conditions – including severe chronic or intractable pain – and a relatively business-friendly MMJ law, observers expect Pennsylvania to eventually become one of the biggest medical marijuana markets in the country.

The exact size of the market – as well as how big the business opportunities will be – ultimately depends on what type of regulations the state implements, however. And much of that won’t be know for a while.

“The Department of Health will have to come up with all the pieces to the puzzle when they draw up the regulations,” said Brett Roper, chief operating officer of Medicine Man Technologies, a cannabis consulting firm in Denver. “And they’ll have to do it carefully, because if they don’t that’s where opportunities fall by the wayside.”

As the rulemaking process plays out, “people will know whether or not they should invest millions of dollars in the state,” Roper added.

The law will go into effect one month after Wolf signs the measure. Regulators could then take up to 18 months to draft regulations.

It could then be another several months before the state begins accepting applications – and a good two to two-and-a-half years from now before the first dispensaries open their doors.

“It’ll be a long process, and a lot of people will be involved,” said Michael Bronstein, co-founder of the American Trade Association for Cannabis and Hemp. “These regulations are where the bill will come to life.”

One of the most important keys to whether Pennsylvania’s market thrives will be how easy or difficult it will be for patients to get medical marijuana cards and doctors to participate in the program, Roper said.

Under the legislation, doctors who wish to recommend medical marijuana will have to take an online certification course and opt in to the program.

The same rules exist in New York – the last state to legalize medical marijuana – and are frequently blamed for the slow start to its MMJ program, which has been suffering from a lack of physicians and a lack of patients.

“Our biggest fear would be to advise clients to move into this market and then find out regulators created more roadblocks than opportunities,” Roper said.

Another concern is that the proposed bill doesn’t allow for smokable flower or edibles, which could undercut the market.

But because the program allows several other forms of consumption – pills, oils, topicals, tinctures and liquids – program backers say patients will have enough options to want to sign up.

The bill doesn’t address residency issues. So regulators must decide whether the program will allow out-of-state business operators, or only Pennsylvania residents.

One of the main attractions of the legislation is that it includes 17 approved medical conditions, including severe/intractable pain, PTSD, inflammatory bowel disease, multiple sclerosis and Parkinson’s disease.

The legislation also spells out the following for cannabis businesses :

  • Twenty-five grower licenses and 50 dispensary licenses initially will be allowed, with each dispensary license allotted up to three different locations for a total of 150 storefronts.
  • Up to five of the 25 grower licenses also will be allowed to have vertically integrated dispensaries, while a person cannot have more than five dispensary licenses and no more than one grower license. The number of grower and dispensary licenses could expand in the future.
  • Application fees will cost $10,000 for growers, while licenses will cost $200,000 and be good for a year. Renewal fees will cost $10,000. Applicants must also prove they have $2 million in capital, $500,000 of which must be on deposit in a financial institution.
  • Dispensary application fees will be set at $5,000, while dispensary licenses will cost $30,000 and be good for a year. Renewal fees will cost $5,000. An applicant must show they have $150,000 of capital on deposit in a bank.

While regulations won’t be drawn up for well over a year, industry observers say the time for aspiring marijuana businesses to get ready is now.

“You’re going to have to have the right group of people on the ground, and you need to start finding them now,” said Bronstein. “You don’t want any shotgun partnerships.”

Roper agreed: “Do your due diligence. When you’re putting your team together, don’t settle on the first people you meet. Always talk to at least two or three groups before picking who you want.”

Omar Sacirbey can be reached at omars@mjbizdaily.com