State nixes temporary medical marijuana research regs

The state Department of Health has revoked temporary regulations governing research into medical marijuana as it moves to issue new rules under an amended law designed to address concerns raised in a recent lawsuit.

The lawsuit was filed in April in Commonwealth Court by a group of 11 plaintiffs holding permits to grow and sell medical marijuana.

The lawsuit asked the court to enjoin or stop the department from implementing its current regulations, arguing that they gave an unfair advantage to companies taking part in the research.

The rules allowed eight state-approved academic clinical research centers, including Penn State Milton S. Hershey Medical Center and College of Medicine, to contract directly with companies that did not have permits, called “clinical registrants,” to sell marijuana commercially.

By authorizing the clinical registrants, known as CRs, to sell cannabis while researching it, the permit holders argued there was an inherent conflict of interest. CRs, they said, had no reason to report the results of their research candidly because there was a profit incentive.

“They’re supposed to be deciding whether there’s bad side effects or if there are certain conditions for which medical marijuana would not be effective, but you’re making your money off of selling it,” said lawyer Judith Cassel who represented the permit holders.

Commonwealth Court Judge Patricia McCullough in May issued a preliminary injunction halting the department’s implementation of the research rules, known as Chapter 20 under the state’s medical marijuana law. 

The department asked the Pennsylvania Supreme Court to lift the preliminary injunction, but the court denied the request.

To render the legal battle moot, the state legislature amended the law in June, requiring CRs to hold commercial permits.


The department had to rescind the temporary regulations and issue new ones under the amended legislation to comply with the amended act. The health department declined to comment about the move but referred the Business Journal to a notice in the Pennsylvania Bulletin

The new regulations will be rolled out within the next 90 days, according to the notice.

When the Medical Marijuana Act was issued in April 2016, companies that wanted to conduct research but also sell marijuana applied for commercial permits under chapters six and eight.

They believed, Cassel said, that if they applied to be a CR under chapter 20, they would be growing and dispensing cannabis to research patients – not selling it to anyone outside of the program.

The expectations were upended, though, after the state handed out additional commercial licences to CRs, permitting them to sell marijuana to any patient registered with the state, Cassel explained.

The new licenses, which some call “super permits” were not part of the rigorous application process other grower/dispensers had gone through to enter the commercial market, according to Cassel.

“They’re just different versions of commercial permits that don’t have the high quality of the regular permits because people winning the regular permits aren’t the ones being chosen for the CR status,” said Cassel who works at Harrisburg law firm Hawke McKeon & Sniscak LLP.

She noted that in some instances, research centers were contracting with firms that failed to win permits previously.

Those who went through the competitive vetting process, Cassel said, are the best of the best.

“What we’re having instead of that is people who lose in those processes, circumventing that and going and getting a contract with the teaching hospital, coming to the department of health and saying, ‘Okay now give me my permit. Now make me a CR even though I failed to meet the requirements or standards that you put up in phase one and phase two,” Cassel said.

In her ruling, Judge McCullough agreed with the permit holders that the original medical marijuana law said CRs were supposed to be limited to research only.

Cassel hopes the new regulations will limit CRs to serving only patients within their research programs. 

“Then there’s no conflict of interest with them selling products at the same time they’re trying to research that product,” Cassel said.

If the regulations don’t restrict the research permits, she would like to see the department award CR contracts only to firms that won commercial permits.

But if the department allows CRs to continue to sell marijuana commercially or if it permits research centers to contract with CRs that do not have a commercial license, Cassel said, she and her clients will likely sue again. 

 

Shelby White
Shelby White covers banking and finance, law and Lancaster County for the Central Penn Business Journal. For tips, email her at swhite@cpbj.com.

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