Gov. Tom Wolf is scheduled to sign a bill legalizing medical use of marijuana into law on Sunday, a simple action that will mark the beginning of a complex new industry in Pennsylvania.
The industry won’t grow overnight.
After Wolf signs the bill, it will take 30 days for the law to go into effect, according to Dan Clearfield, an attorney in the Harrisburg office of Philadelphia-based law firm Eckert Seamans Cherin & Mellott LLC and a member of the firm’s regulated substance practice group.
From there, experts predict it will take nearly two years until the law is fully operational.
The timeline
By January 2018, patients should be able to purchase medical marijuana, but a few other things must happen first.
The Pennsylvania Department of Health, which will oversee the medical marijuana program, has to develop regulations. It has up to six months to complete the regulations, Clearfield said.
From there, the application process will start for potential medical cannabis licensees.
There will be 25 licenses available for growers and processers, and 50 licenses available to dispensaries.
Each dispensary’s license can cover up to three locations.
Some of the licenses will be reserved for academic research centers, which will be able to grow, process and dispense medical marijuana, according to Justin S. Moriconi, a Philadelphia-based attorney specializing in regulated cannabis.
In fact, academic research centers could secure up to eight of the grower/processor licenses and eight of the dispensary licenses. Each academic licensee could then open up to six dispensaries.
The application deadline for cannabis businesses will fall somewhere in January 2017, according to Russ Cersosimo, director of strategic alliances for the Pennsylvania Medical Cannabis Society.
From there, approximately around April, the Department of Health could begin notifying the new licensees.
Then, mapping out of locations and construction can begin.
What can businesses do right now?
In the meantime, businesses that are interested in the medical marijuana industry can do a few things to get ready.
The most important, according to Clearfield: “Do your homework.”
There are a lot of regulations involved in the medical marijuana industry, because the drug is still technically illegal at the federal level.
Marijuana is classified as a Schedule 1 drug under the federal Controlled Substances Act.
The federal government classifies drugs according to schedules, and Schedule 1 controlled substances are defined as “drugs with no currently accepted medical use and a high potential for abuse. Schedule 1 drugs are the most dangerous drugs of all the drug schedules with potentially severe psychological or physical dependence.”
As a result, cannabis-related activities that may be legal under state law may still violate federal law.
With that in mind, establish what part of the business you want to invest in, and then evaluate the minimum requirements to do that.
A significant amount of capital is needed to get started in this industry, according to Clearfield.
To become a grower or processor, businesses are required under the legislation to submit a nonrefundable initial application fee of $10,000, and applicants need to prove they have at least $2 million in capital, with at least $500,000 on deposit with a financial institution.
To dispense medical marijuana, the nonrefundable initial application fee is $5,000, and applicants need to prove they have at least $150,000 deposited with a financial institution.
If approved for a license, dispensers also need to pay the state a one-year permit fee of $30,000 for each location, with an annual renewal fee of $5,000.
From there, it comes down to establishing a corporation, finding a team, seeking legal advice and, of course, attracting additional capital.
There are many resources already in the midstate to guide businesses through the process such as the Pennsylvania Medical Cannabis Society, and Clearfield expects more to evolve as the Department of Health makes progress on regulations.
“The worst thing to do would be to jump the gun,” Clearfield said.
