News

Pennsylvania medical marijuana program on track, but legal issues loom

By Bart Schaneman

Pennsylvania’s developing medical marijuana market appears to be progressing on schedule.

Industry watchers expect seeds to be in the ground ahead of the Dec. 20 deadline, six months after 12 grower/processor licenses and 27 dispensary permits were issued.

But a pair of legal issues could gum up the works:

 

 

While either issue could cause the department to be stretched thin and delay the program, neither has industry insiders particularly worried.

“This program should be available to the patients by early 2018,” said Christine Brann, a cannabis attorney in Hershey.

Michael Bronstein, a Philadelphia-based lobbyist, said the mechanisms for the appeals process undertaken by Keystone ReLeaf and the Reading Eagle’s request for application review were built in so as not to hinder the development or rollout of the program.

Judith Cassel, a Harrisburg-based attorney, said the health department has done a good job communicating with grower/processor and dispensary permit holders to ensure the businesses can meet their deadlines.

“They’re not just sitting in their offices waiting for the grower/processors to come to fruition by themselves,” she said.

Brann is encouraged that applications were submitted and permit winners announced only about 13 months after the act was passed in April 2016.

Bronstein agreed.

“Things have gone pretty well in Pennsylvania,” he said.

Ahead of schedule

Cassel’s optimistic the program could develop quicker than expected.

“We’re not only on schedule,” she said, “we may have grower/processors who are ready ahead of their due date.”

She added that some growers could have seeds in the ground in November, which would be about a month ahead of the Dec. 20 due date.

“That’s significant,” Cassel said. “Everyone thought that was a tight timeline to begin with, but obviously first-to-market is incentivized.”

One point of contention has been the six-month requirement for grower/processor and dispensary license holders to have their facilities constructed.

“This shouldn’t be a surprise,” Cassel said. “Every grower/processor applicant – before they ever applied – they knew they had six months from the date that they were awarded a permit.”

Her understanding is that the health department will grant extensions if a licensee’s facility isn’t ready at the six-month mark but has been making progress.

The next step is Phase 2, where the second half of the licenses are awarded.

Relief for ReLeaf?

Cassel, who represents business applicants for the medical marijuana program, said Keystone ReLeaf’s lawsuit could lead the health department to rescind all the permits it has issued. And that, she added, “would be a mad mess.”

But the company is fighting a losing battle, Cassel said, because it filed its application two days late.

“That’s a nonstarter,” she said. “It’s kind of like a spoiled child stomping their feet and saying, ‘If you don’t give me a permit, then no one should have a permit.’”

Brann expects the Commonwealth Court to rule on Keystone ReLeaf’s suit on the hearing for injunctive relief by the end of October.

State Sen. Daylin Leach – the main advocate for the 2016 law legalizing medical cannabis – said “people will be forced to needlessly endure excruciating pain, agony and, in some cases, death,” if Keystone ReLeaf’s lawsuit succeeds in delaying the program, according to the Philadelphia Inquirer.

Redactions reviewed

The main concern over the open records request about the redactions in the MMJ applications is the effect on the health department’s resources.

Asked how long it would take to review the 450-plus grower/processor and dispensary applications to ensure all the information required to be made public under the law is released, health department officials estimated the process could go nearly two years.

That estimate was based on a review of 300,000 pages of redacted and nonredacted applications by two employees looking at 600 pages per day.

To help with the process, Brann said the health department asked the applicants to explain why they redacted certain sections of the applications. The applicants have been asked to answer within 30 days.

Cassel said her firm helped applicants with redactions and cited legal precedent as to what was redacted. Her firm looked at the redactions as essential to preserving her clients’ business plans.

“What entity is forced to give their business plan to their competitors? No one,” she said. “It just seems outrageous … If you make it public record, all your competitors can have it.”

 

Read the full article HERE

You’re Fired? Wrinkle In PA’s Medical Marijuana Law Raises Concern About Drug Testing

PHILADELPHIA (CBS) — Philadelphia City Council, last week, voted to hold hearings on a new wrinkle in the medical marijuana law. Their concern is whether patients can be fired for using it, even if it’s prescribed by a doctor.

The law eliminates criminal prosecution for using medical marijuana but doesn’t address other obstacles to use. Councilwoman Cherelle Parker says that raises a question.

“What will happen to employees that are medical marijuana patients but who’s employers do drug testing?”

She hopes the hearings will bring clarity to the issue and maybe develop possible adjustments to suggest to the state legislature. Otherwise, she says, it’s likely to end up in court. That is precisely where the issue has landed in a couple of the other states that approved medical marijuana. In those cases, courts have held medical marijuana users are not covered by disability protections and employers can dismiss them if using it for any reason violates company policy.

Read the full article HERE.

First medical cannabis testing labs approved in Pennsylvania

Pennsylvania has approved two medical marijuana testing labs, marking another milestone for the state on its way toward rolling out a new MMJ program.

Michigan-based ACT Laboratories and Pennsylvania-based Keystone State Testing received two-year licenses from the state health department, Pennlive.com reported.

Both labs are in the final stages of building out their operations and are hoping to be up and running by late October or early November. That timetable would put them in position to start testing as soon as the state’s MMJ cultivators are ready to submit samples.

Pennsylvania’s medical cannabis sales are slated to launch sometime in early 2018, but the 12 companies licensed to grow “are still working toward being deemed operational” by the health department, according to Pennlive.com. No cultivators have been approved to begin growing cannabis.

Pennsylvania’s MMJ law requires that all crops be tested for contaminants, potency and CBD-to-THC ratios. Labs will also be responsible for correctly identifying CBD and THC ratios on MMJ product labels.
Read the full article HERE

Coming soon to a billboard near you: Marijuana ads

by Sam Wood, Staff Writer

Before a single seed has been legally sown, a cannabis producer and dispensary operator is launching the state’s first-ever marijuana marketing campaign. Its purpose: to alert Pennsylvanians to the medical marijuana program and get them thinking about it.

Cresco Yeltrah was among 12 growers selected in June by the Pennsylvania Department of Health. The company, which is partnered with Illinois-based Cresco Labs LLC, will cultivate and process marijuana in Brookville, about 100 miles north of Pittsburgh. It is also set to open dispensaries in Butler and Pittsburgh.

The company will spend nearly $500,000 on its outreach effort, said Cresco Labs CEO Charlie Bachtell. The money will pay for billboards, newspaper and magazine ads, and a social-media blitz.

The first phase of the campaign includes a set of three images. In one, a woman sits in a lotus position on a Pennsylvania shaped-yoga mat: “Welcome to a State of Relief,” the text reads. A second features a waffle in the shape of the Keystone State on a plate: “Medical cannabis offers a new way for Pennsylvania residents to seek relief from symptoms of 17 serious medical conditions, like cancer.”

Drivers in the Philadelphia region should start seeing the electronic billboards “along major expressways” by Oct. 2, according to a Cresco spokesman. Statewide, the ads are being launched Sept. 27.

All of the marketing materials were approved by the state Department of Health. The ads mention the company’s name but don’t attempt to steer potential patients to any particular outlet. By state law, dispensaries may advertise but they can’t offer promotional specials, giveaways, or coupons.

 

Read the full article HERE

Pennsylvania support for legal recreational marijuana nears 60%

Nearly six in 10 Pennsylvanians support recreational marijuana legalization, a dramatic upturn over the past decade, a new poll shows.

According to the poll by Franklin & Marshall College’s Center for Opinion Research, 59% of the roughly 400 voters surveyed approve of adult-use legalization, The Inquirer reported.

That’s up from the 22% who supported legalization in 2006, the first year the Lancaster-based college started polling Pennsylvanians about rec marijuana legalization, according to the Philadelphia newspaper.

Pennsylvania currently is working to launch a medical marijuana program in 2018. Gov. Tom Wolf signed Pennsylvania’s MMJ act into law in 2016.

Read the full article HERE

Pennsylvania’s medical marijuana law may be drifting into monetary haze

By Steve Esack

Prior to passage of Pennsylvania’s medical marijuana law, politicians and advocates spoke with compassion about how it would provide alternative care to the sick and infirm.

Now altruism could be taking a backseat to capitalism.

As the Heath Department tries to get the industry started, lawsuits are swirling over bids and some companies could be trying to flip licenses they won to grow and process, or dispense medical cannabis.

On Tuesday, state Sen. Daylin Leach, D-Montgomery — one of the law’s biggest backers, and someone who also temporarily moonlighted as a medical marijuana lawyer — held a news conference in the state Capitol in which he accused a Bethlehem company of threatening to destroy the law with a lawsuit.

Leach accused the firm of putting profits ahead of health and safety. If Keystone Releaf’s lawsuit is successful, he said, the entire medical marijuana program would be shut down, hurting the start-up companies and the patients they seek to serve. Keystone Releaf, he said, should drop its request for a court injunction.

“Patients would be unable to get the medicine they need,” Leach said. He was joined by three mothers whose children’s suffer from ailments that could be treated by medical marijuana.

Leach began working for a Philadelphia law firm, Sacks Weston Diamond, that lobbies on behalf of the industry shortly after Gov. Tom Wolf signed the medical marijuana bill into law in April 2016, The Morning Call reported Monday. One of that firm’s clients was among the dozen companies awarded in June a marijuana growing and processing facility license. Leach quit the firm in July to run for Congress.

On Sept. 26, law firm partner Andrew B. Sacks will co-host a campaign fund-raiser for Leach in Philadelphia, according to a flier. The event charges $250 to $5,000 per attendee.

Leach said Tuesday he did no work for the firm’s medical marijuana clients. He could not say if the firm had other clients that failed to win a license. Leach said he only dealt with businesses looking to enter the market if they came into his Senate office with technical questions about the law or its regulations.

“Let’s be clear, I never advocated for them, I never gave them inside information,” Leach said. “I had my staff try to answer technical questions for them.”

More than one losing applicant has sued the Health Department. BrightStar BioMedics, of Luzerne County, has asked Commonwealth Court to overturn the results — but not halt the law.

While those cases wind through court, some winning bidders may be looking for a quick payoff.

The law required grower-processor applicants to have at least $2 million in business capital, with $500,000 of it deposited in a financial institution. Applicants also had to pay $200,000 for an initial permit, and $10,000 for a renewal. Someone looking to open a dispensary needed $150,000 in capital and pay $30,000 for an initial permit and $5,000 for renewals. Applicants also were charged $10,000 and $5,000 nonrefundable fees for growing-process and dispensary applications, respectively.

Leach said he was anecdotally aware of winners trying to shop licenses or investment opportunities. He added that the Legislature tried to limit sales by writing into the law winning applicants had six months to get operations running.

“We didn’t want people to get licenses and flip them,” he said, adding he trusts the Health Department’s vetting process.

Matthew Haverstick, a Philadelphia lawyer who represented a losing applicant in an ongoing appeal, said he has heard some winners are trying to sell their license or are seeking new investors. That may signal a lack of capital, he said, arguing that’s something the state should have foreseen.

“I don’t see how you can win if you don’t have the money to move a project forward,” Haverstick said. “I’m surprised the Department of Health didn’t figure that out in the application process.”

Read the full article HERE

Philly420: Patients lose as cannabis industry barters for zoning in Pennsylvania

by Chris Goldstein, Philly420

 

A pay-to-play system has developed between state-licensed cannabis operators and municipal governments across the country for local zoning. The same model has quickly materialized in Pennsylvania, and now one town has gone too far.

Muhlenberg Township in Berks County was trying to squeeze a dispensary — Franklin Bioscience LLC — for 5 percent of its annual profits.

The issue was revealed when the Pennsylvania Department of Health released a letter to the Philadelphia Inquirer from medical-marijuana program director John Collins to the company’s CEO, Andrew Weiss, allowing the dispensary to relocate after getting pressured for the cash. Collins wrote:

“If Franklin Bioscience is required to pay the host benefit fee, Franklin Bioscience’s financial position may be negatively impacted, which may, in turn, result in inflated medical marijuana prices for patients.”

Towns and cities usually offer huge tax breaks and pro-business incentives to lure jobs. Quite the opposite is happening for the cannabis oil operators. But far from being victims, the permit applicants helped create the problem: In the early rush for approval letters and favorable zoning, they made a wide range of promises to local officials.

Ryan Briggs at City and State Pa uncovered dozens of letters supporting deep-pocketed medical marijuana applicants that the Department of Health had failed to make public. Glowing recommendations for prospective cultivators and dispensers were sent by state legislators and county officials from both parties, on government letterhead. Various niceties about applicants were also sent in from universities, private businesses, and even a school district superintendent.

But any promises would only come true if the applicants were winners.

An interesting document unearthed by Briggs also involved Franklin Bioscience LLC. Penned by Delaware Valley University on behalf of Franklin’s failed grower/processor application in Doylestown, the communication included a “Letter of Collaboration.” The school was upset about the denied permit because Franklin had pledged two annual $2,000 scholarships along with a $50,000 endowment and major strategic contributions.

So, Muhlenberg Township may have been looking to sweeten deals that the company made elsewhere.

The pay-to-play also opens up a new question about the dispensary, TerraVida, that was forced to relocate from East Mount Airy.

Philadelphia City Councilwoman Cindy Bass joined Councilwoman Cherelle Parker in organizing a months-long effort to uproot the medical cannabis oil retail store. Now, Bass and TerraVida are working together to find a new site within the city. The question is: At what price?

The answer for some growers seems to be: About $50,000.

PurePenn, one of the 12 growers/processors who won a permit, formed a partnership with the City of McKeesport to create a special “community fund.” As noted in an earlier column, PurePenn presented a $50,000 check during a ceremonial groundbreaking in July.

Another grower, Prime Wellness, broke ground in South Heidelberg this week and a $50,000 check was presented to another newly formed community foundation. Prime Wellness had faced some pushback by the community, but that seems to be resolved.

Pennsylvania’s marijuana program director John Collins is correct that the cost of greasing all these local wheels will be passed on to patients. That’s unfair, considering that most permit holders are folding a Keystone State operation into a much larger business or holding company.

Many of the permit winners proudly promote that they own licensed cannabis operations in multiple states. They flew in from Illinois, Connecticut, Minnesota, and New York waving blank checks from investors. Local millionaires tried to compete by touting their famously deep pockets. Somehow, in the middle of all this money, not a single price menu for patients has been discussed.

Read more HERE

Congressional Cannabis Caucus Chairs Reiterate Need for Permanent Medical Marijuana Protections

U.S. Representatives Dana Rohrabacher and Earl Blumenauer want the feds to keep their hands off state-approved legal weed forever, and not just until the end of this year.

House Republicans have tried their hardest to dismantle the federal medical marijuana protections known as the Rohrabacher-Farr amendment, blocking a vote from and putting forth their best effort to remove it from the 2018 fiscal budget. And while a heap of hurricane-fueled disaster relief funding has kept the provision on the books until the second week of December, 2017, the short-term plan means Jeff Sessions and the DEA could still be raiding pot shops from Boulder to Boston by New Years.

In an effort to prevent that potentially grim future, U.S. Representatives Dana Rohrabacher and Earl Blumenauer, the co-chairs of the recently formed Congressional Cannabis Caucus, issued a press release calling for continued protection for the state-approved businesses and customers.

While the media and politicians on both sides of the aisle may still be reeling from the shock of the president’s first bipartisan agreement, the Cannabis Caucus hasn’t lost focus of its mission.

“While this action provides a measure of certainty for the millions of medical marijuana patients and the clinics and business that support them, much more needs to be done.” The press release reads. “More than 95 percent of Americans now have state-legal access to some form of medical marijuana. The American people have spoken, and Congress needs to hear them. Ultimately, we need permanent protections for state-legal medical marijuana programs, as well as adult-use. Prohibition is a failed policy resulting in nothing more than wasted resources and lives.”

Funding for the 2018 fiscal year remains unsolidified, so there is still hope for the Rohrabacher-Farr protections to be extended. After the House GOP’s initial attempt at blocking the amendment, though, it certainly appears that the Cannabis Caucus has their work cut out for them.

Read more HERE.

Adult marijuana use increasing in US, two studies show

That’s according to findings from two different studies – the National Survey on Drug Use and Health and a report from the Public Health Institute.

The National Survey found that in 2016:

  • Nearly 21% of U.S. residents between the ages of 18 and 25 used cannabis at least monthly.
  • Among adults 26-34, monthly consumers made up almost 15% of the general public.

Those numbers are the highest rates of marijuana use since 1985, The Washington Post reported.

According to Newsweek, the Public Health Institute’s study found that:

  • Cannabis consumption among women “almost doubled between 1984 and 2015, from 5.5% of adults to 10.6%.”
  • 14.7% more men have been using cannabis since 2000.
  • Overall, just under 13% of American adults have tried cannabis since 2015, which is up from 6.7% 10 years ago.

The takeaway seems to be that cannabis still has a long way to go before it’s realistically competing with alcohol as America’s drug of choice, but its overall popularity is on the rise.

Read more HERE.

Colorado marijuana banker has plans for a national network

By Omar Sacirbey

A Colorado-based credit union believes it may have the solution to marijuana businesses’ banking issues, one that it hopes will be available in six states by the end of this year and about 20 by the end of 2018.

Sundie Seefried – the CEO of Partner Colorado Credit Union and architect of the institution’s Safe Harbor Private Banking program, which handles about $80 million per month in marijuana business deposits in the state – is betting on that success and a new potentially pioneering deal in Hawaii to prove it’s possible to safely bank cannabis companies.

But marijuana business professionals have seen banking promises come and go, so skepticism is already building.

An official with another Colorado credit union that’s run into roadblocks trying to bank the cannabis industry says federal law will continue to hamper efforts such as Seefried’s.

While Mark Goldfogel, executive vice president of Fourth Corner Credit Union, believes two sets of guidelines meant to safeguard the industry – the Cole Memo and Financial Crimes Enforcement Network (FinCEN) – were drafted in good faith, he says there’s nothing to stop federal authorities from penalizing banks that work with cannabis businesses.

“The 900-pound elephant is that without a change in federal law, these guidelines do not truly provide safe harbor against prosecution,” said Goldfogel, whose Fourth Corner wants to serve marijuana businesses but has been prevented from obtaining a federal reserve account, which is necessary to launch the business.

Business plan

That’s not a deterrent for Seefried, who are carrying out an aggressive expansion strategy centered on an embryonic independent business entity she created, Safe Harbor Services (SHS).

SHS doesn’t officially launch until November, but banks and credit unions in six states already have signed up for the program, Seefried said.

Financial institutions in Arkansas, Colorado, Maryland, Massachusetts, Ohio, and Pennsylvania are beta testing the company’s proprietary cannabis banking compliance software. The testing is expected to be completed by Dec. 1, and the institutions hope to implement the technology soon after.

“We (Safe Harbor Private Banking) have pretty much licensed our rights to everything we have learned to this new company,” said Seefried, who declined to identify the financial institutions working with SHS.

If all goes well, growers, retailers and other marijuana-related businesses will have at least one banking institution in those states where they can open accounts.

The smallest of the institutions on board is a credit union that manages about $100 million in mainstream accounts in one state, according to Matt Cochran, whom Seefried hired earlier this year to serve as CEO of Safe Harbor Services.

The largest is a bank that manages more than $4 billion in assets, Cochran said, and the rest manage between $500 million and $2 billion in assets.

In addition to the banks and credit unions participating in beta testing, institutions in five other states – including California and Nevada – have contracted with Safe Harbor Services.

Those unidentified institutions are on deck for a second round of testing in the first quarter of 2018 and, if all goes well, could be online soon after the trials are done.

Safe Harbor Services’ goal is to conduct beta testing and then license banks or credit unions in at least three to five new states per quarter for the rest of 2018. If successful, SHS would have about 20 marijuana-friendly financial institutions online by the end of next year.

“We’ll focus on getting one up and running in each state and giving them exclusive rights in that state,” Seefried said.

Marijuana business owners will have to carry their share of the load, Cochran said.

They must provide Safe Harbor Services’ partner banks with reams of information before they are accepted, Cochran said, noting there are roughly 30 forms with 500-600 questions.

Businesses also must provide documentation that includes financial records, proof of license, insurance and leases.

Read more HERE