PA: Marijuana Program To Double In Size; Neighboring States Look To Compete

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On April 5, the Pennsylvania Department of Health (PADOH), Office of Medical Marijuana (OMM), which oversees the commonwealth’s medical marijuana program, initiated phase II of its licensing process. The deadline to file applications for grower/processor permits and dispensary permits was May 17, and the deadline to file applications for certification of Academic Clinical Research Centers (ACRC) was May 3.

In this follow-on licensing round for grower/processors and dispensaries, Pennsylvania will nearly double the size of the commonwealth’s medical marijuana program, with the commonwealth expected to issue 13 additional grower/processor permits and 23 additional dispensary permits in phase II, which will bring the total number of permits to 25 growers/processors and 50 dispensaries. In June 2017, in phase I, the commonwealth issued 12 grower/processor permits and 27 dispensary permits. Each dispensary may have no more than three separate locations (i.e., 150 total dispensaries are authorized under law).

By way of background, on April 17, 2016, Gov. Tom Wolf signed into law SB 3, a law to establish the commonwealth’s medical marijuana program. Under the law, the term medical marijuana refers to marijuana obtained for a certified medical use by a Pennsylvania resident with a “serious medical condition,” which is defined as any one of the following: amyotrophic lateral sclerosis (ALS); Autism; cancer; Crohn’s Disease; damage to the nervous tissue of the spinal cord with objective neurological indication of intractable spasticity; Epilepsy; Glaucoma; HIV (Human Immunodeficiency Virus)/AIDS (Acquired Immune Deficiency Syndrome); Huntington’s Disease; Inflammatory Bowel Disease; intractable seizures; Multiple Sclerosis; neuropathies; Parkinson’s Disease; post-traumatic stress disorder (PTSD); severe chronic or intractable pain of neuropathic origin or severe chronic or intractable pain in which conventional therapeutic intervention and opiate therapy is contraindicated or ineffective; and Sickle Cell Anemia.

Under SB 3, medical marijuana shall be available in the following forms only:

• Pills

• Oils

• Topical forms, including gels, creams or ointments

• Forms medically appropriate for administration by vaporization or nebulization, excluding dry leaf or plant form

• Tinctures

• Liquids

Interestingly, however, on April 9, the Pennsylvania Medical Marijuana Advisory Board proposed a number of recommendations for the commonwealth’s program, including permitting medical marijuana to be dispensed in dry leaf or plant form, for administration by vaporization. In addition, the board recommended adding several medical conditions for which medical marijuana shall be available, including, but not limited to:

• “Dyskinetic and spastic movement disorders,” which would include tics, tremors and similar involuntary movements, as well as diseases and conditions such as Tourette syndrome and dystonia

• Addiction substitute therapy-opioid reduction

• Cancer remission (the condition of cancer was revised to cancer; including remission therapy).

PADOH Secretary Dr. Rachel Levine announced that her agency is implementing all recommendations made by the board.

Under the Pennsylvania Medical Marijuana Act, patients who are residents of the commonwealth, who have a serious medical condition as certified by a physician, and who have a validly issued permit from PADOH will be able to obtain medical marijuana at OMM-licensed dispensaries.  A caregiver who is designated by the patient and is registered with PADOH will be able to obtain medical marijuana from an OMM-licensed dispensary in order for the caregiver to deliver medical marijuana to the patient.

Not to be outdone, Pennsylvania’s regional counterparts, namely Maryland, New York, and New Jersey, are also evaluating marijuana programmatic expansions after slow starts or delays in each state.

Maryland’s medical cannabis program has been marred by a number of issues, including licensing delays and litigation over the licensing process. However, there are now 14 licensed growers, 13 licensed processors and 46 licensed dispensaries. And in light of recently enacted legislation aimed at increasing the number of minority-owned and women-owned cannabis businesses in the state, the Maryland Medical Cannabis Commission will be issuing even more licenses.

HB 2 would increase the number of growing licenses to 22, and the number of processing licenses to 28, although not all of the new licenses are up for grabs. Two of the growing licenses have been set aside for companies that sued the state after they were removed from the winning applicant pool to account for geographic diversity. HB 2 contains a processor license set aside provision, whereby a previously unsuccessful processor license applicant that was successful in obtaining a grower license and that was ranked in the top 30 in processor application scoring will now obtain a processor license. It is believed that three businesses fit this criteria, which means that only 10 processor licenses will be competitively available in the next licensing round. In addition, HB 2 has a grower license set aside, whereby a previously unsuccessful grower license applicant that was successful in obtaining a processor license and that was ranked in the top 30 in grower application scoring will now obtain a grower license. It is believed that one business fits this criteria, which means that only four grower licenses will be competitively available in the next licensing round.

New Jersey is also in the midst of expanding its existing medical program, as well as potentially legalizing adult use in the near future. The Garden State has had a medical marijuana statute on the books since 2010, the New Jersey Compassionate Use Medical Marijuana Act (CUMMA); the NJDOH’s rules to implement the same went into effect on Dec. 19, 2011. However, due to significant restraints placed on the medical program by then Gov. Chris Christie—a staunch opponent to legalization of cannabis—the program has had little growth over the last eight years. New Jersey currently has only five open dispensaries, with a sixth set to open shortly. If legislation that has been introduced in New Jersey’s State House or some variation thereof is passed, the number of dispensaries could reach 100 or more on the near term.

New Jersey Gov. Phil Murphy, who was sworn into office in January of this year, is aggressively pursuing a new direction for marijuana in the state. In his sixth executive order (EO 6), Murphy ordered a 60-day review of all aspects of New Jersey’s current program, “with a focus on ways to expand access to marijuana for medical purposes.” In addition to the executive order, Murphy stated in his first budget address that he “advocates for legalizing adult-use marijuana,” suggesting that full legalization of marijuana is coming to the Garden State.

The New Jersey Department of Health (NJDOH) released its EO 6 report on March 23, in which the department proposed significant changes to the existing medical program to expand its reach. With the changes, New Jersey’s medical program has now reached patient enrollment of 20,000, 1,500 of whom came in the last month. In line with what other states have done to make their programs more robust, New Jersey has cut registration and renewal fees and removed what have been considered by many as barriers to patient access. While many of the proposed changes will require either revisions to existing regulations or statutory changes, the NJDOH is already engaged in the drafting process, there are bills pending before the state legislature and the legislature’s oversight, reform and federal relations committee is conducting public hearings on the topic.

In the EO 6 report, NJDOH  recommends, among other things, eliminating the current 10 percent THC content limit, allowing edibles, increasing the maximum monthly supply that a patient can obtain, removing the nonprofit requirement for original alternative treatment centers, and allowing use of cannabis as a first-line treatment. These changes would put New Jersey in line with other states, including New York and Pennsylvania. Another big change to the program that has been proposed is a shift form a vertically integrated licensing system to a tiered system with the creation of separate endorsements for: cultivation and harvesting; manufacturing and processing (including edible products); and dispensing usable marijuana. The thought behind these changes is that offering additional tiered licenses will further open the program, increase the supply of product in New Jersey for the rapidly growing list of medical participants, and ultimately incorporate adult use if the state legislature can agree on a bill.

With respect to adult legislation, many in the Garden State hope to see language in the successful legislative vehicle (if any) addressing criminal justice reform, employer/employee rights, and potential home growing. These details continue to be debated in the legislature, and it is expected the elected in New Jersey will look to their counterparts throughout the Mid-Atlantic region (and beyond) to see what has and has not worked elsewhere.

And finally, for its part, New York state, which has had a medical marijuana program in place since 2014, is studying whether or not it should legalize marijuana for adult use. The state’s study is expected to be completed by this fall.

As states in the Mid-Atlantic region consider expanding their medical marijuana programs and establishing adult-use programs, they must consider what their counterparts are doing.  Assuming state marijuana programs allow out-of-state residents to participate, if a state does not keep up with its regional counterparts, it could forego significant revenue.