After a years-long battle in the state legislature, medical marijuana is coming to Pennsylvania. In April, Gov. Tom Wolf signed a bill legalizing medical marijuana, and patients here are expected to be able to use the drug by 2018. City Paper talked to Dan Clearfield, an attorney with Eckert Seamans Cherin & Mellott, LLC launching a series of webinars for those interested in the medical-marijuana industry in our state. It won’t be as exciting as the Gold Rush out west, but here are seven things you need to know if you’re interested in this burgeoning industry.
1. Medical marijuana is still illegal under federal law. “You could potentially be prosecuted, just for running your business, under federal law,” Clearfield says. “When you get in this business, you have to be acutely aware that there are risks.” Congress has defunded prosecutions of state-authorized medical-marijuana programs, but that defunding ends in September. “It’s not clear that a federal court would recognize your contract as being valid if it’s for the purpose of selling, delivering or processing medical marijuana,” Clearfield says.
2. Banks have resisted working with medical-marijuana companies because federal law prohibits banks and credit unions from taking marijuana money. “It’s harder than another business to find a bank,” Clearfield says. “More and more banks are starting to work with state-authorized medical-marijuana organizations, but discussions with potential clients are still a big issue.” In Colorado, where medical marijuana has been legal for 14 years, state officials say 40 percent of cannabis businesses are run without a bank account.
3. Pennsylvania’s legislation is unique because it includes funding for research, and this could lead to advancements in the application of medical marijuana. “There’s been a lot of research in other countries and less research in the United States,” says Clearfield. “That could have a big effect on the industry. Some of the issues the industry continues to face are dosing: Exactly how much and which strain is better? There’s still a lot of research that’s needed. Another question is what kind of delivery method is better.”
4. Medical marijuana is a highly speculative market. “There are no good, well established, readily identifiable metrics,” says Clearfield. “Usually when you start a business like this, the first thing you do is figure out what the potential market is, and that doesn’t exist because so much of the market is either illegal or not comparable.” Consumer attitudes toward marijuana use vary greatly across states. For instance, Colorado legalized medical marijuana in 2002, but then went on to legalize recreational marijuana in 2014, so revenues there would not likely reflect Pennsylvania’s.
5. The medical-marijuana industry likely won’t create new opportunities for small and minority businesses or pioneering entrepreneurs. “The primary reason for doing this was to make sure patients have access to this product, so this isn’t an opportunity for startups,” says Clearfield. Pennsylvania’s law, as in some other states, does have a diversity component asking state officials do minority outreach. “They want to see diversity in your operation,” says Clearfield. “So you want to put together a team that’s more diverse.” But other than requiring the Pennsylvania Department of Health to create a report in 2018 about diversity in the state’s medical-marijuana industry, there are no mandates for diversity.
6. Successful applications for medical-marijuana licenses require support from the host community. “One of the most important things in the licensing process is you have to be able to show you have a location that’s suitable, that meets all the criteria — and there’s lots of them — and that the local community is accepting, that they’re comfortable with a medical-marijuana organization running a processing operation at that location or a dispensary at that location,” says Clearfield. “Local support is going to be very, very important.”
7. In order to be involved in a medical-marijuana operation, you cannot have been convicted of a drug-related offense. “That may sound reasonable, but they don’t distinguish between felonies and misdemeanors,” says Clearfield. “So if 30 years ago you pled guilty to a misdemeanor of possessing drug paraphernalia, because you had papers in your backpack when you went to a concert, you’re out. That’s relevant mostly because this is initially going to attract people who have had experience with medical marijuana, either in terms of their own use or in terms of business in other states.”