(Left, Mark Alderman; Right, James Davis -- Images courtesy of Cozen O'Connor)
In an “insanely” competitive and “frenzied” race to obtain one of the 12 available medical marijuana cultivation licenses in the state of Pennsylvania, hundreds of applicants -- both wealthy and aspiring --have been pushed into working long days to acquire land and obtain zoning approvals, on top of paying over $1 million in fees before a looming March 20 deadline, reports Philly.com.
But a number of applicants aren’t in it alone – advisers Mark Alderman and Jim Davis, of the Philadelphia-based law firm Cozen O’Connor, have been working extensively with clients to help them meet the stringent requirements of the application process. Here, they answer a few questions about the state’s MMJ market.
Cannabis Business Times: What are some differences in the Pennsylvania program that set it apart from other states’?
James Davis: Pennsylvania was in the fortunate position to be able to look at many states who had successful and failing programs, and utilize various best practices when drafting. Specifically, Pennsylvania approved 17 qualifying conditions, a significant and necessary aspect to ensure suffering children and adults the access to the medicine they need. Patient and physician participation in the program are absolute necessities for the businesses participating to remain viable. Our neighbors in New York and New Jersey have experienced significant challenges as their programs are implemented, due in large part to a lack of patients being approved by the state.
Pennsylvania is also the first state in the country to create a provision (Chapter 20) that allows for medical schools the opportunity to work closely with grower/processors in various research capacities. Many envision this provision providing the much-needed research, which will be documented and reported to the state, and ultimately shared with the entire medical community.
CBT: What are some legal obstacles that MMJ growers in Pennsylvania will have to face that recreational operations typically don’t?
Mark Alderman: The medical marijuana regime in Pennsylvania is thus much more intensely regulated than most recreational programs elsewhere. The grower/processor and dispensary requirements, both statutory and regulatory, are more akin to a pharmaceutical program than to a less comprehensive oversight such as beer or wine.
Further, the requirements for patients are far more significant than those for consumers of alcohol. And there is a third-party certifier involved in medical marijuana - i.e., doctors - that does not even exist in the recreational realm. As a legal matter, medical and recreational marijuana are apples and oranges.
CBT: What is the biggest/most common mistake made during the application process?
Davis: We have been very fortunate to be working with some very competent applicants, who are compiling very strong applications with a strong primary focus – the patient. However, I would expect that many other applicants are frantically trying to address some of the following issues at the last minute: zoning, community impact, diversity, raising capital/investors.
CBT: What information can you NOT leave out of your license application?
Davis: Beyond the information that is required by the state to be eligible, the application must reflect a compassionate approach to the patient, producing quality medicine that is consistent and affordable.
CBT: How long does the application process typically take?
Davis: Our teams have been working toward putting things in place in preparation for their application since last summer, well before the state published the regulations or released the application.
CBT: What are three top elements a potential grower needs to have the leg up?
Davis: A grower needs to identify a responsible location, which is zoned appropriately, has more than adequate access to electric and water capacity for required for operation, and space for expansion if the opportunity presents itself in the future.
CBT: What relationships can growers build to help them better understand the medical market and regulations?
Davis: Without question, personal and professional relationships with the physician and patient communities are a must. They will be partners throughout, and they need to view the growers as a trusted resource to share ideas, thoughts and concerns over time.
CBT: What are the application fees of which growers should be aware? What additional costs should they prepare for in addition to fees?
Davis: Grower application fee of $10,000 (non-refundable). The initial permit fee of $200,000 will only apply if approved by the state. Beyond the fees collected by the state, growers will likely have spent significant monies on various consultants, attorneys, architects and engineers.
CBT: If an operation does NOT receive a license, what should their next steps be?
Davis: Act 16 of 2016 allows for 25 grower/processor permits, 50 permits for dispensaries, and eight permits for clinical registrants (Chapter 20 provision).
However, on Jan. 17, Pennsylvania announced it would move forward with “Phase 1” of the program, allowing for only 12 grower/ processors permits and 27 dispensaries permits.
So, if an operation unsuccessfully applies in Phase 1, there remains an opportunity to be approved once the state moves forward with the remaining 13 grower/processor permits, 23 dispensary permits, and the eight clinical registrant permits. The uncertainty lies with the timing the state takes with respect to the next phase of applications and permits.
CBT: What are your thoughts on what the Pennsylvania program will look like once everyone is licensed and open for business?
Davis: Without question, Pennsylvania has the legislative and regulatory framework to be the best medical marijuana program in the country. This framework has attracted the BEST organizations in the country to apply, creating a very competitive application process for the Department of Health. The Department will have to pick from the best of the best, which leaves me with very high expectations of success.
Physician engagement is a critical component to the success of the entire program. Physicians will provide the state with the certifications of patients who are eligible to receive a medical marijuana card. After the patients are certified by the state to be eligible (one of 17 qualifying conditions), during the course of care, the physician will need to make recommendations for the patient to be treated with a form of marijuana at a dispensary. Physician education and engagement will remain a priority for the state, patients and permitted businesses.