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Legislative Update – May 2016

THE MEDICAL MARIJUANA act

Senate Bill No. 3, known as the Medical Marijuana Act (the “Act”) authorizes the growth, processing, dispensing and consumption of marijuana for medical purposes in Pennsylvania.  The Act is “a temporary measure, pending federal approval of and access to medical marijuana through traditional medical and pharmaceutical avenues.”  Section 102.4.  The Act establishes a program for patients suffering from serious medical conditions under the supervision of the Pennsylvania Department of Health (the “Department”).  The Department is authorized and required to (i) issue permits to medical marijuana organizations (“MMOs”), (ii) register practitioners, (iii) regulate and enforce the growth, processing, sale and use of medical marijuana in Pennsylvania, and (iv) establish and maintain an electronic database regarding medical marijuana organizations, certifications, identification cards issued, practitioner registration and tracking medical marijuana.

The Act declares lawful the use and possession of medical marijuana in Pennsylvania, but declares as unlawful to (a) smoke medical marijuana, (b) grow, process or dispense medical marijuana except as provided by the Act, and (c) incorporate medical marijuana into edible form except by a patient or caregiver to aid ingestion by the patient. Medical marijuana may be dispensed to (i) a patient or (ii) a caregiver, each of which has received a valid identification card from the Department.  MMOs, not physicians, may dispense medical marijuana and only in the form of pills, topical gels, creams or ointments for vaporization or nebulization (excluding dry leaf form), tincture or liquid.  MMOs are either growers/processors or dispensaries.  Medical marijuana is to be labelled with:  (1) the name of the grower/processor, (2) the name of the dispensary, (3) the form and species of medical marijuana, (4) the percentage of tetrahydrocannabinol and cannabinol contained in the product and (5) any other labeling required by the Department.

Patients must reside in Pennsylvania, meet the requirements for certification and have a serious medical condition. Those conditions caused much of the political debate and compromise in drafting the Act and now include:  cancer, HIV or AIDS, amyotrophic or lateral sclerosis, Parkinson’s Disease, MS, certain spinal cord damage with intractable spasticity, epilepsy, IBD, neuropathies, Huntington’s Disease, Crohn’s Disease, PTSD, intractable seizures, glaucoma, sickle cell anemia, certain chronic or intractable pain of neuropathic origin or in which conventional and opiate therapy is contraindicated or ineffective, or autism.

Practitioners are physicians registered to issue certifications to patients. The Department approves or denies the physician’s application to be a registered practitioner.  Practitioners included in the registry must report promptly to the Department:  (1) the lapse of the serious medical condition for which a certificate was issued, (2) whether medical marijuana is no longer therapeutic or palliative and (3) whether the patient has died.  Practitioners are prohibited from (a) soliciting, offering or accepting remuneration for certifying a patient other than as provided in the Act, (b) holding a direct or economic interest in an MMO or (c) advertising the physician’s services as a patient certifier.  The practitioner may issue a certificate to use medical marijuana only upon concluding, after review of past treatments, that “the patient is likely to receive therapeutic or palliative benefit from the use of medical marijuana.”  Section 403(A)(4).

On such a practitioner’s certificate, the Department may issue an identification card to the related patient and to a caregiver designated by the patient. The identification card of a patient expires one year from the date of issuance, on the death of the patient or on suspension or revocation by the Department following a violation of the Act by the patient or caregiver.  Caregivers must be at least 21 years old and are required for patients under 18 years of age.  Caregivers of minor patients are (1) the patient’s parent or legal guardian, (2) an individual designated by a parent or legal guardian, or (3) an individual approved by the Department after showing that no parent or legal guardian is appropriate or available.

The Department must designate at least three regions in Pennsylvania for the purpose of granting permits to MMOs. Criteria for the Department to grant a permit on application by a perspective MMO include (1) ability to control and present diversion of medical marijuana, (2) ability to comply with state laws, (3) readiness to carry on the activity, (4) ability to acquire land, buildings and equipment to grow, process or dispense medical marijuana, (5) public interest to grant the permit, (6) good moral character and financial fitness, (7) ability to implement and manage security, record keeping, tracking and surveillance systems and (8) any other conditions of the Department.  Fees for application, permit and renewal for the grower/processor are $10,000, $200,000 and $10,000, and for the dispensary are $5,000, $30,000 and $5,000.

The Act states that the Department shall promote diversity and participation by diverse groups, and report by March 1, 2018, and annually thereafter to the Chairperson and the Minority Chairperson of the Senate Public Health and Welfare Committee and House Health Committee summarizing the participation and utilization of diverse groups in the Program. A “diverse group” is a disadvantaged business, minority‑owned business, service‑disabled veteran‑owned small business or veteran‑owned small business that has been certified by a third‑party certifying organization qualified under a Pennsylvania law relating to transportation contracts.

The grower/processor must pay to the Pennsylvania Department of Revenue (the “Revenue Department”) a 5% tax on the gross receipts from the sale of medical marijuana to a dispensary.  The MMO makes quarterly tax payments to the Revenue Department.  All taxes are held in the Medical Marijuana Program Fund in the State Treasury and distributed as follows:  (a) 55% to the Department for operations and assistance and reimbursement programs; (b) 10% to the Department of Drug and Alcohol Programs for counselling and treatment; (c) 30% to the Department for medical marijuana research; and (d) 5% to the Pennsylvania Commission on Crime and Delinquency for distribution to local police departments.

The Act contains provisions for administration, enforcement, creation of the Medical Marijuana Advisory Board, offenses (including criminal diversion of medical marijuana) and a Medical Marijuana Research Program. That research program could help development of cannabinoid-based medicines and is a highlight of the Act for the Pennsylvania Medical Society which has serious concerns about the medical efficacy of marijuana “across a wide spectrum of disease states.”  Pennsylvania has become the 24th state to legalize medical marijuana under a federal policy not to enforce federal laws against the growth, dispensing and use of this Schedule I drug if the state crafts a narrowly tailored law on the subject.  That federal unlawfulness will affect the implementation of the Act as (1) FDIC regulated lenders will not lend to MMOs; (2) MMOs cannot be within 1,000 feet of a school or day care center without Department waiver, but children and teachers will be certified patients and caregivers; and (3) the Department has undertaken to draft regulations expeditiously with only a framework of guidance.  Nevertheless, parents of children suffering from serious medical conditions, and prospective MMOs, practitioners and patients in Pennsylvania and many of their Pennsylvania Senators and Representatives hail the adoption of the Act after a protracted legislative process.  Governor Wolf approved the Act on April 17, 2016 and it took effect on May 17, 2016.

© 2016 Robert J. Hobaugh, Jr.