West Virginia’s Stalled Medical Marijuana Program May Be Picking Up Steam

by | Sep 25, 2019 | Business

By: Micah Bucy

West Virginia legalized medical marijuana in 2017 through the West Virginia Medical Cannabis Act (“Act”), but the implementation of the Act has moved at a glacially slow pace. But now that a banking institution has been selected to process funds in connection with the Act there appears to be renewed hope among West Virginia industry-stakeholders that the process towards patient access will move forward.

The state’s Office of Medical Cannabis (“Office”), the office charged with implementing and overseeing the Act, website indicates that it is “committed to a goal of less than two years” for patient access—that is far off in the future for patients who need treatment now, but it means for those looking to operate on the supply side of the state’s program things could accelerate quickly.

The Reason for the Delay

For many who follow the industry it will come at no surprise that the primary reason for the Act’s slow implementation was because of banking issues. Specifically, as outlined in a March 2018 letter by John Perdue’s, the State Treasurer, as of the Act’s enactment the state’s banking vendors refused to process any monies related to the “sales, fees, licenses, or taxes” of medical marijuana and the State Treasurer’s Office was “uncomfortable” handling the money directly because of the federal law implications of doing so.

A year later, in March 2019, the legislature passed legislation that authorized the State Treasurer to engage in a competitive bidding process in order to identify a banking institution that is willing and able to serve as the state’s medical marijuana banking vendor. Information for the bidding process was issued in Spring 2019 and bids were due June 1st. On June 1st, the State Treasurer’s Office reported that 5 bids were received from Element Federal Credit Union, Paul Fairbanks IFEB, MVB Financial, MTLP, and JP Morgan. At the end of August, the State Treasurer announced that Element Federal Credit Union’s (“EFCU”) bid received the highest score. Other bidders had until the first week of September to protest EFCU’s bid award; on September 5th, the State Treasurer’s Office announced that no protest had been made and that EFCU was officially awarded the banking contract.

What does this mean? It means that West Virginia now has the capability to accept, process, deposit, and disburse the funds associated with all aspects of the Act’s implementation. It means that the state can now handle the application fees for prospective growers, processors, and dispensaries which means the state is finally in a position to issue and accept applications from those seeking to enter the West Virginia medical marijuana industry. Although the Office has not yet made applications available, some believe such applications must be made available in the coming months in order to have products available for patients within the Office’s commitment to a 2-year timeline.

The Act’s Details

The Act, which is overseen by the West Virginia Department of Health and Human Resources, Bureau of Public Health (“Bureau”), legalizes the use, possession, growing, processing, and dispensing of marijuana for medical purposes in the treatment of “serious medical conditions”. The Act defines a serious medical condition as one of the following:

  • Cancer
  • HIV/AIDS
  • Multiple Sclerosis
  • Terminal Illness      (> 1yr life expectancy)
  • Parkinson’s Disease
  • Epilepsy
  • Neuropathies
  • Huntington’s Disease
  • Crohn’s Disease
  • PTSD
  • Intractable Seizures
  • Sickle Cell Anemia
  • Amyotrophic Later Sclerosis (ALS)
  • Damage to the nervous tissue of the spinal cord with objective neurological indication of intractable spasticity
  • Severe chronic or intractable pain of neuropathic origin or sever choric or intractable pain in which conventional therapeutic intervention and opiate therapy is contraindicated or ineffective.

The Act further delineated the lawful forms of medical marijuana that can be dispensed to qualified patients, these include:

  • Pill
  • Oil
  • Tincture
  • Liquid
  • Dermal Patch
  • Topical forms such as gels, creams, or ointments
  • A form medically appropriate for vaporization or nebulization (excluding dry leaf)

The Act also creates the Medical Cannabis Advisory Board (“Board”) and delegates to it the task of analyzing the Act’s implementation and making recommendations to add/remove serious medical conditions or forms of treatment. Once the Board makes a recommendation, the Office’s Commissioner has discretion to approve it. If the Commissioner approves it, then the recommendation only becomes effective through a legislative rulemaking process.

In February 2018 the Board made a number of recommendations, including permitting the sale of dry leaf or plant form for vaporization or nebulization, but this recommendation was not approved and dry leaf or plant form of medical marijuana remains illegal under the Act. Also of note is the fact that opioid dependence, an issue for which West Virginia has received national attention, is not a qualifying serious medical condition.

However, a few of the Board’s recommendations have become law:

  1. Patients can “pre-register” with the Office for a patient ID card which will be required to purchase medical marijuana at dispensaries
  2. The Act’s initial prohibition against vertically-integrated suppliers has been rescinded. A company can now grow, process, and dispense medical marijuana.
  3. The Act’s initial limitation of 30 total dispensary permits was replaced with a limitation of 100 dispensaries, and a single person may hold up to 10 dispensary permits.

Grower, Processor, Dispensary Application Details

As mentioned above, now that a banking solution has been found the Office’s goal is to provide patient access within 2 years. For those already operating in another a state, you know that many things need to occur to meet that goal, chief among them is the permitting process for entities seeking to grow, process, and dispense medical marijuana products to qualified patients. Little is known what the applications will look like, but with a cap on the number of permits available it will be a competitive application process. Here is what we do know:

  • Up to 10 grower permits may be issued. Each grower permits grants authority to grow at 2 different locations—so up to 20 growing facilities may become operational. A person may not be issued more than 1 grower permit.
  • Up to 10 processor permits may be issued. A person may not be issued more than 1 grower permit.
  • 100 dispensary permits may be issued. A person may not be issued more than 10 dispensary permits. Under the emergency regulations that were published in April 2018 (prior to the legislation increasing the available permits), the permits were going to be issued across 6 designated regions based on population, number of patients with qualifying medical conditions, and other factors with a limitation of only allowing 5 dispensary facilities in each region. Regulations accounting for the increase in available dispensary permits have not been published yet, so its not clear what, if any, geographical limitations will be placed on dispensary permits.

WV Medical Marijuana Regions Pursuant to April 2018 Emergency Regulations

  • The application fee for a grower or processor permit is $5,000 and it is non-refundable. The permit fee for a grower or processor permit is $50,000. The permit fee must be submitted at the time of the application and it will be returned if the applicant is unsuccessful in obtaining a permit. A permit is valid for 1 year. All fees must be paid by certified check or money order.
  • The application fee for a dispensary permit is $2,500 and it is non-refundable. The permit fee for a dispensary is $10,000. The permit fee must be submitted at the time of the application and it will be returned if the applicant is unsuccessful in obtaining a permit. A permit is valid for 1 year. All fees must be paid by certified check or money order.
  • Business entity applicants must have an ownership group consisting of a majority of West Virginia residents and the business must be organized under the laws of West Virginia.
  • Counties are permitted to prohibit medical marijuana facilities by a vote of its residents. Prior to a permit being awarded, the Bureau must receive written approval from the County Commission for the county in which the proposed facility will be located, that the county has not voted to prohibit medical marijuana facilities. Also, prior to the permit being awarded, the Bureau must receive written approval from the Board of Health for the county in which the proposed facility will be located.
  • Medical marijuana facilities are subject to local zoning laws—municipalities are permitted to enact ordinances prohibiting medical marijuana facilities or limiting the number of facilities, including the time, place, and manner of operation.
  • All medical marijuana produced by permitted facilities must be tested by approved testing laboratories. There will be an application for testing labs. The Office published regulations concerning labs. There does not appear at this time to be a limitation on the number of labs that can be approved to test medical marijuana.

Because the application process will be a competitive one, we encourage anyone who is considering applying for a permit to start the process now! For companies both currently operating in other jurisdictions and that are considering a startup, now is the time to start putting together your application—beginning the work now will most assuredly result in a more competitive application at the end of the process. And even though the application materials have not yet been released, there are steps you should be taking now to prepare for the upcoming application window. For guidance on what you can be doing now to prepare for the application period contact Cannabis Law PA at (717) 703-0813 or (717) 703-0804.