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By Elliott Zucker
Pennsylvania’s “Medical Marijuana Act” (“Act 16”) was signed into law by Governor Tom Wolf on April 17, 2016. As of May 2021, more than three hundred forty thousand (340,000) Pennsylvanians have taken advantage of the program; that’s more than two and a half percent of the state population.
See https://www.mpp.org/issues/medical-marijuana/state-by-state-medical-marijuana-laws/medical-marijuana-patient-numbers/. This is not a surprise. More and more state legislatures across the nation seem to understand the benefits to their constituents and to the government’s budgets. According to Business Insider, “since 2012, 18 states and Washington, DC, have legalized marijuana for adults over the age of 21, and 37 states have legalized medical marijuana.” See Source A. Not surprisingly, the surge in medical marijuana use in Pennsylvania has been a boon for the local economy. That said, only a handful of “medical marijuana organizations,” 35 P.S. § 10231.103 (“dispensary or a grower/processor;.”), have been able to participate in the program due to the high cost of entry for most of the businesses involved. If the legislature would enact specific changes to the Act, additional ancillary businesses could participate in the medical marijuana program. One such ancillary business which could benefit from the program would be home delivery services.
The Players: Grower/Processors and Dispensaries
Growers/Processors
Under Act 16, a “grower/processor” is “a person . . . corporation, partnership, association, trust or other entity, or any combination thereof, which holds a permit . . . to grow and process medical marijuana. Pennsylvania law limits the total number of permits the Pennsylvania Department of Health may issue to twenty-five . 35 P.S. § 10231.616(1),(4).
In Pennsylvania, the monetary requirements to apply for a grower/processor permit are, from the eyes of an aspiring marijuana baron, seemingly insurmountable. To start the process, one must submit an “initial application fee in the amount of $10,000”; the fee is non-refundable. See 35 P.S. § 10231.607(1)(i). In addition, the successful applicant must pay a permit fee in the amount of $200,000. See 35 P.S. § 10231.607(1)(ii). Permits are valid for one year and applicants must pay a renewal fee in the amount of $10,000 each year thereafter. See 35 P.S. § 10231.607(1)(iii). If $210,000 isn’t cost-prohibitive enough, “before issuing an initial permit . . . the [Pennsylvania Department of Health] shall verify that the applicant has at least $2,000,000 in capital, $500,000 of which must be on deposit with a financial institution.” 35 P.S. § 10231.607(1)(vi).
Dispensaries
The same costly barriers to entry exist for medical marijuana dispensaries. Under the Act, the Pennsylvania Department of Health may only issue a total of fifty “dispensary” operating permits with “each dispensary [permitted to provide] medical marijuana at no more than three separate locations.” 35 P.S. § 10231.616(2). However, as compared to “growers/processors,” one person can hold up to five individual dispensary permits. See 35 P.S. § 10231.616(3).
For dispensaries, the application fees are not as cost-prohibitive, but still high. To start the process, one must pay an “initial application fee in the amount of $5,000”; the fee is non-refundable. See 35 P.S. § 10231.607(2)(i). In addition, the applicant must pay a permit fee in the amount of $30,000 for each location. See 35 P.S. § 10231.607(2)(ii). Permits are valid for one year and applicants must pay a renewal fee in the amount of $5,000 each year thereafter. See 35 P.S. § 10231.607(2)(iii). Just as with “grower/processors,” “before issuing an initial permit . . . the [Pennsylvania Department of Health] shall verify that the applicant has at least $150,000 in capital, which must be on deposit with a financial institution.” 35 P.S. § 10231.607(2)(vi).
The Medical Marijuana Industry in Pennsylvania: A Potential Oligarchy
While Act 16 is a landmark piece of legislation, the law’s myopic scope drains its potential to benefit Pennsylvania’s small business owners and entrepreneurs. With very few permits available and only with very high price tags, the end result is that only wealthy individuals or large, out-of-state marijuana companies secure the limited permits, leaving the ambitious in-state applicants out in the cold.
Since the passage of the Medical Marijuana Act in April 2016, the General Assembly has not amended the law to be more inclusive of others who want to participate in this new industry but cannot satisfy the capital requirements needed for a permit. One way to remedy this deficiency would be to allow for more ancillary businesses such as home delivery services. Home delivery services would not only be a means for increased participation in the industry, but it would be congruent with the Act’s purpose.
Policy: Provide a Safe and Effective Method of Delivery
Per Act 16’s Declaration of Policy, “it is the intent of the General Assembly to… provide a safe and effective method of delivery of medical marijuana to patients.” 35 P.S. § 10231.102(3)(ii).
As the Act stands today, there are a few ways to obtain medical marijuana in Pennsylvania:
- “Caregiver.” A “caregiver” can be “an individual designated by a patient,” 35 P.S. § 10231.103(1), or an individual who is employed by a “hospice, palliative or home health care service” with “significant responsibility for managing the health care and well-being of a patient” and is “designated by the organization to provide care to a patient who has provided authorization for the designation.” See 35 P.S. § 10231.103(3)(i),(ii),(iii).
- Physically going to the dispensary. Per Act 16, “a dispensary may dispense medical marijuana in an indoor, enclosed, secure facility located within this Commonwealth.” 35 P.S. § 10231.802(a)(1).
- Curbside Pickup. Prior to the COVID-19 pandemic, this was not an option under Act 16. However, due to the pandemic’s effect on businesses, Governor Wolf signed an Emergency Proclamation allowing “dispensary employees to go out to [patients’] vehicles, retrieve identification cards, go back inside and dispense product in accordance with regulatory dispensing requirements and then deliver to the vehicle.” See Source B. On June 30, 2021, curbside pickup became permanent. See PA LEGIS 2021-44, 2021 Pa. Legis. Serv. Act 2021-44 (H.B. 1024) (PURDON’S); See also Source C; See also 35 P.S. § 10231.802(a)(1) (“a dispensary may dispense medical marijuana . . . in accordance with a curbside delivery protocol as determined by the [Pennsylvania Department of Health]).
While there is some efficiency to curbside pickup or using a “caregiver,” it is not the most effective means of delivery. Many patients, especially disabled veterans, may not have the ability to drive to a dispensary. Many other homebound patients do not have access to someone willing to act as their “caregiver”.
Massachusetts, for instance, recently promulgated regulations for marijuana home delivery services. See Source D. The new regulations provide for three different types of licenses: Marijuana Courier, Marijuana Delivery Operator, and Delivery Endorsement. A FAQ document from the Massachusetts Cannabis Control Commission best describes the differences:
The Marijuana Courier and Marijuana Delivery Operator licenses are both stand-alone license types allowed to perform different operations. Marijuana Couriers are allowed to deliver marijuana and marijuana products to consumers and patients from a Marijuana Retail Establishment or Medical Marijuana Treatment Center. On the other hand, Delivery Operators are allowed to purchase marijuana and marijuana products from licensed Marijuana Cultivators and Marijuana Product Manufacturers and sell and deliver to consumers. Marijuana Couriers cannot store marijuana and marijuana products overnight whereas Marijuana Delivery Operators may securely store on its premises marijuana and marijuana products that have been purchased at wholesale for eventual resale to consumers. A Delivery Endorsement is expanded permission to perform delivery operations that is added to an existing license. Currently, Delivery Endorsements are available only to Marijuana Microbusinesses with majority ownership comprised of Certified Economic Empowerment Priority Applicants and/or Social Equity Program Participants for a period of at least 36 months from the date the first Delivery Operator licensee receives a notice to commence operations.
See Source E; See also 935 Mass. Code Regs. § 500.002.
Most importantly, the fees associated with marijuana home delivery service providers in Massachusetts are relatively low compared to the fees required of dispensaries or grower/processors in Pennsylvania.
The application fee for a Marijuana Delivery Operator or a Marijuana Courier license is a mere $1,500. Better yet, if you’re a business controlled by Certified Economic Empowerment Priority Applicants or Social Equity Program Participants, then the fee is waived automatically. See Source E; See also 935 Mass. Code Regs. § 500.005(1)(b)(1),(d). The annual license fees for Marijuana Delivery Operators and Marijuana Couriers aren’t too bad either: $5,000 for a Marijuana Courier and $10,000 for a Delivery Operator. Like the application fees for businesses controlled by Social Equity Program Participants and/or Certified Economic Empowerment Priority Applicants, license fees are waived for the first year and cost only $2,500 for a Marijuana Courier and $5,000 for a Delivery Operator license for the second year and every year thereafter. See Source E; See also 935 Mass. Code Regs. § 500.005(1)(b)(1),(d).
Conclusion
While large, multi-state operators deserve a place in the local medical marijuana economy in Pennsylvania, marijuana home delivery service providers do as well.
Curbside pick-up is a good start; however, it is incumbent upon the Pennsylvania General Assembly to enact legislation so that others who want to work within the industry but may not have the capital required to establish a dispensary or a grower/processor facility can do so without a large financial barrier.
Source C: https://mjbizdaily.com/pennsylvania-raises-medical-marijuana-purchase-limits-makes-other-changes/
Source E: https://masscannabiscontrol.com/wp-content/uploads/2021/05/20210528_FAQs_Cannabis_Delivery.pdf
