In 2016, Pennsylvania adopted Act 16, becoming one of 38 states that have medical marijuana programs in the United States. The Pennsylvania Department of Health regulates licensing and has issued 25 grower/processor licenses and fifty dispensary licenses to date. Aiming to be a pioneer in cannabis research, in 2018 Pennsylvania made provisions for eight Academic Clinical Research Center permits to be granted to accredited medical schools that have a relationship with an acute care hospital. This permit allows for an additional grower/processor permit to conduct clinical research relating to medical marijuana. So far, some of the state’s best-known medical schools have been certified by the Pennsylvania Department of Health. Their research focuses on medical conditions such as the treatment of neuropathies, autism, opioid dependence, and sickle cell disease. In May of 2021, Temple University researchers discovered a new CBD derivative KLS-13019 that could be used to treat peripheral neuropathy associated with some cancer treatments.
Effects of COVID-19 on the cannabis space
The rules that govern the cannabis industry in Pennsylvania were loosened during the pandemic. Dispensaries were declared essential businesses and patients were given access to telemedicine consultations to obtain medical marijuana user cards. As an example, one of the more significant rule changes permitted curbside pick-up at dispensaries. The number of registered caregivers was expanded significantly, and home delivery of cannabis was approved. Many dispensaries implemented apps that optimized delivery routes. These temporary pandemic rules were codified under Act 44 and signed into law by Governor Wolf in the summer of 2021. The fact that the industry quickly pivoted to provide essential services in unchartered waters is telling of a healthy business environment. Cannabis sales topped $600 million in 2020 and they are expected to pass the $1 billion mark by 2023.
While COVID fast-tracked certain aspects of the PA cannabis industry, major hurdles, like access to proper banking services, still plague operators in the space. The services of the financial institution come with an increased cost and some growers report being charged an exorbitant amount in monthly fees. Banks justify these fees as a cost of compliance and due diligence, such as filing suspicious activity reports and processing cash-heavy deposits and withdrawals. Community-oriented institutions that do not charge extra fees are difficult to find.
Legalization in the future
In November of 2021, Philadelphia voters passed a resolution calling on the Pennsylvania General Assembly and Governor Wolf to implement adult-use legislation in the state. The will of the voters of the state’s largest city echoed increased calls for statewide legalization by the legislators over the course of the pandemic. In September of 2021, Representatives Wheatley and Frankel introduced House Bill 2050 that authorizes adults 21 years or older to purchase and possess up to an ounce of cannabis along with home cultivation of three mature and three immature plants. All purchases are subject to a 13% excise tax with a part of the proceeds dedicated to community reinvestment. Pennsylvania Departments of Revenue, Agriculture, Health, and the attorney general’s office will be tasked with industry regulation.
A bipartisan Street-Laughlin Senate Bill 473 introduced in October of 2021 similarly authorizes purchasing from a licensed dispensary and possession of up to 30 grams of cannabis for adults. Medical marijuana patients are permitted to cultivate up to five plants at home. This bill is significant because it garnered Republican support in what has been a largely Democratic effort to legalize. S.B. 473 also engages the agricultural sectors by providing cultivation licenses. This legislation proposes the establishment of a Cannabis Regulatory Board that would regulate the business establishment, marketing, packing, and labeling. Both H.B. 2050 and S.B. 473 account for social and economic equity by earmarking new licenses to historically disadvantaged individuals and expunging non-violent marijuana convictions.
In a separate effort, a GOP lawmaker Mike Regan with a background in federal law enforcement announced a plan to introduce legislation that would largely legalize recreational marijuana, establish a new regulatory board, and address social equity and assistance for business entry into the industry. Governor Wolf has been very receptive to these legalization efforts. Perhaps a sign of increased acceptance of the cannabis space, the Pittsburgh area welcomed its first drive-through medical cannabis dispensary in the summer of 2021.
The views and opinions expressed in the article represent the view of the author and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is intended to be a substitute for professional legal advice.
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