PA: Medical Marijuana Could Be Thriving Business In Philly


Medical marijuana is about to grow roots in Philadelphia.

City Councilman Derek Green is hosting a hearing today to discuss how Pennsylvania’s new medical cannabis program will operate in the city – and it’s going to get complicated.

The spirit of the new state law is to supply a vital therapy to seriously ill residents. The reality of politics and business means that people are looking to make a profit.

Act 16 was signed by Governor Tom Wolf in April following a years-long legislative fight. What emerged is a very limited vision for a marijuana program. Patients will only be able to purchase processed hash oils that can be eaten or vaporized in an e-cigarette. Tinctures and some pill forms will also be available. Buds will not be sold and there is no smoking allowed.

Refined oils from cannabis plants will be the core product and are made by using butane, solvents or super-critical carbon dioxide. This process extracts the component chemicals called cannabinoids (like THC or CBD) and also flavor and scent molecules called terpenes.

Underground hash oils are available right now and are quite ubiquitous. Commonly called “wax, shatter and dabs,” these products sell for about $40 per gram on the street or about $1,300 per ounce.

Oddly, legal medical cannabis oil dispensaries in New York charge the same, or more, as the street. It is unclear how expensive medical cannabis products will be in Pa., but low income patients are often priced out in other states.

Just getting patients into the program could be tough. Only Pennsylvania medical professionals who have completed as as-yet-to-be-determined certification course will be able to recommend cannabis oil.

The approved practitioners will then facilitate patient registration. A lack of participating doctors has been the biggest bottleneck to access in New Jersey and New York.

States like Maine and Michigan allow any licensed physician to make the cannabis recommendation.

So the first step in Philly should be to foster a community of medical professionals willing to serve patients.

There are three main types of businesses that will get permits to operate under the program: Cultivators/processors, dispensaries and labs. They need to be in relatively close proximity to each other but may be owned separately. None can operate within a Drug Free School Zone, or within 1,000 feet of a school, daycare center, playground or recreation center. About 58 percent of Philadelphia lies within a DFSZ.

Zoning and building inspection provisions may need to be created specifically for these businesses.

The Pennsylvania Department of Health (DOH) has been steadily building out regulations for the program. They released temporary guidelines for potential growers in August. That included some interesting information, such as a list of approved pesticides. But the draft rules also had some revelations for Philly.

First, because DOH is divvying permits by regional population, Philadelphia stands to get the most. In total, there will be 25 cultivation permits and 50 dispensary permits for the entire commonwealth. A single business can apply for multiple permits. Mom and Pop won’t be trading out corn for kush on the family farm quite yet as all the growing has to be done indoors.

Pennsylvania will also attempt some innovations that will likely make competition very fierce. Publicly traded companies will be allowed to own cultivation and dispensary permits. This is huge. In the past, states required interested parties to form a local business or non-profit to apply for a marijuana license. Now an out-of-state company, potentially a major multi-million dollar corporation, can bid and win.

Small-businesses may not find a level playing field under this new scheme.

In another twist, the cultivation permits will be transferable. That is not the case in other states that treat the permits essentially as a public contract. Pa will treat them more like a liquor license.

In New York, New Jersey, Maryland and Delaware the winners of the cannabis cultivation and dispensing permits turned out to have a similar winning combination that includes massive amounts of liquid capital, deep political influence and experienced operators from other states. The boards of those businesses are a who’s-who of entrepreneurs, retired law enforcement and state legislators.

More altruistic residents, many who spent years as advocates, tried to compete in all four states but lost.

Maryland recently awarded 15 permits for medical cannabis cultivation and another serious issue came up: diversity. Hundreds of applications were submitted in MD and not a single black-owned business won.

Act 16 in Pennsylvania has a requirement that 10 percent of the permits go to minority and woman owned businesses. But there is no requirement that those entities have to be based in Pa.

Philadelphia’s city government is about to be accosted by hundreds of businesses from all around region and the country who want a piece of this pie. There are scores of successful cannabis entrepreneurs ready to expand here with plenty of cash to fund their effort.

Pa. Department of Health and Philadelphia’s officials have to structure a welcoming environment for the new medical cannabis industry while keeping the sites open to local operators. The next step will be to get as many qualifying city residents as possible registered and assure them affordable prices.

Philadelphia will need to work closely with DOH to craft final regulations that move the program forward within the city.

News Moderator: Katelyn Baker
Full Article: Medical Marijuana Could Be Thriving Business In Philly
Author: Chris Goldstein
Photo Credit: Lindsey Bartlett