Pennsylvania House of Representatives Votes to Increase Regulation of Medical Cannabis Prescribers

In a 194-8 vote on March 17, the Pennsylvania House of Representatives has approved a bill that would greatly empower the State Department of Health to regulate medical cannabis prescribers. The State Senate Law and Justice Committee will consider the bill next.

Should the bill pass the Senate, the department would have authority to place specific prescribers on probation, limit the number of medical cannabis certifications prescribers are allowed to issue, require prescribers to be supervised by another physician, and enact reporting requirements. Further, the department could create any other condition it “determines is necessary to protect the health and safety of patients in the program.”

Representative Tim Twardzik (R., Schuylkill) proposed including the additional Department of Health authority in regulation of medical cannabis as an amendment to a cannabis lab testing bill. The House Health Committee unanimously approved the proposal.

State senators on both sides of the aisle have expressed interest in the bill. State Senate Majority Leader Joe Pittman (R., Indiana) said “it is clear Pennsylvania’s medical marijuana program was not implemented well and could benefit from potential changes to make the program more airtight, efficient, and productive.” Similarly, State Senate Minority Leader Jay Costa (D., Allegheny) explained that he supports oversight in the Commonwealth’s medical cannabis program, saying such measures “protect our medical cannabis patients from bad actors, dishonest laboratory practices, and dangerous contaminants.”

Still, lawmakers remain focused on bringing recreational cannabis to Pennsylvania. Senator Costa made that clear, stating “our ultimate goal is the creation of an adult-use recreational cannabis program.” State Senator Dan Laughlin (R., Erie) likewise supports adult-use legalization, commenting “legislation involving cannabis deserves thorough review and I remain committed to using my position as Chairman to achieve this goal.” And Governor Josh Shapiro has urged the legislature to include recreational cannabis in its budget, due by the end of June.

Stakeholders in the cannabis industry in Pennsylvania should pay particular attention to these simultaneous legislative goals, as regulation of the medical cannabis program and the introduction of a recreational cannabis program would both have profound effects on the industry’s landscape in the Commonwealth. We will continue to provide updates on the legislature’s movement with respect to both medical and recreational cannabis.

Pennsylvania Legislature Weighs Possibility of Adding Recreational Cannabis to the Purview of the Liquor Control Board

Pennsylvania state representatives Dan Frankel (D-Allegheny) and Rick Krajewski (D-Philadelphia) plan to propose a bill in the House of Representatives that would legalize recreational cannabis. Under their proposal, cannabis would be controlled by the state’s Liquor Control Board, the name of which would be changed to the Liquor and Cannabis Control Board. Cannabis would be sold at existing state liquor stores; meanwhile, private businesses would be permitted in the industry in cultivation and consumption sites, similar to bars.

However, there has been debate about the merits of this state-run system for liquor sales, and Republican members of the state legislature have made efforts to privatize liquor sales in the past.

Proponents of the state-run system argue that this system provides stable jobs, including consistent benefits and reliable pensions, for over 5,000 Pennsylvanians, while also returning millions of dollars in profits to the state. Furthermore, this system gives the state more control to prevent underage liquor sales.

Opponents of this system argue that Pennsylvanians should have more freedom over decisions regarding liquor sales. They also hypothesize that privatizing liquor sales would allow more stores to arise and more sales to occur, which would increase tax revenue for the state. For example, less than three years after Washington State privatized liquor sales, the number of liquor stores increased by approximately 327%, and the industry’s revenue collections increased by approximately 18%.

Despite this debate, Pennsylvania’s state-run system for liquor sales has remained in place. However, a state-run system for cannabis dispensaries may run into a separate issue: the potential conflict with federal law. Cannabis remains a controlled substance under Schedule I of the Controlled Substances Act, and Section 280E of the Internal Revenue Code disallows all tax deductions or credits for amounts paid or incurred in carrying on trade or business that consists of “illegally trafficking” a Schedule I controlled substance. As recently as June 2024, the IRS has issued reminders that this section applies to businesses selling marijuana, even if they operate in states which have legalized the sale of cannabis. It remains to be seen whether state-run dispensaries would be subject to this same provision.

Representatives Frankel and Krajewski’s bill would also provide for the possibility of expungement for people charged with cannabis-related crimes, invest revenue into communities impacted by prohibition policies, implement public health protections, and assist minority business owners in entering the industry.

The legislators have not officially proposed the bill but did release a memorandum to all House members seeking co-sponsors on December 2, 2024.

DEA Rescheduling, Pa. Legalization Efforts May Breathe New Life Into Cannabis Practices

Duane Morris cannabis industry group team lead Paul Josephson spoke with The Legal Intelligencer on Pennsylvania cannabis legalization as the Drug Enforcement Administration has officially moved to reschedule marijuana from a Schedule I to a Schedule III substance.

“There’s not a legal practice area that hasn’t touched or worked for our cannabis practice here,” he said, although he and other attorneys emphasized the potential growth in financing work should rescheduling and local legalization efforts go through.

“Removing this from Schedule I … it provides immediate tax relief to companies in the cannabis business,” Josephson said, explaining that as the law currently stands, cannabis businesses aren’t allowed to deduct business expenses when they calculate and pay taxes, resulting in razor-thin profit margins. “When rescheduling happens, when that monkey comes off the back of the industry, it will improve cashflows for everyone in the business and allow for more investment.” Read more on the Duane Morris website.

Governor Wolf Calls on PA Legislature to Pass a Recreational Cannabis Bill; $1B of CARES Relief

Earlier today, August 25, 2020, Gov. Tom Wolf called on the Pennsylvania legislature to legalize recreational marijuana and use the tax revenue to help small businesses that have been impacted by the COVID-19 pandemic.

According to the Philadelphia Business Journal, Gov. Wolf’s proposal on recreational marijuana was part of a package unveiled to spend the $1 billion remaining out of $3.6 billion CARES Act funding. The Governor called for a range of spending that would include$225 million in forgivable loans and grants to small businesses and another $100 million for restaurants and bars, hospitality and leisure businesses that have taken a big hit since March with business closures and occupancy restrictions. Tax revenue from the sale of recreational marijuana would add to the state’s small business funding and half would go to historically disadvantaged businesses.

To read the full text of this post by Duane Morris partner Brad Molotsky, please visit the Duane Morris Project Development/Infrastructure/P3 Blog.

Pennsylvania Department of Health Publishes Regulations on Special Medical Marijuana Clinical Research Licenses

The Pennsylvania Medical Marijuana Act uniquely provides for a special class of licenses for growers and dispensaries to partner with medical schools to undertake real clinical research on medical marijuana.

On January 3, 2018, the Pennsylvania Department of Health (DOH) published for comment the final clinical registrant regulations. The process of issuing these licenses will be underway shortly. While other states are focused on increasing the availability of nonmedical adult-use marijuana, Pennsylvania seeks to become the leader in clinical research on the medical benefits of cannabis.

To read the full text of this Alert, please visit the Duane Morris website.

How Legal Marijuana in New Jersey Will Disrupt Pennsylvania’s Medical Program: A Q&A with Duane Morris Lawyers

New Jersey is almost certain to legalize marijuana for adult recreational use within a year, and that’s sure to have major repercussions on Pennsylvania’s nascent medical cannabis industry.

The Inquirer spoke with two Duane Morris LLP lawyers who represent marijuana clients on both sides of the river. Seth A. Goldberg, based in Philadelphia, heads the firm’s cannabis practicePaul P. Josephson, based in Cherry Hill, served as counsel to Murphy’s gubernatorial campaign and is an adviser to the New Jersey Cannabis Industry Association.

Read more on the Duane Morris LLP website.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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