Seth Goldberg, Duane Morris partner and team lead of the Cannabis Industry Group, is quoted in the Philadelphia magazine article, “If Pennsylvania Is Going to Legalize Adult-Use Marijuana, This Is How It Should Be Done.”
Use the State’s Existing Supply Chain
“There is a supply chain that is already intact and could likely be expanded very quickly to allow for a recreational marijuana program to be implemented without too much challenge,” said Mr. Goldberg.
“You have growers and processors who can expand their production, labs who could expand their testing, dispensaries who could expand their sales, fairly quickly, to provide adult-use marijuana to Pennsylvanians. This is a very good framework to be utilized in a way that could get this done quickly and efficiently if people wanted to.” […]
Be Mindful of How Marijuana Is Taxed
Currently, marijuana growers and processors in Pennsylvania are taxed five percent on the gross receipts received from the sale of medical marijuana to a dispensary. But there is no sales tax on marijuana, so consumers who purchase it do not pay a tax. According to Mr. Goldberg, that could change with legalization, but it shouldn’t.
“Whether a marijuana sales tax is imposed on consumers or whether the five percent excise tax that’s imposed on growers and processors is increased, these are things that I certainly wouldn’t advocate for because I don’t know that it would be necessary to result in a boost in the tax revenue.” […]
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.
Cannabis operators, like all other businesses, are searching for new ways to reach their customers during the COVID-19 pandemic. Cannabis businesses have been generally treated as “essential” under the various state orders that have otherwise closed businesses and ordered people to stay at home. Even though they have been permitted to operate, it is not business-as-usual for these operators as they grapple with CDC workplace restrictions and guidelines for reducing the spread of COVID-19.
As a result of these restrictions, state regulators and cannabis business have begun implementing new policies and procedures such as curbside pick-up, expanded delivery zones and increased use of contactless payment methods. While these changes are viewed as temporary, if properly implemented, cannabis businesses may be able to show regulators that these expanded policies should continue after the crisis has passed. This difficult time presents an opportunity for cannabis retailers to expand their reach and help bolster support for more online ordering, home delivery and other delivery methods.
On April 5, 2018, Phase 2 of the PA Department of Health’s permitting for commercial medical marijuana cultivation and dispensary operations will begin.
13 Grower/Processor permits will be available, two in each of the six DOH regions, and the 13th going to the highest scorer. 23 Dispensary permits will be available, nine in Region 1, three in Regions 2 and 3, two in Regions 4 and 6, and four in Region 5. Applications will be available online at www.medicalmarijuana.pa.gov on April 5, and the submission deadline will be May 17.
In June 2017, 12 Grower/Processor and 27 Dispensary permits were granted. According to April Hutcheson of DOH:
25,573 patients have registered to participate in the PA program;
9,020 patient certifications have issued;
7,000 of those patients have purchased their ID cards;
6,683 patients have bought medical marijuana in a PA dispensary;
866 physicians have been registered to participate in the program; and
473 of the registered physicians have been approved.
Given the very real possibility that PA will approve the use of dry flower products, i.e., smoking and edibles, this summer, the PA market is positioned for strong performance over the next few years.
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.
Duane Morris’ Seth Goldberg was quoted in the Philadelphia Business Journal on the opportunities and risk facing entrepreneurs in the development medical marijuana industry in Pennsylvania.
While the upfront costs to entrepreneurs wanting to enter the market are expected to run into the millions of dollars, the payoff could be substantial. The ArcView Group, a market research firm that studies the cannabis industry, estimates the Pennsylvania medical marijuana market will start out with annual sales at about $125 million and grow at a rate of about 180 percent per year in the program’s first few years.
“There will also be huge opportunities for entrepreneurs who want to create ancillary businesses that are integral to the core growing and dispensing businesses,” said Seth Goldberg, a Philadelphia attorney with Duane Morris who specializes in commercial and health care matters.