Pennsylvania’s Cannabis Market: What Investors And Entrepreneurs Need To Know

Duane Morris partner Seth Goldberg was quoted in an article on Benzinga:

Seth Goldberg, a partner and team leader at Philadelphia-based law firm Duane Morris‘ cannabis department, said PA’s program has remained stable during its three years of operation. He added that the state’s marijuana department has “worked out the administrative program kinks” to create a smooth-running program.

Goldberg highlighted achievements, including over 400,000 registered MMJ patients and soaring tax revenue, both of which help boost public support for the program.</blockquote?

To read the full text of the article, please visit the Benzinga website.

Bipartisan Adult-Use Bill To Be Introduced in Pennsylvania

Seth Goldberg
Seth A. Goldberg

Senators Dan Laughlin (R) and Sharif Street (D) are introducing legislation that would legalize marijuana for adult recreational use in Pennsylvania. This is the first time a republican senator has backed such a bill. The proposed legislation will attempt to generate revenue for the commonwealth and to promote social equity by way of increasing the number of licenses to operate, imposing a 6% sales tax, and imposing a 10% excise tax that would go toward a Cannabis Business Development Fund to provide aid, grants, and technical assistance to businesses and individuals in areas that have been disproportionately impacted by criminal prosecution for cannabis violations. Expungement of cannabis crimes would also be available.

Laughlin’s pragmatic views may encourage his republican colleagues in PA’s legislature to join him. As Laughlin stated during a press conference: “Our proposal prioritizes safety and social equity. And furthermore, it will let Pennsylvania’s robust agricultural industry participate in marijuana cultivation.” And both Laughlin and Street encouraged PA legislators to keep pace with lawmakers in New Jersey and New York, stating in their co-sponsorship memo: “This year our neighbors in New Jersey have signed adult use marijuana into law and our neighbors in New York are likely to legalize. It is our duty to taxpayers to seize the initiative and legalize marijuana concurrently with bordering states. Failure to do so risks permanently ceding hundreds of millions of dollars of new tax revenue as well as thousands of jobs at a time when taxpayers can least afford it.”

 

Seth Goldberg Discusses Pennsylvania Legalization of Adult-Use Marijuana

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.” […]

To read the full article, please visit the phillymag.com.

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 Medical Marijuana Program to Begin Phase II Permitting

Seth Goldberg
Seth A. Goldberg

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.

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.

Pennsylvania Medical Marijuana Market Officially Opens!

Seth Goldberg

Exciting times in Pennsylvania!! After (i) medical marijuana was legalized in PA in April 2016, (ii) the PA government received more than 900 applications for permits to grow, process and/or dispense in March 2017, and (iii) 12 permits were awarded to grow/process and 27 permits were award to dispense in June 2017, the first grower/processor has been approved to operate, meaning marijuana will now be lawfully grown in PA.

Valuing a Medical Marijuana Grow

The medical marijuana market in Pennsylvania does not go live until, at the earliest, January 2018. However, the applicants for permits were required to develop business plans based on pro forma projections without having any “actual” information about marijuana sales in the market in which they intend to operate. Actual sales information from other states may be a useful proxy, but not necessarily a completely reliable one because of the differences in the regulations that define the marijuana markets in each state. A good example of the challenge in valuing a cannabis business is the recent proposal by Franklin Labs, which obtained one of 12 permits to grow cannabis in PA, to sell its permit for $20,000,000 months before the PA market goes live.