Author Archives: Jorge Pereira, Esq.

About Jorge Pereira, Esq.

I was born in Portugal and raised in Bethlehem after immigrating with his family to the Lehigh Valley at the age of 2. I attended Rutgers University, New Brunswick graduating with B.A. in Political Science and a minor in Psychology. After graduating with honors from Rutgers University, I attended Rutgers-Newark Law School. While at Rutgers-Newark Law School, I was part of Appellate Moot Court, Urban Legal Clinic and the Animal Rights Clinic. Upon graduating Rutgers-Newark Law School Law, I initially practiced at a small boutique law firm in Newark, New Jersey but always maintained a desire to return to his home in the Lehigh Valley. I spent the last eighteen years working in civil litigation and personal injury law firms in the Lehigh Valley. For the last sixteen years, I has worked at an Allentown law firm, The Law of Business, P.C. f/k/a Douglas M. Marinos & Associates, P.C. focusing on business divorce, corporate law, creditor’s rights and general civil litigation. I am a member of the Pennsylvania and New Jersey bars and admitted to practice in the United States District Court of Pennsylvania for the Eastern District and the United States District Court of New Jersey. I have litigated cases throughout the Courts of Common Pleas of Eastern Pennsylvania from Susquehanna County to Philadelphia County and represented both debtors and creditors in the United States Bankruptcy Court for the Eastern and Middle District of Pennsylvania. As counsel for Sovereign Bank, I wrote the appellate brief in the precedent setting decision in the matter of Sovereign Bank v. Schwab, 414 F.3d 450 (3rd Cir. 2005). I am an avid cigar smoker and a founding member, board member and former officer of the Lehigh Valley Cigar Club, a non-profit social club with over 200 members dedicated to protecting and promoting the enjoyment of cigar smoking in the Lehigh Valley.I played Rugby for ten years on the men’s team of the Lehigh Valley Rugby Football Club, becoming a captain of the men’s team, and President of the club. I own a commercial building in the historical district of Main Street, Bethlehem where my business partner and I own a hair salon, Hair Studio Main.

Pennsylvania Announces the First Phase of Permit Applications for Grower/Processors and Dispensaries.

Yesterday, Secretary of Health, Dr. Karen Murphy of the Pennsylvania Department of Health (“DOH”) announced that applications for medical marijuana grower/processors and dispensaries will be available at the Pennsylvania DOH’s website, www.health.pa.gov, beginning January 17, 2017. Permit applications will be accepted from February 20, 2017 until March 20, 2017.

In less than a year, Pennsylvania’s Medical Marijuana Act (“MMA”) has gone from enactment to the first phase of implementation. Pursuant to chapter 6 of the MMA, Section 601 authorizes grower/processors and dispensaries as the only entities authorized to receive a permit and operate as a medical marijuana organizations and grow, process or dispenses medical marijuana.

Section 602(a) of the MMA generally requires all applications to include:

1. Verification of all principals, operators, financial backers or employees of a medical marijuana grower/processor or dispensary.
2. A description of responsibilities as a principal, operator, financial backer or employee.
3. Any release necessary to obtain information from governmental agencies, employers and other organizations.
4. A criminal history record check.
5. Details relating to a similar license, permit or other authorization obtained in another jurisdiction, including any suspensions, revocations or discipline in that jurisdiction.
6. A description of the business activities in which it intends to engage as a medical marijuana organization.
7. A statement that the applicant: (i) Is of good moral character; (ii) Possesses the ability to obtain in an expeditious manner the right to use sufficient land, buildings and other premises and equipment to properly carry on the activity described in the application and any proposed location for a facility; (iii) Is able to maintain effective security and control to prevent diversion, abuse and other illegal conduct relating to medical marijuana; and (iv) Is able to comply with all applicable Commonwealth laws and regulations relating to the activities in which it intends to engage under this act.
8. The name, residential address and title of each financial backer and principal of the applicant. Each individual, or lawful representative of a legal entity, shall submit an affidavit with the application setting forth: (i) Any position of management or ownership during the preceding 10 years of a controlling interest in any other business, located inside or outside this Commonwealth, manufacturing or distributing controlled substances; and (ii) Whether the person or business has been convicted of a criminal offense graded higher than a summary offense or has had a permit relating to medical marijuana suspended or revoked in any administrative or judicial proceeding, and
9. Any other information the department may require.

Section 607 of the MMA sets forth the following fees and requirements to obtain a permit.

For a grower/processor:  1) An initial nonrefundable application fee of $10,000 must be paid; 2) A permit fee of $200,000 is required at the time of application. (The fee shall be returned if the permit is not granted); and 3)  A grower/processor must have at least $2,000,000 in capital, $500,000 of which must be on deposit with a financial institution.

For a dispensary: 1) An initial nonrefundable application fee of $5,000 must be paid: 2  A permit fee of $30,000 for each location must be paid. (The fee shall be returned if the application is not granted); and 3) A dispensary must have at least $150,000 in capital, which must be on deposit with a financial institution.

In October and November, the DOH drafted and published general regulations as well as specific regulations for both grower/processors and dispensaries. The regulations can be found at 28 PA. Code CHS 1141, 1151, and 1161.

Pursuant to 28 PA. Code §1141.23, no more than 25 permits will be issued for grower/processors and only one grower/processor permit per applicant. Additionally, no more than 50 dispensary permits will be issued and no more than five dispensary permits to one person. A dispensary permit may be used at no more than three locations.

28 PA. Code §1141.28 states the DOH shall publish in the Pennsylvania Bulletin notice of the initial permit application availability and the timeframe which they will be accepted. Only the form of application provided on the DOH’s website may be used and it must be submitted electronically.

Secretary Murphy further announced that this was the first phase of the program and that initially up to 12 permits will be issued for grower/processors and up to 27 permits will be issued for dispensaries, across Pennsylvania’s six medical marijuana regions. Secretary Murphy stated that “the decision for which counties will be issued permits in this first phase was determined by using the department’s medical data, as well as comments from more than 5,000 patients and nearly 900 potential grower/processors and dispensary applicants.” For further information on how many permits will be issued per each region please read the blog at http://cannabisindustrylawgroup.com/index.php/2016/12/21/pa-department-of-health-outlines-phase-i-of-medical-marijuana-program/

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Concerns on both sides when drafting a commercial lease for a medical marijuana business.

In the upcoming year, medical marijuana businesses will be applying for permits to conduct business in Pennsylvania as either a grower/processor or a dispensary. In my previous blog, I commented on how it may be significantly more costly to rent property for a medical marijuana business than a non-marijuana business as result of the risks landlords may face.

Because of the risks associated with leasing to medical marijuana business, it is in the best interests of both the landlord and potential medical marijuana tenants to tailor a commercial lease to address some of those risks.

From a landlord’s perspective, there are specific concerns which should be addressed in a commercial lease.

1. Use of the Premises. Pennsylvania will issue permits for both grower/processors and dispensaries. Any lease should designate what state lawful purpose the premises will be used for.

2. Indemnification. The business of growing, cultivating, and selling marijuana remains illegal under the federal Controlled Substance Act. A landlord should include in any commercial lease an indemnification clause requiring the tenant to defend and indemnify the landlord from any federal action against the tenant, including forfeiture.

3. Early termination. A landlord should seek to include an early termination provision in the lease which allows the landlord to terminate the lease should: 1) the tenant fail to comply with any state or local law; 2) the commencement of any action against the tenant; 3) entry of a judgment against the tenant; 4) seizure by any government authority, and 5) any event that cause the closure of the building.

4. Improvements. The MMA has specific requirements for any property housing medical marijuana businesses, including access and security requirements. Any potential lease should require the tenant to comply with all state and local regulations and ordinances, secure any all licenses, at the tenants own expenses, and require the tenant to remove, at its own expenses, any improvements and modifications made by tenant.

5. Utilities. Utility expenses for a medical marijuana business are likely to be very high, especially for a grower/processor. A landlord should require a tenant to reimburse landlord and/or pay directly if possible any all utilities that out of the ordinary and excessive.

6. Access. Under the MMA, there are very strict rules as to who may have access and enter into a medical marijuana business. The right of a landlord to enter the premises must be clearly outlined and comply with state law.

7. Environmental, debris and waste. Under the MMA, there are very strict procedures for storage and removal of marijuana waste which any lease will have to incorporate. Additional, any grower/processor will have to store, use, and dispose of materials which are subject to environmental regulation including pesticides and fertilizers. Any commercial lease will require compliance with all environmental laws and regulations.

From a tenant’s perspective, a tenant should address in a commercial lease the following.

1. Term. With the federal government’s position towards marijuana unclear and the state’s position on marijuana evolving, a tenant may not wish to lock into 5 – 10 year lease terms with multiple automatic renewals. Shorter 2- 3 year terms and less automatic renewal periods may be more practical.

2. Permits. Medical marijuana businesses will be granted permits from the state after application and compliance with all state regulations. Any commercial lease should require a landlord to reasonably cooperate with tenant in complying with all regulations in the application process and not to take any action which could negatively affect the tenants application for a permit, operation and renewal of the permit.

3. Occupancy and commencement. Any potential medical marijuana business will have to present an operating plan and a lease to obtain a permit from the state.  The problem is there is no guaranty that a permit will be granted by the state. A tent should look to include an out clause or contingency clause to allow the tenant to terminate the lease should tenant not be granted a permit. The tenant should also look to include a rent abatement provision pending approval of the tenant’s application for a permit.

4. Dispute resolution. Typically commercial leases will have a confession of judgment clauses and specify where the dispute will be heard and under what laws a dispute will be decided. A tenant will have to be careful and tailor any confession of judgment clause so it  is not triggered by a violation of federal law and/or violation of the CSA. Additionally, a tenant may want all disputes to be submitted to private arbitration and have Pennsylvania state law govern due to the federal illegal status of marijuana.

Both landlord and tenant will need to make sure there are medical marijuana related outs drafted into the commercial lease to protect from federal prosecution. Additionally, any lease should incorporate a waiver by both parties acknowledging that neither will use against the other marijuana’s illegal status under federal law as a claim or defense to any dispute arising under the lease.

When drafting a lease, both landlord and tenant will have to carefully navigate federal, state, and local statutes and ordinances.  The aforementioned are just some concerns which should be considered by both landlord and tenant in drafting a medical marijuana lease.

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Failure to Clean Your Car Of Snow Could Cost You.

Whether you are dreaming of a White Christmas or not do not forget to clean your car windows of snow and ice this winter. Not only is it a smart idea for safety purposes but it is also the law in Pennsylvania.

Title 75 § 4524. Windshield obstructions and wipers, states:

(a) Obstruction on front windshield.–No person shall drive any motor vehicle with any sign, poster or other nontransparent material upon the front windshield which materially obstructs, obscures or impairs the driver’s clear view of the highway or any intersecting highway except an inspection certificate, sticker identification sign on a mass transit vehicle or other officially required sticker and no person shall drive any motor vehicle with any ice or snow on the front windshield which materially obstructs, obscures or impairs the driver’s clear view of the highway or any intersecting highway.

(b) Obstruction on side and rear windows.–No person shall drive a motor vehicle with any sign, poster or other nontransparent material, including ice or snow, upon the side wings or side or rear windows of the vehicle which materially obstructs, obscures or impairs the driver’s clear view of the highway or any intersecting highway. The placement of a registration permit upon the side or rear window of a vehicle shall not be considered a material obstruction.

In short, 75 §4524 requires all motor vehicle operators to remove all ice and snow and any other material from the windshield, side windows, and rear windows which prevents the operator from having a clear and unobstructed view of the road at all times.

While a violation of §4524 is only a summary offense subject to a $25 fine, the citation amount will likely exceed $100.00 after administrative fees and court costs are added in. That’s a lot to pay when an ice scrapper can be purchased for $5 to $10 and the windows cleared in 10 minutes.

Worse case scenario is that ice and snow dislodge from your car while moving and causes an accident, injury, or death. Under Title 75 §3720, the operator of a vehicle who failed to remove snow or ice from his vehicle could be subject to a fine of no less than $200.00 and no more than $1,000.00.

§ 3720. Snow and ice dislodged or falling from moving vehicle, states:

When snow or ice is dislodged or falls from a moving vehicle and strikes another vehicle or pedestrian causing death or serious bodily injury, the operator of the vehicle from which the snow or ice is dislodged or falls shall be subject to a fine of not less than $200 nor more than $1,000 for each offense.

With snow and icy weather approaching, remember to take 10 minutes and clean your car before driving. Have a safe and Merry Christmas.

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Watch out for Higher Rents For Medical Marijuana Businesses

Any entrepreneur looking to participate in Pennsylvania’s Medical Marijuana program understands that one of the biggest expenses and concerns is the location of the operation of the marijuana business venture.  The Pennsylvania Department of Health is planning on issuing 25 permits for grower/processors and 50 permits for dispensaries (with up to three locations per each dispensary permit). Theoretically, that is a maximum of 175 properties throughout the state that can house a medical marijuana grower/processor or dispensary. The Medical Marijuana Act requires that all medical marijuana business be indoor and 1000 feet from the property line of the nearest school or daycare. There are additional requirements under the MMA that are primarily security related that must also be factored in when searching for a property to house the business.

Local zoning ordinances will also impact any search for a property to rent or buy.  Many townships and municipalities are enacting ordinances in anticipation of medical marijuana businesses setting up in their area.  Local ordinances may place additional requirements and restrictions on properties housing medical marijuana business so long as they are consistent with the MMA. Township zoning classifications and conditional uses, maximum square footage, entrance, signage, parking and distance between competing unrelated medical marijuana businesses in the same township are all within the township’s authority to regulate.

A new medical marijuana business in the state you can either buy or rent. Grower/processors may have larger amounts of capital available then dispensaries and elect to buy and build. The problem when you buy is that bank financing will likely be required and there is a good chance that banks and other lending institutions will charge higher rates due to the risks involved. Marijuana is still illegal federally and the new administration’s unclear position with regards to marijuana is creating a lot of fear and worry in the legal marijuana industry.  A legal business could still be subject to federal prosecution, shut down, and seizure causing default on loans and loss of collateral. Banks will look to protect themselves by charging higher rates if they accept the risks and provide financing to buy and build.

If a marijuana business elects to rent a property, the landlord is subject to risk of default on the lease if the business is shutdown.  Many potential landlords will have properties that are subject to mortgages.  A lose of rental income even for a short time could cause landlords to default on those mortgages.  Additionally, within the mortgage there is likely a default provision allowing banks to foreclose if any illegal business is conducted on the property.  Landlords could be subject to foreclosure by simply entering into a lease with a medical marijuana business.

So long as the Department of Justice’s focus was not on marijuana business legal under their respective state laws, banks have accepted these risks but with a new administration banks may start to have cold feet.

The point is all of these factors make it more of a seller’s market and give potential landlords an advantage when it comes to setting rental terms and rates. With all the risks involved, the statutory requirements, and the limited amount of locations, landlords will be able to charge rents higher than the going market rate.

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What The Nomination Of Senator Jeffrey Sessions as Attorney General Could Mean to the Legal Marijuana Industry.

On election day in November, I wrote a blog article outlining the states which were voting to legalize either recreational or medical marijuana. Eight states voted on election day to legalize marijuana in some form bringing the total number of states who legalized recreational marijuana to eight and medical marijuana to 29. 1 in 5 Americans now live in states where recreational pot is legal. National opinion favors the continued growth of the marijuana industry. Before the election, both candidates expressed support for medical marijuana at the very least. There currently is a policy by the federal government to not interfere with state intrastate commerce and the legal marijuana industry.

Following the election, President-elect Donald Trump nominated Senator Jeffrey Sessions of Alabama for attorney general. Senator Session is on the record as opposing the legalization of marijuana in any form. Sessions has called marijuana reform a “tragic mistake” and criticized FBI Director James Comey and Attorneys General Eric Holder and Loretta Lynch for not vigorously enforcing the federal prohibition. Earlier this year on the floor of the Senate, Senator Sessions said: “You can’t have the President of the United States of America talking about marijuana like it is no different than taking a drink… It is different…. It is already causing a disturbance in the states that have made it legal.” Session further said, ”good people don’t smoke marijuana.”

Such an antiquated way of thinking ignores the progress made by states with legal medical marijuana programs and shows no empathy for those individuals who currently benefit from medical marijuana. Sessions should spend a day with the cancer patient or the epileptic child who benefits from medical marijuana. His view also threatens to derail and drive the multi-billion dollar marijuana industry business back underground right at the time that it is starting to gain support in the legitimate investment world.

Other than the President–elect, there is no one with more power than Sessions to interrupt the growth the marijuana industry has experienced in the last two decades. The Justice Department under President Obama has been hands-off, issuing the Cole memos that basically say the federal government will not prosecute legal marijuana sellers or buyers in states where it is legal. As the new Attorney General, Senator Sessions could reverse the DOJ’s position and simply tear up the Cole Memos. With little more than the stroke of his pen, the new Attorney General could direct the enforcement of the federal law against marijuana and direct that federal law enforcement officers shut down legal marijuana operations and arrest growers, retailers and users.

Sessions would face at least one stumbling block in the the Rohrabacher-Farr amendment. The Rohrabacher-Farr amendment to annual appropriations bills prohibits the Department of Justice and the DEA from using federal money to target or prosecute state-compliant medical marijuana businesses. The problem with Rohrabacher-Farr amendment is that it must be renewed annually with each budget or it will expire.

No one is certain what President-elect Trump will do with regards to the legalization of marijuana. Trump’s exact views on marijuana remain mixed at best. While campaigning, he has expressed support for medical marijuana. However, he has also stated the recreational marijuana is bad and has spoken of undocumented problems with recreational adult use in states like Colorado. What clouds things even things even further is Trump’s expressed support for a state’s right to govern themselves. He is on the record as saying if the state voter for it that’s the law in the state. Moreover, he has routinely touted himself as pro business and it seems unlikely that he would interfere with the multi-billion dollar marijuana industry.

Some have argued that it would be political suicide for the Trump administration to go against a campaign promise on a hugely popular issue that is widely supported by voters even Republicans. But the marijuana industry is worried. With the nomination of Senator Sessions, it is facing uncertainty that could become a very real threat to its growth.

Updated December 12. 2017.  The U.S. Senate approved approved a stopgap  federal spending measure to fund the government through April 28, 2017 which included renewal of the Rohrabacher-Farr Amendment.

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Election Day For Marijuana

It’s election day for marijuana. The number of states legalizing marijuana for medicinal and/or recreational use continues to grow. Five more states have ballot initiatives for the legalization of recreation/adult use marijuana and four more states have medical marijuana ballot initiatives.

Arizona, California, Maine, Massachusetts, and Nevada are all states with existing medical marijuana programs who are now voting on ballot initiatives that would legalize recreation/adult use marijuana for state residents 21 years or older.

Arizona is voting on Proposition 205, The Legalization and Regulation of Marijuana Act. Proposition 205 would legalize the possession of up to 1 ounce of marijuana,
allow adults to grow up to 6 marijuana plants in an enclosed, locked space within their residences, and possess the marijuana produced by those plants in the location where it was grown. A limit of the total marijuana plants grown in a single residence would be limited to 12.

Proposition 205 would allocate taxes to school construction, full-day kindergarten programs, public drug education and more.

Proposition 205 appears likely to pass as register voters support it 50 % to 40%.

California is voting on Proposition 64, The Adult Use of Marijuana Act (AUMA). AUMA would legalize the possession of 1 ounce of marijuana flower, or up to 8 grams of cannabis concentrate, the cultivation of up to 6 plants, and the industrial cultivation of industrial hemp.

AUMA would create a tax and regulatory system with the tax resources being allocated toward environmental protection and remediation, youth substance abuse prevention, medical marijuana research and local governments.

California Polls suggests that voters support passing AUMA 52% to 41%.

Maine voters will have The Marijuana Legalization Act on the ballot. The Maine act would legalize for recreational purposes the possession of up to 2 1/2 ounces of marijuana and the possession, cultivation and transportation of up to 6 flowering marijuana plants, 12 immature marijuana plants and unlimited seedlings, and possession of all the marijuana produced by the marijuana plants at that person’s residence.

The Marijuana Legalization Act appears likely to pass as polls show it is supported by 50 % – 41 % margin.

The Massachusetts initiative would legalize possession up to 1 ounce of marijuana outside of an individual’s residence, possession of up to 10 ounces of marijuana in an enclosed, locked space within their residences, growing up to 6 marijuana plants in an enclosed, locked space within their residences and possess the marijuana produced by those plants in the location where it was grown.

No more than 12 total marijuana plants can be grown in a single residence.

Massachusetts initiate also seems likely to pass.

Nevada is voting on legalizing recreational/adult use marijuana allowing possession of 1 ounce of marijuana and allowing anyone who does not live within 25 miles of a marijuana store to grow up to 6 marijuana plants.

Nevada is also creating a tax and regulatory system with taxes being allocated to supporting schools and K-12 education.

Four states are voting on legalizing medical marijuana, Arkansas, Florida, Montana and North Dakota.

Arkansas is voting on Issue 6, the Arkansas Medical Marijuana Amendment, which would legalize medical marijuana for 17 qualifying conditions. It is uncertain whether Issue 6 will pass.

Florida’s initiative, Amendment 2, is likely to pass as recent survey suggest that 73% percent of the voters support it.

Montana is voting to reinstate medical marijuana laws after legislative restrictions made it impossible for them to work.

North Dakota is voting on Initiated Statutory Measure 5, The North Dakota Medical Marijuana Legalization Initiative, which would legalize medical marijuana for debilitating medical conditions. Recent polls suggest 47 % support it as opposed to 41% who don’t. 50% is required to pass.

Currently 4 states have legalized recreational/adult use marijuana and 25 states have legalized some sort of medical marijuana program. If all ballot initiatives pass, a total of 28 states will have legalized marijuana in some form. Nine states will have legalized recreation/adult use of marijuana. If all recreational/adult use ballot initiatives pass, nearly a quarter of all Americans will reside in areas where recreational use marijuana is legal.

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DOH Announces Important Updates On PA’s Medical Marijuana Program Including Draft Regulations for Growers/Processors.

On August 18, 2016, Secretary of Health, Karen Murphy held a press conference to give four important updates on Pennsylvania’s Medical Marijuana Program. One update was the previous announcement of John Collins named as the director of the Office of Medical Marijuana.

The biggest update was Secretary Murphy’s announcement that the Department of Health finished drafting temporary regulations for growers/processors. The DOH website includes two sets of draft regulations. The first is a general set of regulations focused primarily on the permit and application process. The second set of draft regulations is titled as specific set for growers/processors and is primarily focused on operational requirements. The draft regulations will be available for review and feedback on the DOH’s website until August 26, 2018. This is an important opportunity for those interested in Pennsylvania’s Medical Marijuana Program to help shape the regulations with any input and feedback.

The second update was the release of a survey on the DOH’s website seeking input from the patient and caregiver community. The update states that the survey’s purpose is to help in drafting regulations but the survey is primarily focused in what patient /caregiver information should be required in their respective applications and what information should be on the their respective identification cards. The questions concerning information visible on the identification cards may raise some issues with regards to privacy.

The third update was concerning Safe Harbor Letter. The Secretary announced that 53 Safe Harbor Letters had been approved to date and that the DOH is processing another ten more applications. The Safe Harbor Letter allows parents, legal guardians, caregivers and spouses of minors under the age of 18 certified with serious with medical conditions to posses marijuana in its approved from for the minor within Pennsylvania. The next question is where will these 53 possessors of Safe Harbor Letters obtain the approved form of medical marijuana. Maryland has just started to issue dispensary permits and that may in the near future be an initial source of medical marijuana.

If you would like to read more of Secretary Murphy’s updates, you may visit the website below.

Four Important Updates You Need to Know About PA’s Medical Marijuana Program

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