Tag Archives: permits

One company is trying to make a profit before Pennsylvania’s medical marijuana program commences.

Back in June of this year, the Pennsylvania Department of Health granted 12 medical marijuana grower/processor permits to the following companies:

Prime Wellness of Pennsylvania (Berks County)
Franklin Labs (Berks)
Pennsylvania Medical Solutions (Lackawanna)
Standard Farms (Luzerne)
Ilera Healthcare (Fulton)
AES Compassionate Care (Franklin)
Terrapin Investment Fund 1 (Clinton)
GTI Pennsylvania (Montour)
AGRiMED Industries of PA (Greene)
PurePenn (Allegheny)
Holistic Farms (Lawrence)
Cresco Yeltrah (Jefferson)

Under Pennsylvania’s Medical Marijuana Act, in order to obtain a grower/processor permit, an applicant had to pay a nonrefundable $10,000 initial application fee and along with $200,000 for the actual permit. The grower/processor also had to prove it had $2 million in capital on hand. Despite the steep price, the health department still received 177 applications for grower/processor permits and generated $1,770,000.00 in nonrefundable application fees.(The Department of state also received 280 applications for a dispensary permit which required payment of a $5,000.00 in non refundable initial application fees, or $1,400,000.)

Of the 177 applicants, only 12 grower/processor permits were issued so the demand was great. Now apparently one of the successful permit applicants is trying to sell the rights to his permit. Franklin Labs, LLC in Reading, Berks County is willing to sell 100% of Franklin Labs including the grower/processor permit for $20 million dollars. Franklin Labs also applied for a special clinical research (CR) license, and only applied for the grow permit as a backup plan. The CR license would allow the company to partner with a teaching hospital to conduct research on medical cannabis. Companies that are granted CR permit will receive permits to open a growing facility as well as six storefront dispensaries for selling oil-based cannabis products.

Under Pennsylvania’s Medical Marijuana Act, the issuance of a permit is a revocable privilege and any permit issued may not be transferred to any other person or location. Apparently, Franklin Labs is trying to circumvent the Act by selling of the whole company lock, stock, and barrel. The Department of Health has issued a statement saying that “no permit may be sold or transferred without approval from the Department of Health” but what about an entire company. Needless to say, this has caused some unsuccessful applicants to requests that Department of Health revoke Franklin Labs’ permit.

There is significant risk in purchasing Franklin Labs and its permit for $20 million dollars. The cost of applying for a permit during Phase II of the applications will still be $210,000.00. While there is no guarantee, the risk is still only the non-refundable $10,000.00 and whatever costs are incurred as part of the application process. While those costs could be significant, they are not likely to near $20 million dollars. Additionally, the Pennsylvania Department of Health could revoke the permit at any time or choose not to re-new it the next year. Despite the risk, Medical Marijuana is big business and it would not surprise me if an existing company in a state such as Colorado or California saw the sale of Franklin Labs as an opportunity to expand into Pennsylvania.

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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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