PA Entrepreneurs Diving into Medical Marijuana Industry

Articles & Publications

Central Pennsylvania Business Journal
June 3, 2016

Costs will be steep, banks will be scarce and federal law could be unforgiving, but land is available and patients are waiting.

That is the state of Pennsylvania’s medical marijuana industry in the weeks since Gov. Tom Wolf signed a bill allowing sick people to ingest legally a substance that has long been illegal.

The state’s medical marijuana program is expected to be up and running no later than 2018, but people serious about doing business are working now to be ready.

Entrepreneurs at a recent networking event in Harrisburg were diving in. They have established limited liability companies, begun building teams and started the search for land.

But as they ramp up, they are not blind to the challenges.

Concerns loom about marijuana’s legal status and access to funding.

Others believe the high cost of entry could block smaller, startup businesses from breaking into the market, which could end up being dominated by bigger companies, including out-of-state players already in the medical marijuana business.

The concern is legitimate, said Patrick Nightingale, executive director of the Pennsylvania Medical Cannabis Society, a nonprofit focused on education and industry networking.

Businesses active in the 23 states that legalized medical marijuana before Pennsylvania have money and know what they are doing.

This special report in the Central Penn Business Journal examines some of the questions sparked by the creation of a new industry in Pennsylvania.

• What kind of money, equipment and space will companies need to grow and process marijuana for medical use?

• Will physicians, despite misgivings, register with the state and recommend the drug to patients?

• Will municipalities approve the use of land for growing, processing and dispensing a drug that remains illegal under federal law?

• Where will medical marijuana entities put their cash when banks across the state are taking a hands-off policy so far?

• Will the status of marijuana change at the federal level?

Many of the industry’s challenges stem from the fact that marijuana is illegal under federal law, but the federal government has stepped lightly in states that have approved the use of marijuana, whether for medical or recreational purposes. And some federal legislators are pushing to make changes that would open more doors for the emerging industry across the country.

Pending legislation includes the Compassionate Access, Research Expansion and Respect States Act of 2015, or the CARERS Act, an amendment to the Controlled Substances Act.

Sponsored by Sen. Cory A. Booker (D-New Jersey), the act would protect any person who is complying with state laws relating “to the production, possession, distribution, dispensation, administration, laboratory testing, or delivery of medical marijuana,” from sanctions under the Controlled Substances Act.

The bill also proposes reclassifying marijuana. Federal law defines the drug as a Schedule I substance. A change would relax regulations governing research into the drug as well as the ability of bankers to serve businesses that grow, sell and process it, among other things.

Despite all the activity, industry players don’t expect reform to happen soon.

“There’s some momentum behind it,” said Justin S. Moriconi, a Philadelphia-based attorney who specializes in regulated cannabis. “Whether that translates to something that actually passes is another story.”