Comments Sought on Maryland’s Draft MMJ Regulations
On Friday, June 26, 2015, Maryland published the text of proposed regulations that will shape the medical marijuana industry in that state. Interested parties have had the opportunity to comment for the last year and a half, but in the spirit of “last call” this is what investors and industry participants need to know:
Opportunity for Public Comment
Comments may be sent to Michele Phinney, Director, Office of Regulation and Policy Coordination, Department of Health and Mental Hygiene, 201 West Preston Street, Room 512, Baltimore, Maryland 21201, or call 410-767-6499 (TTY 800-735-2258), or email to [email protected], or fax to 410-767-6483. Comments will be accepted through July 27, 2015. A public hearing has not been scheduled.
It is a very short comment period. Following are six additional issues that investors and entrepreneurs may want to pay close attention to while appreciating patient needs:
Section 10.62.01 (21) of the draft regulations specifically excludes “food” from the definition of the term “Medical cannabis-infused product.” This means that Maryland dispensaries will be able to sell suppositories and ointments, but not cookies or candy.
Edibles already generate more than half of all sales in states that have legalized, and edible products are projected to be a growth segment for the industry in the coming years. The Maryland Medical Cannabis Commission reportedly felt that it did not have sufficient time to draft complicated edible regulations.
“It makes a difference for patient access,” according to Mike Liszewski, Director of Government Affairs at Americans for Safe Access, “but we hope the Commission will address the issue further down the line.”
The rules apparently do not envision a role for wholesalers, which many see as a key element in the growth of the industry.
The state will grant only 15 growers’ licenses. It will award an indeterminate number of processors’ licenses “sufficient to supply the demand for medical cannabis concentrates and medical cannabis-infused products in a range of routes of administration desired by qualifying patients,” and up to two dispensary licenses in each of Maryland’s 47 senatorial districts.
Whether 15 growers can supply 94 dispensaries clearly depends on the size of the grow operations. “It’s going to put pressure on the growers to produce” according to Liszewski, but the regulations do contemplate field growing, which “is something that we think cultivators need to be able to consider to produce the best medicine for patients.” A single entity may, but need not necessarily, engage in all three functions.
The 100-point scale will take into account factors such as:
- operational plans,
- safety and security concerns,
- evidence of professionalism,
- retail management or commercial agricultural factors,
- production control,
- business and economic plans and
- additional factors. These may include Maryland residency of owners and investors.
If the number of applicants exceeds the number of licenses to be awarded and, in the case of growers or dispensaries, the applications have the same score, the license will be awarded by public lottery.
Scoring systems have been criticized as reducing the diversity of the applicant pool. In states where the number of licensees is capped, an alternative is to award licenses based on a lottery in which all applicants who meet the minimum requirements may participate.
On the other hand, from a patient perspective, Liszewski said, “We favor scoring processes. Patients deserve the best available. When it comes down to producing the best medicine possible for patients, the merit based system is the best choice.”
High Annual License Fees
The application fees, payable in two stages, are far less than those seen in New York, for example. But the annual license fees are among the highest in the country, reportedly second only to Illinois.
The license fee for a grower only is $125,000 per year, and for a grower who also has a dispensary, $165,000 per year. The fee for processors and dispensaries is $40,000 per year. These fees are in addition to a fee of $200 per year, per employee and miscellaneous fees assessed for replacement of cards, etc. An additional $7,000 is due on change of ownership or location, as well as a license reinstatement fee of $2,000.
Although independent testing laboratories are not subject to licensing restrictions, they must also pay annual fees for registration, renewal of registration and per employee.
Doctors, Patients and Caregivers Must Register
Doctors must register with the Commission to write marijuana referrals. Patient and caregiver registration is not voluntary, as it is in Washington state. Dispensary workers will be required to use the Commission data network to independently verify that:
- the qualifying patient or caregiver is currently registered;
- a certifying physician issued a valid written certification to the qualifying patient, and
- the amount of medical cannabis that has already been dispensed pursuant to the written certification.
Depending on the number of patients who ultimately register, these requirements could imply a massive data collection project, but patient registration may open the door to medical marijuana reciprocity in the future.
“We would prefer patient registration to be voluntary as long as federal enforcement is a concern,” Liszewski said.
Short Application Timeline
The Commission also provided a proposed timeline for implementing the program. In September 2015, the Commission expects to finalize and publish medical cannabis regulations and to post the initial applications for growers, processors and dispensaries. The deadline for applications will likely be in mid-October to November.
License pre-approvals will be issued in December 2015 or January 2016. The state will conduct final reviews and inspections during the spring and summer of 2016, after which the medical marijuana program will become operational.
In addition to the content of the regulations, interested parties may also want to weigh in on the timeline, particularly what may be a relatively brief period between the availability of the application and the submission deadline.
Preparing a detailed application within a very short time frame is arduous and expensive and may unfairly disadvantage less well-funded applicants, but it may bring medicine to patients in need of relief more quickly.
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