The continuous operation of financially viable medical marijuana dispensaries is not something that everyone can afford to take for granted. There are millions of Americans who rely on medical marijuana to support their wellbeing. It can be used to help treat multiple sclerosis, Parkinson’s disease, chronic pain, and nausea or vomiting induced by cancer treatment—serious health issues. What happens when medical marijuana dispensaries lack the financial means to operate and are forced to close? How are Pennsylvania patients/consumers affected? These are questions that Pennsylvania’s Medical Marijuana Act (the MMA or the act) should help to avoid. Taking a few steps back, the goal of the MMA is to “provide a program of access to medical marijuana which balances the need of patients to have access to the latest treatments with the need to promote patient safety” and to “provide a safe and effective method of delivery of medical marijuana to patients.” See35 P.S. Section 10231.102. In connection with these policy goals, the MMA allows the Department of Health to issue permits to medical marijuana organizations (e.g., dispensaries) to authorize them to dispense medical marijuana.

Now, the act and its corresponding regulations prioritize ensuring that only viable companies can obtain dispensary permits and permit renewals. For example, as part of the initial permit application, the regulations require applicants to submit, under oath, “evidence that the applicant is responsible and capable of successfully establishing and operating a facility.” See Section 1141a.29(a)(9). Additionally, the Department of Health may only grant a permit to a dispensary if, among other requirements, “it is in the public interest to grant the permit” and “the applicant, including the financial backer or principal, is of good moral character and has the financial fitness necessary to operate.” See 35 P.S. Section 10231.603(a.1)(5)-(6). The regulations also note that the Department of Health may deny the issuance of a permit based on “failure or refusal to submit information or documentation requested by the department during the review process” or a “misrepresentation by an applicant of fact, or failure to disclose a material fact to the department during the review process.” These are important gatekeeping mechanisms that help protect patients from unworthy dispensaries. In short, dispensary permit holders who misrepresent their financial viability on a renewal application should lose their permit.

General application requirements under the MMA’s regulations also include that “the applicant and its principals and other persons affiliated with the applicant identified by the department are current in all tax obligations due and owing to the commonwealth.” This requirement is for good reason. A tax lien attaches to business assets and generally makes doing business more challenging, which can lead to the ultimate shutdown of a company. The unexpected shutdown of dispensaries is what subjects Pennsylvania medical marijuana patients to the risk of being unable to readily fulfill their needs. This is why the department’s enforcement of the MMA’s permitting requirements is paramount for ensuring financially viable and operational dispensaries that Pennsylvania residents can rely upon.

Concerns about the viability of a dispensary last beyond the submission of the initial permit application; hence, the ongoing duty, imposed by the act, to “report to the department any change in facts or circumstances reflected in the application or any newly discovered or occurring fact or circumstance which is required to be included in the application.” And for the medical marijuana dispensaries who wish to renew their permit, Pennsylvania requires all applications for renewal to include “any material change in the information provided by the medical marijuana organization in a prior application or renewal of a permit.” For example, dispensaries that cannot acquire medical marijuana because no grower/processors will supply it to them due to their failure to pay should not stay in business. These requirements help protect the public interest and their enforcement is part of shielding public health from bad actors who do not deserve to hold onto their dispensary permits.

When patients struggle to or are unable to have their medical marijuana orders filled by viable, operational dispensaries, they may have little choice but to forgo marijuana and the relief it can provide. It is easy to imagine how this might impact a patient’s daily functioning, job performance, and relationships. In the policy declaration of the MMA, the General Assembly found that “scientific evidence suggests that medical marijuana is one potential therapy that may mitigate suffering in some patients and also enhance quality of life.” Consequently, not only do patients suffer in the face of dispensary closures, but also the Act’s policy goals fail to be met.

Plus, the commonwealth at large could be harmed. This is because jobs are lost when financially failed dispensaries lose their operational status, which can negatively impact the income of families and diminish the economy’s output. Therefore, it is in the best interest of the commonwealth to avoid the domino effect created by non-compliance with the MMA and its initial permit and renewal application requirements.

The importance of the financial worthiness component of the permit and renewal process is also something to consider in light of ongoing conversations surrounding the legalization of marijuana for adult-use in Pennsylvania. On Feb. 6, Gov. Josh Shapiro asked the legislature to provide him with a bill that legalizes adult-use marijuana. Sens. Dan Laughlin (R-Erie) and Sharif Street (D-Philadelphia) had previously introduced Pennsylvania Senate Bill 846, which would utilize Pennsylvania’s current medical marijuana infrastructure to sell recreational marijuana. On April 9, Pennsylvania State Rep. Amen Brown (D-Philadelphia) and several co-sponsors introduced Pennsylvania House Bill 2210, which mirrors Senate Bill 846 in a material way.

While the final form of any legislation that might legalize marijuana for adult use is unclear at this time, concerns over the operability of dispensaries should remain, particularly if any future legalization efforts are going to rest, at least in part, on the existing medical marijuana system. In that case, it is wise to consider how the commonwealth and its residents might suffer if we do not maintain mechanisms through which to weed out financially unworthy dispensaries of medical or adult-use marijuana. If we are going to build upon what we currently have, it is worth ensuring that the foundation is stable. How can we continue to support Pennsylvania consumers and how can we best protect them in the everchanging landscape of marijuana laws?

Reprinted with permission from the May 7, 2024, issue of The Legal Intelligencer© 2024 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.