The waiting game for the commercial cannabis industry continues in Pennsylvania this week following a series of critical hearings in the state Senate that will lead to a bill setting down the parameters for the long-awaited establishment of legal recreational sales and provide assurances that the current medical marijuana sector continues to thrive.
The timing and content of the legislation remain to be seen, but the industry is expecting Pennsylvania to stick close to the system currently used to regulate the established medical marijuana system while looking to other states for best practices that would be a good fit for the commonwealth.
“I think Pennsylvania is in a unique position to learn from the successes and failures of other states,” said Meredith Buettner, Executive Director of the Pennsylvania Cannabis Coalition, an association that represents the state’s medical marijuana permit holders. “Pennsylvania is, in fact, very well positioned to put together the best of the best of other programs.”
State Sen. Mike Regan (R-31) convened a trio of hearings on what steps will be needed to launch the adult market alongside Pennsylvania’s current medical-cannabis system. The information collected at the hearings before the Senate Law and Justice Committee, which Regan chairs, will be used to put together formal legislation that will be introduced at a later date.
“I want to fully understand which states are models of success, which ones we should look to for guidance on specific aspects of establishing an adult-use cannabis program in Pennsylvania, and which states have failed in one way or another,” Regan said. “It is not necessary for us to go about this blindly when 18 other states have navigated the process already.”
“Legalization of adult-use cannabis is a complex and controversial issue, so we are grateful for the many perspectives, personal experiences, and opinions we have received,” Regan added.
Looking at the entire national landscape for best practices and potential pitfalls is a common practice for states moving into adult-use sales, but that doesn’t mean that there are not issues unique to Pennsylvania or that the Republican-dominated General Assembly will automatically sign off when it comes to establishing a program with their fingerprints on it.
Regan circulated an official memo last month stating his intention to draft a legalization bill that would specifically protect medical marijuana, and also provide for unspecified social equity provisions. Some goals include a provision for the Pennsylvania State Police to receive a cut of the new tax revenues and a general vow to “provide for social equity, inclusion, and assistance for business entry into the industry.”
Democrats in the General Assembly are making social equity one of their priorities in developing a new adult-use rulebook. “It is the duty of legislators to ensure that lack of diversity and shutting out communities will not be tolerated,” said state Rep. Darisha Parker (D-Philadelphia County), “We must do what we can in the legislature to make laws that will even the playing field.”
Social equity was considered when medical marijuana was legalized in 2016; however, the industry is anticipating some tweaks and adjustments to keep up with the changing business and political landscape. “When our medical marijuana program was passed in 2016, it did include some social justice and equity provisions in the licensing process in terms of minority vendors and things like that,” Buettner told Financial Regulation News. “Getting medicine to the people who needed it was the primary focus.”
The highest-profile step will likely be replacing the Department of Health’s Medical Marijuana Program office with an entirely new agency that will govern both the medical and recreational sectors.
The department found itself under criticism from all sides last month when it ordered the statewide recall of vaporized marijuana products – not just one brand but all 650 “vape” products on the market – based on a lack of FDA approval of some ingredients. Retailers and manufacturers questioned why the department ordered the draconian recall and whether the FDA even has jurisdiction over vape ingredients. Medical marijuana patients said they received little guidance from the agency other than a notification that their go-to products were under further review.
Regan said after last month’s hearings, “Unless the Office of Medical Marijuana is going to take action to address some of the issues raised today, we need to act sooner rather than later to establish an adult-use program and a new regulatory agency.”
Buettner said the industry was also in favor of a new umbrella organization since there will likely be no clear line between the two sectors as the industry becomes more comprehensive and concentrated. “The ownership landscape in Pennsylvania has changed over the course of the (medical marijuana) program and it has included mergers and acquisitions and consolidation,” she said. “So, we can advocate for a co-located program where the medical and adult-use programs are housed under the same regulatory agency.”
A single agency would presumably function even better once Pennsylvania sets down and codifies the state’s overall cannabis rulebook, which, somewhat surprisingly, has not yet been made official. “Our medical program is still operating under temporary regulations,” said Buettner. The failure to meet the 2021 statutory deadlines for permanent cannabis rules has cast a level of murkiness to the medical sector. Changes were made on the fly during the COVID-19 shutdowns as well as stabs made at social-justice requirements by individual cities that will have to be worked in.
“It has been an opportunity for some evolution (of the regulations),” Buettner said, adding that cannabis operators also “find themselves with unanswered questions or a lack of clarity.”
The anticipated rules coming out of Regan’s hearings should provide the continuity needed for the seamless expansion of the Keystone State’s cannabis industry into adult-use, and the current lack of permanent rules will make it easier to incorporate new ideas that have worked well in other states.