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Pennsylvania

Growers say medical marijuana research dispensaries will unfairly flood market

| Thursday, May 17, 2018, 4:18 p.m.
Marijuana plants.
Marijuana plants.

Pennsylvania's pioneering medical marijuana research initiative faces a potential roadblock, barely three months after retailers began dispensing cannabis products.

A group of commercial medical marijuana licensees claim the state changed the rules governing the research initiative months after they invested millions of dollars in licensing and start-up costs. Now, they want a judge to put a hold on research regulations they contend would “flood the commercial market for medical marijuana” and hurt their businesses.

Commonwealth Court Judge Patricia McCullough is weighing a petition from 11 licensed marijuana growers and dispensaries seeking an injunction to halt action on a state-sanctioned cannabis research initiative at eight academic medical centers, including the University of Pittsburgh's School of Medicine.

Medical research was a key component of the state's medical marijuana law. This week, Gov. Tom Wolf announced that eight Pennsylvania medical schools were certified to conduct research in conjunction with the state's medical marijuana program.

But the nation's first medical marijuana research can't begin until the medical schools partner with Clinical Registrants, or CRs, that will be licensed to grow and distribute medical marijuana. Each CR must prove they have $15 million in capital and have inked a deal with a medical school to be considered for the designation.

The Department of Health will begin accepting CR applications Thursday.

A lawyer for the companies that prevailed in last year's commercial licensing competition said her clients aren't opposed to medical marijuana research. But they maintain the regulations governing CRs run counter to the law that suggested the CRs would be limited to production for research.

The regulations, published two months ago, permit medical schools to negotiate contracts with CRs that would allow each of the eight CRs to operate their own grow rooms and six dispensaries.

Commercial growers and dispensaries that operate retail outlets were subject to a complex licensing procedure that saw more than 150 applicants vie for 12 growers' permits and 25 dispensary licenses.

“After they have spent tens of millions of dollars and actually hold a permit, now we get to this,” said attorney Judith Cassel. “The rules of the game have changed. The Department of Health is creating these eight super permits, and none of these CRs have to go through the very stringent vetting process the folks we represent went through.”

Cresco Yeltrah, which has a dispensary in Butler and cultivating facility in Jefferson County, is among the 11 permit holders seeking a court injunction.

State Rep. Kathy Watson, who wrote the research component of the law, said it was always clear that both research and commercial distribution were intended.

“They were told that in the beginning,” Watson said. “Did they think it would not come to fruition?”

Watson, who filed a friend of the court brief supporting the CR regulations, said she thought the commercial licenses and CRs would be rolled out in tandem, rather than a year apart.

“I can't account for the lag time. … But the research component was the only way I could support this law. We wanted to put to rest once and for all the question of how marijuana could help this condition and not that one. And the only way to do it was through research,” Watson said.

Cassel said her clients don't want to block research but question the way the CRs are structured.

Research could get under way faster if the Department of Health directed the medical schools to the companies that are up and running, she said.

While 29 states have legalized medical marijuana, research as to how and why the drug acts is limited because of marijuana's classification as a narcotic under federal drug laws.

Pittsburgh lawyers Patrick Nightingale, executive director of the Pennsylvania Medical Cannabis Society, said the state Department of Health conducted a rapid, very effective roll out of the first phase of the medical marijuana law.

“But maybe in this instance they need to slow down and work a little more with the existing license holders because patients need as much competition as they can get,“ he said.

The Department of Health acknowledged as much when it began gearing up for a second round of commercial license applications for an additional 13 commercial growers and 23 commercial dispensaries later this month.

When the second round of licensing is complete, the state will have 25 commercial growers and 50 license dispensaries, each of which can have up to three retail stores for a total of 150 dispensaries. That's in addition to the eight growers and 48 dispensaries that would be licensed as CRs if the regulations are upheld.

McCullough is expected to rule on the dispute over the regulations this month.

Under state law, patients who have one of 21 qualified medical conditions can apply for a medical marijuana card. More than 37,000 Pennsylvanians have registered to participate in the medical marijuana program. Although research participation is voluntary, any one of them could be asked to participate.

Debra Erdley is a Tribune-Review staff writer. Reach her at 412-320-7996 or derdley@tribweb.com or via Twitter @deberdley_trib.

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