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High Hopes for Medical Marijuana in Pennsylvania Senate Bill 3

February 11, 2015

With the race for Governor of Pennsylvania behind us, the push for the legalization of medical marijuana in Pennsylvania is stronger than ever. As a means of preparing for what is to come in the state of Pennsylvania it is integral that we understand the legislation leading the way. In particular, it is critical that we take a closer look at Senate Bill 3 in order to anticipate where the future of medical marijuana in Pennsylvania is headed.

I. Licensing: Generally

In understanding the licensing requirements and restrictions proposed in Senate Bill 3, we can get a better idea and understanding of what to expect in the likely event this legislation is passed. To start, chapter five of Senate Bill 3 deals specifically with the licensing requirements for medical cannabis growers, processors and dispensers.

The first question Senate Bill 3 seeks to address is the number of licenses that will be made available and at what cost. In answering this question, it is important to distinguish between the three major players in the medical cannabis infrastructure: growers, processors and dispensers.

As it pertains to medical cannabis growers, Senate Bill 3 provides that the Board should not license more than 65 medical cannabis growers, and imposes a licensing fee of $50,000 per license. The Board also caps medical cannabis processors at not more than 65 licenses for the same fee.  Licenses for medical cannabis dispensers on the other hand are capped at 130 licenses also with a fee of $50,000 apiece. The legislation makes clear, that once a license is issued the license is to be in effect unless suspended, revoked or not renewed by the Board for good cause.

Additionally, aside from the initial $50,000 licensing fee, the Board also imposes a $5,000 a year renewal fee for each license.

II. Licensing: Requirements and Prohibitions

Although the number of licenses to be provided and the associated fees are pretty straight forward, the Bill includes various requirements and prohibitions that require a closer look.

Beginning with medical cannabis growers, the Bill includes but is not limited to the following requirements: only growing medical cannabis in an indoor, enclosed, secure facility; providing a cultivation inventory and packaging plan and procedures for the oversight of the cultivation area; and providing information relating to the enclosed secure facility including electronic locking systems, limited access areas and the like.

The Bill also provides a list of restrictions directed to medical cannabis growers, these restrictions include: zoning and location prohibitions pertaining to medical cannabis growing facilities, as well as prohibited modes of advertising.

As with the medical cannabis growers, Senate Bill 3 also provides processors of medical cannabis with a variety of requirements and restrictions. Some of the delineated requirements include: submitting to preoperational and postoperational announced and unannounced inspections; conducting quality testing utilizing a certified testing laboratory;  and conducting processing activity in a Board-approved facility that is indoor, enclosed and secure which includes an electronic locking system, a limited access area, secure storage and disposal procedures.

As with the medical cannabis growers, medical cannabis processors are also similarly restricted as to the location of the processing facility, and in the allowed modes of advertising. 

The requirements are slightly more complex and lengthy for medical cannabis dispensers. As it stands, the Bill’s requirements for medical cannabis dispensers include but are not limited to the following: maintaining a system to verify medical cannabis access cards; maintaining a daily log of all medical cannabis purchased and dispensed; provide reports as required by the Board relating to the amount dispensed; maintaining an electronic security system; providing the proposed address of the enclosed, secure facility where medical cannabis will be dispensed; and provide an inventory and packaging plan and procedures for the oversight of the dispensing facility, including a plant and produce monitoring system, container tracking system, staffing plan and security plan.

As with medical cannabis growers and processors the Bill lays out several prohibitions that directed at medical cannabis dispensers. These prohibitions include the location and zoning requirements for a dispensary as well as who medical cannabis may be dispensed to.

III. The Application Process

     a. Grower/Processor/Dispenser License

Before any of the above can come into play, a person or entity interested in growing, processing or dispensing medical cannabis must successfully traverse through the application process. Accordingly, Senate Bill 3 sets forth not only a list of information that must be disclosed to the Board, but also provides numerous requirements for license applicants.

For instance, an applicant for a grower, processor or dispenser must provide a variety of information as a preliminary step in the application process. Some of the information that must be disclosed includes, the name, address and photograph of the applicant and each principal’s position within the corporation or organization; any financial information required by the Board; the proposed location of the growing, processing or dispensing operation; the details of each loan obtained to finance the growing, processing or dispensing operation; and consent to the conduct of a background investigation by the Board.

In addition to the handful of information an applicant must disclose to the Board, the Board also imposes a “good character” component. Thus, an applicant for a grower, processor or dispenser license shall also include in their application, information, documentation and assurance required to establish by clear and convincing evidence that the applicant is a person of good character, honesty and integrity, has appropriate financial suitability and is eligible and suitable to be an owner or operator.

    b. Owner/Operator License

In conjunction with the aforementioned application requirements, each owner or operator of an applicant for licensure must obtain an owner or operator license from the Board.  Pursuant to Senate Bill 3, an applicant for an owner or operator license is required to provide the following: verification of status as an owner or operator from a medical cannabis dispenser, grower or processor; a description of responsibilities as an owner or operator; each release necessary to obtain information from governmental agencies, employers and other organizations; fingerprints to be submitted to the Pennsylvania State Police; a photograph that meets the standards of the Commonwealth photo imaging network; and details relating to a similar license, permit or other authorization obtained in another jurisdiction.

Moreover, the Board also imposes a “good character” component for this applicant as well. The Bill clearly states that following a review of the application and the background check, the Board may issue an owner or operator license if the applicant is a person of good character, honesty, integrity and is eligible and suitable to be licensed as an owner or operator.

An applicant who receives an owner or operator license is not required to obtain an occupation permit. However, obtaining an occupation permit is a requirement for all medical cannabis employees and personal representatives who are not a parent or guardian of a patient.

    c. Occupation Permit

As previously mentioned all medical cannabis employees and personal representatives who are not a parent or guardian of a patient must obtain an occupation permit. An applicant hoping to obtain an occupation permit must supply the following: verification of the applicants status as a medical cannabis employee or potential medical cannabis employer from a medical cannabis grower, processor or dispenser; a description of employment responsibilities; verification from a health care facility that the patient representative is an employee designated to purchase, possess, transport, deliver and properly administer medical cannabis to a patient with a medical cannabis access card who is unable to obtain the medical cannabis; a photograph that meets the standards of the Commonwealth photo imaging network; and details relating to a similar license, permit or other authorization obtained in another jurisdiction.

The Future of Medical Marijuana Legislation

It is clear that the possibility of legalizing medical marijuana in Pennsylvania is not only a hope but a reality. As such, it is important to gain a prospective on the current legislation as it stands as means to prepare for what is coming. Understanding the application process as well as the innumerous requirements and prohibitions is integral to successfully navigating through this process in the future. Thus, understanding Senate Bill 3 is extremely important as it has laid out not only a skeleton of what is to come but also the groundwork on which state regulations and rules will be based. If there was ever a time in Pennsylvania for the legalization of medical marijuana to be a reality, the time is now.

Zoning Implications of Passing Medial Marijuana Legislation

The process, requirements and guidelines for medical marijuana are explicitly described in the Bill.  What is not abundantly clear on the surface of the Bill is the impact of the legislation on municipalities across the Commonwealth regarding their zoning codes and procedures.  To glean enlightenment on the possible impacts of the current legislation, we analyzed zoning codes from the county seats of Philadelphia County (Philadelphia), Bucks County (Doylestown), Montgomery County (Norristown), Delaware County (Media) and Chester County (West Chester). 

The Bill provides limited restrictions related to zoning and placement of growing, processing and dispensary facilities.  All of the facilities must be located within indoor, enclosed and fully secured facilities.  None of the uses may be located within 1,000 feet of a public, private, or parochial school or within 1,000 feet of a daycare. Finally, none of the facilities may be located within a residential dwelling or in an area zoned for residential use.  Given the Commonwealth restriction on any of the uses being within a residentially zoned district, our analysis automatically excluded all residential zoning classifications which would automatically trigger a variance.  Likewise, our analysis focused on identifying the possibility of securing as-of-right zoning locations for each facet of a medical marijuana operation and did not consider specific regulations that may be put in place to specially classify and regulate medical marijuana throughout the Commonwealth.

      a. Growers

Considering growers, processors and dispensers together, it is evident from a review of several zoning codes that growing operations will face the most uncertainty and inconsistent results across municipalities. The Bill establishes that growing operations should be treated as traditional agriculture facilities.  However, traditional agriculture uses such as nurseries, greenhouses, or other farm-type facilities are not contemplated in every municipality zoning code given the space or environmental hardships that prevent these uses from operating across the Commonwealth.  For example, we could not identify a single pre-defined use category in the Doylestown or Media zoning codes that would adequately encompass an agriculture operation such as a medical marijuana growing facility (or even a use as basic as a cornfield). 

Conversely, such a use would likely be allowed in the IN Institutional zoning district in Norristown which permits agriculture or the CR Commercial Retail district which allows for uses like nurseries, garden centers or greenhouses.  West Chester is another municipality that seeks to regulate the location of agriculture, as there is no as-of-right zoning district in which an agricultural operation may exist.  Yet, by conditional use only a growing operation could likely find a home in the NC-1 Neighborhood Conservation District or the TND Traditional Neighborhood Development Districts in West Chester.

Finally, the implications for growers in Philadelphia are uncertain given the various zoning classifications for agriculture-type uses such as market or community supported farms, horticulture nurseries and greenhouses, and urban agriculture.  If considered a market or community supported farm, which involves the growing or harvesting of food or non-food crops for sale or distribution, the growing of medical marijuana would be permitted in all commercial zoning districts with the exception of CMX-4 and CMX-5 and all industrial zoning districts excluding I-3 and I-P.  If medical marijuana growers are lumped within the “horticulture” classification, which is most likely, they would only be permitted in industrial zoning districts (excluding I-P).  Regardless, all urban agriculture uses in Philadelphia are permitted to conduct sales operations on-site in addition to the primary agriculture use.  This means there are likely opportunities in Philadelphia to find appropriate locations in which a grower can also operate a dispensary.

      b. Processors

Medical marijuana processing operations have the most predictable, logical zoning results across all municipalities reviewed.  According to the Bill, processors should be treated in accordance with other manufacturing, preparation and production facilities. Logically, subject to specific requirements in each district, processors will be accommodated in industrial or manufacturing zoning districts in all five (5) of the municipalities reviewed.  For example, manufacturers are permitted in the I-Industrial district in Media, the ID Industrial district in West Chester and the CI Central Industrial or PI Planned Industrial districts in Doylestown.

In municipalities such as Norristown and Philadelphia, where processors will fit largely depends on whether the use will be considered low or high impact.  In Norristown, a low impact industrial use is permitted in the LIMU Limited Industrial Mixed-Use zoning district, while greater impact uses are accommodated in the HI Heavy Industrial district.  In Philadelphia, whether classified as Limited, General or Intensive Industrial (Limited is the most probable classification) will determine which of the industrial zoning districts will accommodate the use by-right.  

     c. Dispensers

With 130 dispensary licenses available for purchase, the question on everyone’s mind is how those licenses will be distributed amongst the sixty-seven (67) counties in the Commonwealth. The current Bill does not contemplate the division.  An even split would result in less than two (1) licenses per county (1.94 per county to be exact, which is an impracticable division).  If treated like the current liquor license system, then the distribution of licenses will be based on county populations.  Major counties such as Montgomery, Bucks, Philadelphia, Delaware, Allegheny, and Lancaster, all counties with over 500,000 people, would likely receive a higher density of licenses than counties such as Cameron, Forest, and Sullivan that each has less than 10,000 people. 

Along with the uncertainty regarding the distribution of licenses, dispensaries also face the most uncertain implications when considering municipality zoning codes.  Effects may cover a large spectrum of results depending on whether dispensaries operate under-the-radar as retail or pharmacy-type uses or whether they are burdened with heavily restrictive classifications that comport with drug paraphernalia stores and other heavily regulated uses. 

The Bill provides that dispensaries should be treated as ordinary commercial facilities.  In reviewing the use classifications in the zoning codes of Philadelphia, Media, Norristown, Doylestown and West Chester, we were able to identify a range of different use categories that could encompass the dispensary use.  In Philadelphia, use classifications such as “consumer goods”, “sundries, pharmaceuticals and convenience sales,” and “food, beverage and groceries” all have definitions that arguably encompass the medical marijuana dispensary use.  These uses would be allowed in varying commercial and industrial zoning districts throughout the City.  Alternatively, if deemed a more controversial use comparable to a drug paraphernalia shop or a beer distributor, dispensary locations will be heavily restricted and resigned to operate almost exclusively in industrial districts.  If saddled with the all-encompassing “regulated use” category, as-of-right dispensary locations will be even scarcer as regulated uses are prohibited from operating within certain proximities from other regulated uses, certain zoning districts, and certain protected uses like parks and religious worship facilities.  This would be an unfavorable result based on the contents of the Bill which contemplates “reasonable proximity and access”. 

The other municipality zoning codes reviewed suggest similar implications to those expected in Philadelphia.  Many municipalities broadly define retail uses and accommodate them in several zoning districts.  Others specifically provide for pharmaceutical and “drug stores”, which would nicely accommodate the dispensary use.  However, the municipalities with broadly defined categories may find themselves inundated with dispensaries in areas not completed for and certainly not intended for marijuana sales - medical or otherwise.

We were curious how municipalities within our most recent neighbor state to adopt medical marijuana legislation have handled the influx of new uses, so we conducted a brief review of the Atlantic City, New Jersey zoning code.  Surprisingly, there were no additional use classifications in Atlantic City’s zoning code that would suggest modifications were made in the aftermath of medical marijuana legislation.  Regardless, it would be in Pennsylvania municipality’s best interests to conduct an in-depth review of their zoning codes to fully understand what medical marijuana means to their population and how they can best accommodate and regulate the unique uses to be generated from the passage of the existing legislation.

Proposed Land Use Ordinances:

Zoning is the best means by which a municipality may establish specific areas of the municipality in which Medical Marijuana facilities may be permitted or prohibited.  Subdivision and land development ordinances, while not appropriate for identifying the areas of the municipality in which such uses will or will not be permitted, do provide the municipality with a significant amount of control over such issues as set-backs, roads, layout of facilities etc. 

As such, we suspect that some land use ordinances will not only be used to regulate the location and density of the dispensaries, growers and processors but these ordinances will also attempt to impose requirements on how they would be operated.  Whether these ordinances will be enforceable is for another discussion and not for this article. 

The reader should consider the following policy issues when looking to draft proposed ordinances:  1)  In drafting, one should consider identifying the local issues and resources in order to consider what goals need to be achieved. 2) The drafter should also consider the political environment and the stakeholders involved.  3) The drafters will have to involve both the community at large and local residences. 4) The drafter will want to also consider a time line in which the proposed ordinances become effective.

Growers and processors may enjoy a lesser burden in terms of community review in a sense that the activity has a little to no public engagement and can be done without being viewed or seen by the public. Dispensaries however don’t enjoy the same level of anonymity. Therefore considerations as to where these dispensaries are located will become a significant concern (i.e.  whether the dispensaries should be five hundred  (500) feet from any other dispensary or from a residential neighborhood or from a school or a church).  Signage is also an issue the drafter should be concerned with as well.

Model Land Use Ordinance:

The attached sample model ordinances based on Senate Bill 3 and are intended for general information and discussion. Please keep in mind that these sample model ordinances are merely models, and should be used only as a guide in developing or amending ordinances as they pertain to Medical Marijuana.   No assurances are made regarding the enforceability of any ordinance.  Each municipality should confer with its own solicitor regarding such matters.

MODEL 1: ZONING ORDINANCE AMENDMENT FOR MEDICAL MARIJUANA FACILITIES

The following sample amendment (or variation thereof) may be used where an existing zoning ordinance is to be amended to include provisions for the use and siting of Medical Marijuana facilities.  Such an amendment must be adopted in accordance with Sections 609 and 610 of the MPC.

(Municipality) Ordinance No.

An Ordinance Amending

Ordinance No. of (municipality), known as the (municipality) Zoning Ordinance, providing for the regulation of Medical Marijuana Facilities.

The ______________ [municipality] hereby amends Ordinance No. _____ known as the ____________ [municipality] Zoning Ordinance, by adding the following: 

Sec. 1.  Sec       of Ordinance No.       is hereby amended to add the following definitions:

            [DEFINITIONS shall be per State Statute]

Sec. 2.  A Medical Marijuana Dispenser shall be considered a __________{permitted use, conditional use or special exception} in the following zones ________________ [select the appropriate zone].

            (If a conditional use or special exception is selected, standard language and desired conditions should be added here.)

Sec. 2.  A Medical Marijuana Grower shall be considered a _____________{permitted use, conditional use or special exception} in the following zones ________________ [select the appropriate zone]. 

            (If a conditional use or special exception is selected, standard language and desired conditions should be added here.)

Sec. 2.  A Medical Marijuana Processor shall be considered a __________{permitted use, conditional use or special exception} in the following zones ________________ [select the appropriate zone]. 

            (If a conditional use or special exception is selected, standard language and desired conditions should be added here.)

Please Note***

The above will most likely need to be accompanied with an amendment to the municipality’s subdivision and land development ordinance (adopted in accordance with sections 504-506 of the Municipalities Planning Code).  Such ordinances will help the municipality meet its goal of allowing medical marijuana while minimizing negative impacts by the development of such related facilities.

MODEL 2:  FREE STANDING ORDINANCE

The following sample ordinance contemplates a set of standards for the erection and operation of Medical Marijuana facilities.  This model is enacted under the “police” power authority of the municipality.

AN ORDINANCE REGULATING MEDICAL MARIJUANA FACILITIES:

1.         TITLE:  This Ordinance shall be known as Medical Marijuana Facility Ordinance for ___________  [municipality].

2.         PURPOSE:  The purpose of the Ordinance is to provide for the use and operation of Medical Marijuana Facilities in ___________ [municipality], subject to reasonable conditions that will protect the public health, safety and welfare.

3.         DEFINITIONS

              A.        "Applicant" is the person or entity filing an application under this Ordinance.

              B.         "Facility Owner" means the entity or entities having an equity interest in the Medical Marijuana Facility, including their respective successors and assigns.

              C.        "Operator" means the entity responsible for the day-to-day operation and maintenance of the Medical Marijuana Facility.

              D.        “Medical Marijuana Facility" means a facility [per STATUTORY DEFINITION].    

4.         APPLICABILITY

              A.        This Ordinance applies to all Medical Marijuana Facilities proposed with the limits of _____________ [municipality].

5.         PERMIT REQUIREMENT

              A.        No Medical Marijuana Facility, shall be constructed or located within_________          [municipality] unless a permit has been issued under this Ordinance.

              B.         The permit application or amended permit application shall be accompanied with a fee in the amount of $ _______.        

6.         PERMIT APPLICATION

            A. The permit application shall demonstrate that the proposed Medical Marijuana Facility will comply with this Ordinance.

            B. Among other things, the application shall contain the following:

1.         A narrative describing the proposed Medical Marijuana Facility, including an overview of the activity and the facility’s location.

2.         Identification of the adjacent properties on which the proposed Medical Marijuana Facility be located.

3.         There shall be maintained a current general liability policy covering bodily injury and property damage with limits of at least $1 million per occurrence and $1 million in the aggregate. Certificates shall be made available to the  ___________ [municipality] upon request.

4.         True and correct copies of any certifications required by the Commonwealth must be submitted with this application.

             C.        Within (30) days after receipt of a permit application, the __________ [municipality] will determine whether the application is complete and advise the applicant accordingly.

             D.        Within sixty (60) days of a completeness determination, the __________ [municipality] will schedule a hearing. The applicant shall participate in the hearing and be afforded an opportunity to present the project to  the public and municipal officials, and answer questions about the project.                          The public shall be afforded an opportunity to ask questions and provide comment on the proposed project.

             E.        Within one hundred and twenty (120) days of a completeness determination, or within forty-five (45) days after the close of any hearing, whichever is later, the _____________ [municipality] will make a decision whether to issue or deny the permit application.

             F.         Throughout the permit process, the Applicant shall promptly notify [municipality] of any changes to the information contained in the permit application.

             G.        Changes to the pending application that do not materially alter the initial project description may be adopted without a renewed public hearing.

7.         PUBLIC INQUIRIES AND COMPLAINTS:

             A.        The Facility Owner and Operator shall maintain a phone number and identify a responsible person for the public to contact with inquiries and complaints throughout the life of the project.

             B.         The Facility Owner and Operator shall make reasonable efforts to respond to the public's inquiries and complaints.

8.         REMEDIES:

A. It shall be unlawful for any person, firm, or corporation to violate or fail to comply with or take any action which is contrary to the terms of the ordinance, or any permit issued under the ordinance, or cause another to violate or fail to comply, or to take any action which is contrary to the terms of the ordinance or any permit issued under the ordinance.

B. If the ___________ [municipality] determines that a violation of the Ordinance or the permit has occurred, the ____________ [municipality] shall provide written notice to any person, firm, or corporation alleged to be in violation of this Ordinance or permit. If the alleged violation does not pose an immediate threat to public health or safety, the ____________ [municipality] and the parties shall engage in good faith negotiations to resolve the alleged violation. Such negotiations shall be conducted within thirty (30) days of the notice of violation.

  C. If after thirty (30) days from the date of the notice of violation the __________ [municipality] determines, in its discretion, that the parties have   not resolved the alleged violation, the _____________ [municipality] may institute civil enforcement proceedings or any other remedy at law   to ensure compliance with the Ordinance or permit.

Authored by: Stephen G. Pollock, Esquire in conjunction with Darwin Beauvais , Esquire, Meredith Ferleger, Esquire  and Rachael Pritzker, Esquire of the Zoning and Land Use Department of Zarwin Baum DeVito Kaplan Schaer & Toddy, P.C. 

 


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