Pennsylvania Senator Daylin Leach and Senator Sharif Street recently unveiled their plan to introduce legislation, Senate Bill 350 (“SB 350”), that — if passed — would legalize adult-use cannabis and create a corresponding regulatory program. SB 350 would permit adults over the age of 21 to purchase and consume adult-use cannabis, and, to grow up to six plants per household.
The state regulatory authority will license cannabis businesses, including cultivation facilities, processors, dispensaries, public lounges and delivery services. There is no limit as to how many licenses the regulatory authority may issue. Additionally, licensees currently active under the state’s medical cannabis program will automatically be issued licenses to enter into the adult-use cannabis space.
Cultivation licenses will be separated into two categories: macro-growers and micro-growers. Macro-growers will be traditional cultivation facilities, reserved for larger growing operations. In order to receive a cultivation license, the applicant will need to meet certain regulatory and financial requirements.
Micro-growers licenses, on the other hand, are designed to provide entry into the adult-use cannabis sphere; specifically, these are intended to encourage growth for businesses in areas that have been directly impacted by cannabis prohibition. Micro-growers can only grow and only sell their product to processors and dispensaries.
SB 350 also contemplates a tax on adult-use cannabis transactions. However, the bill does not include the rate that the tax will be imposed. Instead, the bill provides a standard for which the tax rate shall be determined. Specifically, the rate must ensure tax generation sufficient to undermine the illegal market, to invest in the communities that have been harmed by prohibition, and to satisfy the need to pay for industry regulation.
The majority of tax money generated from cannabis sales under SB 350 will go to Pennsylvania public schools. School districts will, however, have the opportunity to decide whether to use these taxes as an investment into their schools, or, rather, to lower local property taxes.
If passed, SB 350 will automatically expunge all criminal convictions related to possession of cannabis, cannabis paraphernalia, and possession with the intent to deliver less than an ounce of cannabis. Any eligible pending cannabis charges will be dismissed. Those who are currently serving sentences for possession or intent to deliver less than an ounce of cannabis will be commutated, and eligible terms of parole or probation related to cannabis offenses will be ended.
SB 350 proposes some features that are unique relative to other state adult-use cannabis programs. Specifically, it would do away with “seed-to-sale tracking,” one method similar programs have used to track regulated cannabis. Additionally, it proposes environmental standards (for example, dispensaries selling vape pens must offer recycling programs), social lounges, and home delivery.
Additionally, SB 350 proposes public education initiatives about cannabis. It proposes a statewide cannabis business institute, which will provide, at no cost to the public, education as to how to start and run a small business, how to grow and process cannabis, and how to be compliant with state and federal law. Those who complete this course will be eligible to apply for state grants and interest-free loans to start a cannabis business. The program would further allow colleges and universities to offer classes related to cannabis, on subjects like growing and processing. These institutions will be able to grow and process cannabis in offering these courses.
Although the language of the bill itself has yet to be published, the framework of SB 350 provides a guide for regulators to implement a program, as well as regulations, that remedies the inequities surrounding the prohibition of cannabis, and, to establish a fair system for the taxation, consumption, and regulation of adult-use cannabis in Pennsylvania.
AUTHORS
Haley Keefer is a legal extern at Hoban Law Group in Denver Colorado. Haley is pursuing a Juris Doctor at the University of Denver, Strum College of Law and her interests include marijuana, industrial hemp, and civil litigation. She can be reached at [email protected].
Darren Kaplan is an associate attorney at Hoban Law Group in Denver, Colorado. Darren has worked on several legal issues in the cannabis space, specializing thus far in industrial hemp, regulatory compliance (hemp and marijuana), and civil and commercial litigation.
Garrett Graff is a senior attorney at Hoban Law Group in Denver, Colorado, nationally recognized as a Cannabis Law Trailblazer by National Law Journal. Garrett specializes in representation of both the marijuana and industrial hemp industries. His practice involves corporate and M&A, real estate, regulatory/compliance, FDA/FTC compliance, intellectual property protection, and civil and commercial litigation.
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