The Pennsylvania Department of Health (DOH) reported that almost $100 million in medical marijuana sales occurred between February 15, 2018, and February 15, 2019, the first full year that medical cannabis was available to Pennsylvania patients. More than $40 million in sales occurred between growers and dispensaries. Pennsylvania does not tax sales to patients, but does tax transactions between growers and dispensaries at a rate of 5%. Thus, in the first year of licensed sales, the Commonwealth received approximately $2 million in tax revenue from medical cannabis.
In April 2019, the DOH confirmed that the first Phase II grower/processor was approved to begin operations. A total of 13 grower/processors received licenses in 2018. The 2016 Medical Marijuana Act (MMA) allows for a maximum of 25 standard grower/processor licenses. Assuming that all of the Phase II grower processors will produce product in 2019, the volume of medical cannabis in Pennsylvania will double and the price for patients will fall. It is estimated that the current market value of medical cannabis is $2,000 a pound and falling.
This is a boon to the approximately 102,000 certified medical marijuana patients in Pennsylvania. It is also a potential boon to the estimated 32,000 additional patients who have registered on the DOH website but are still in the process of receiving medical certification.
The number of registered Pennsylvania patients reflects a concerted effort to make medical marijuana available. New Jersey has had a medical marijuana program since 2010 and in March reported a total of 42,500 registered patients. New York enacted its medical marijuana program in 2014 and on April 16, 2019, reported a total of 97,646 registered patients. Pennsylvania’s program began processingmedical cannabis registrations in 2017 and already has exceeded its closest neighbors in the number of registered patients.
Bugs in the System
Maintaining a market in the face of increasing supply will not be easy, and there still are bugs in the system that limit access to medical cannabis in the Commonwealth. To participate in the medical marijuana program a patient must first register through the DOH website. Accessing the website is easy, but successfully completing the on-line form can be difficult, so much so that many dispensaries and private groups sponsor patient sign-up events. Even when receiving help from an experienced registration assistant, the failure rate is about 50%.
The most common registration issue involves identification. The DOH system requires that a patient possess a state-issued form of identification. A person who doesn’t have a driver’s license will have a hard time registering for medical marijuana. Even with a state-issued ID, the registrant must enter their information in a precise way. Entering “Street” or “St.” when the ID says “ST” may result in a denial.
Unfortunately, the system does not inform registrants why their application was denied. Some patients will simply reapply until successful. Others may feel that they were denied on a substantive basis and forego participating in the program.
Eye on the Patient
There are other obstacles to participating in the Commonwealth’s Medical Marijuana Program. Program participation requires certification from a physician that the patient suffers from one of 21 recognized medical conditions. Some physicians will charge $150−$200 for an appointment, and certification appointments are not covered under insurance. Moreover, the MMA requires that the patient receiving cannabis remain under the “continuing care” of a physician. In some areas, physicians charge a monthly amount to cannabis patients, believing that they must “monitor” the patient to comply with the law. “Continuing care” payments are not covered by insurance and some physicians have been reported to charge up to $840 a year for ongoing care.
Once certified by a physician, patients must pay a $50 registration fee, which may be discounted for low-income individuals upon proof of participation in Medicaid, PACE/PACENET, CHIP, SNAP or WIC. Until that proof is accepted, no Medical Marijuana Card can be issued. Since medical marijuana remains illegal under federal law, patients may not wish to disclose their receipt of federal assistance.
The DOH, while committed to serving Pennsylvanians and making access to medical cannabis widely available, must nevertheless operate within its budget and pursuant to the MMA and its attendant regulations. Unfortunately, the current system remains frustrating to many patients who feel that they have been denied access, cannot afford medical certification or may lose federal entitlements by participating. Cannabis supply will increase in 2019, but if demand does not increase with supply, prices and tax revenues will fall. Thus, resolving registration problems and increasing participation in the Medical Marijuana Program is in the best interests of all Pennsylvanians.
About the Author
William F. McDevitt is a partner in the Philadelphia office of national law firm Wilson Elser, where he is a member of the firm’s Cannabis Law practice. He can be reached at william.mcdevitt@wilsonelser.com.
