Authored By: William F. McDevitt, Esq.

On June 24, 2018, Pennsylvania Governor Tom Wolf signed the “Watson Amendment” to the 2016 Medical Marijuana Act (MMA). The amendment is a direct response to the Commonwealth Court of Pennsylvania’s preliminary injunction decision in AES Compassionate Care, LLC v. Rachel L. Levine, 233 MD 2018. The Department of Health (DOH) is presently enjoined from issuing permits to Clinical Registrants (CRs) that would allow them to perform medical research as contractors of eight medical schools holding Academic Clinical Research Center (ACRC) licenses. The Pennsylvania Supreme Court declined to lift the injunction, which remains in place while the case is litigated.

The Watson Amendment seeks to resolve several arguments that the Commonwealth Court relied on in issuing its injunction:

● Per the amendment, the DOH must “ensure that a clinical registrant meets all of the other requirements to hold a permit as a grower/processor and dispensary.” Every CR must contract with an ACRC. ACRCs and CRs enter into contracts before CR permits are issued. The Commonwealth Court expressed concern that ACRCs assume the DOH’s regulatory role by pre-certifying CR applicants before they receive permits. The Watson Amendment requires the DOH to independently certify CR candidates, but does not require competitive bidding for ACRC contracts. Also, it is unclear an ACRC contract is a prerequisite for submitting a CR license application.

● The Watson Amendment expressly states that the 8 CR licenses are in addition to the 25 grower/ processor permits and 50 dispensary permits that have been and are being issued through a competitive process. This clarifies that CR licenses are not a subset of “commercial” licenses but a distinct group.

● The amendment states that the purpose of the CR license is “to create a mechanism whereby the Commonwealth may encourage research associated with medical marijuana.” This was not questioned by the Commonwealth Court and may have been included to justify timing of the amendment, which was drafted and passed about a month after the Commonwealth Court issued its injunction.

● The process by which the DOH issues regulations pertaining to the MMA is defined. The Commonwealth Court noted that when issuing the Chapter 20 regulations relating to medical research, the DOH fully conformed to procedural requirements that might not have applied to the MMA.

The Watson Amendment does not resolve all of the Commonwealth Court’s concerns. In AES, the petitioners argued that under the DOH’s Chapter 20 regulations a CR is required to devote only 8 percent of its operations to medical research. The Commonwealth Court found this troubling, especially since each CR is authorized to operate twice the number of dispensaries as “commercial” licensees. The Chapter 20 regulations neither limit a CR’s DOH-approved medical research nor require CRs to engage in commercial medical marijuana sales. Presently, a CR could devote 70, 90 or 100 percent of its operations to medical research.

The Watson Amendment does not legislatively mandate the amount of medical research a CR must perform, but requires CRs to engage in some commercial operations. CRs are now precluded from making “participation in a research study or program a condition for dispensing medical marijuana.” The amended MMA also expressly recognizes a CR as “a medical marijuana organization”; thus, CRs are afforded all of the obligations and privileges of other licensed grower/processors and dispensaries.

Litigation Status

Counsel for the petitioners in AES have pledged to continue challenging the ability of CRs to commercially cultivate and dispense medical cannabis. The temporary injunction is still in force and will remain in place until the courts consider either the effect of the Watson Amendment or the merits of the case. Until AES is resolved, the ability to conduct medical research on cannabis in Pennsylvania will be curtailed.

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.