Legally Grown- Episode 5: How to Start a Medical Cannabis Dispensary in PA Transcript - Norris McLaughlin, P.A., Attorneys at Law

Episode 5: How to Start a Medical Cannabis Dispensary in PA

Transcript: Ben Sheppard

Welcome to Norris McLaughlin’s Legally Grown, a limited podcast series where we weed through the topics of cannabis law in New Jersey and Pennsylvania, and beyond. I’m your host, Ben Shepard, Associate in the cannabis law group at Norris McLaughlin. In this episode, we will be covering how to start a medical marijuana dispensary in Pennsylvania in the event that these applications go open again. This is your cheat sheet to learning these things.

All right, so the first part of your application process is you’re going to have to indicate what region you’re from. There’s between six regions in Pennsylvania. There’s the Northeast region, the southeast region, south-central region, the north-central region, southwest region, and northwest region.

Now since we don’t have a map or a photo or anything, I’m going to try to put our Pennsylvania geography hat and kind of describe the cities and areas that are in these regions. So, the northeast region includes Allentown, Bethlehem, Easton, Stroudsburg, and Scranton. Southeast region includes Lancaster, Amish country, Concha Hokan, and Philadelphia. South Central includes Harrisburg, York, stretches all the way out into Altoona. We have North Central, which is State College, Bloomsburg, Berwick, Pennsylvania, where my mom’s from, so I have to mention that. Then we have the Southwest region, which is Pittsburgh and Somerset. And then finally, we have the Northwest region, which is Erie, Pennsylvania.

Now, the next step after you determine your region is you have to provide your business name, your trade names, which is a fictitious name. So, if you’re using a different name. That would be something like, you know, if your LLC is titled Joe Smith LLC and you use 123 as your trade name, that’s your trade name, and then your address, so your business headquarters, 123 Main Street.

Then you want to list the address of your proposed dispensary. And then if not yet, form a corporate entity, so an LLC, corporation, you know, partnership, etc, and secure a location that meets value requirements. It’s really, really important in any heavily regulated industry, whether it be liquor or cannabis, you have to make sure that you meet zoning requirements. Zoning requirements are pretty complex, and you want to make sure that you meet them. Because, for example, if you started dispensary in a residential area, that would not fly and that would not be acceptable. That’d be a big issue if you got everything set and then you have a zoning issue in your application.

Now, the next section I want to talk about is the third section, which is the diversity plan. You’re scored on points in this section. So, you can in theory get one point or you get, I believe the maximum is about 150 points. Now, what you’re trying to do is you need to show how you promote diversity within your business. And it’s very vague what people have done in the past, you know, with these things. I’ve heard of examples where people say, we’re appointing a chief diversity officer. We’re going to host a diversity-oriented events, you know, maybe a black history month related to cannabis, educate people on the disparate impact on the war on drugs. Alternatively, you would want to disclose if you’re a majority minority-owned business, whether you’re Indian, Native American, etc. It would all be stuff that would come back into your point system. You know, I’ve seen one, the application itself, the template says, they would use a female-owned armored car service. So, you can get creative with these things and talk about that kind of stuff.

Now, the next section is your disclosure of your corporate structure. This is the disclosure of all principles, financial backers, operators, employees, etc. Each individual needs to provide their full name, address, contact details, and confirm they’re a good moral character. So, the way they do this is they might ask, you know, have you been convicted of any crimes, you know, any felonies, misdemeanors, etc. Or is there a proceeding that’s rendered you a person of ill repute? So, for example, the Pennsylvania Liquor Control Board, there’s hearings, if you’re a liquor licensee, that the board, the PLCB, the Liquor Control Board can make a determination that you’re a person of ill repute. One thing I would just recommend, too, is you want to be very, very, with any of these applications, honesty is key. You can’t try to hide a financial badger. You can’t try to hide a principal. That’s what you want to do. Now, this section is not scored on points. It’s pass, fail. So, in theory, if you fail to disclose a principal or a financial backer, you would essentially have failed this application. So, that would hurt your application.

The next section is your operational plan. This is kind of like how you’re going to do business. So, this includes describing the security measures, the employee training, how products are going to be transported. Maybe it’s that female-owned security car company that we have mentioned. You know, how are you going to store your cannabis products? You know, how are you going to manage the inventory? What sanitation procedures are you going to use to make sure everybody’s There’s no germs or anything like that. You also want to talk about record-keeping requirements and how you’re going to avoid unlawful diversion products. So that’s for example, how you’re going to not allow minors to be buying these products, how you’re going to make sure that people have a medical marijuana card. A lot of dispensaries, they won’t even let you in the door if you don’t show a card. It’s probably not a bad idea this day and age. You know, it’s, that’s probably what you want to be doing. And you also, if you’re using any medical professionals involved as well. And finally, the other thing is you want to outline a timetable within six months of the license being issued of how you’re going to become operational. So, you want to update, kind of say like applicants ready to begin operations immediately. Well, you’re going to have to go a little bit deeper than that. Say, you know, on the, upon approval, we’re ready to open up, you know, we’ve got our security in place, we’ve got our, all these other measures that we can start selling products to, uh, licensed medical marijuana users.

Now the next section is kind of a repeat of the corporate structure, but this is more of like the actual business itself. So, you need to provide the EIN. The employer identification number from the IRS. One thing I always tell people is do not lose your EIN number because it’s something typically the IRS doesn’t give back. They don’t get that out to you. And if they do, it’s going to take months and months and months. So, you always want to make sure you take good care of your EIN.

The next step is you got to get your unemployment compensation number from the account number from the state of Pennsylvania. And then you also want to kind of go into more about your business operations, um, and demonstrate your capability to operate effectively and sustainably. So you got to kind of say like how you’re going to be like making money, how you’re going to be, you know, you’re going to be in for the long term. You know, you’re not going to just get this license and then sell it to someone. They don’t want to see that because that kind of warps and perverts the market. That’s been a big issue in a lot of these states, that people would acquire a license, But, then they just sell it to a bigger bidder. And we’re trying to create overall intent behind the cannabis world is they want to market that’s different people. It’s not just big corporations or industries that have already existed. They want to give people a shot, but that’s always been the big issue so it’s so difficult with the cost associated with this industry, but something you can do if you put your mind to it.

Now, the final section we have is on the community impact section. So, you got to explain how your dispensary will positively impact the community. So, you know, this kind of bleeds into one of our other, our operational plan. Yeah, you want to say like how you’re going to prevent minors from using the dispensary. So, you know, we check for ID. Maybe you could even throw in that we’re even going to check driver’s license to confirm age or require passports, well, require a passport if not available, or identification. You know, you want to be doing those things or talking about maybe how community events that you might be hosting. I think you could be, you know, maybe like a sponsor a picnic. You know, sponsor various activities like that or sponsor some activities that just put your name out there as a good product and use safely can be a good and helpful and not harmful product as well. So, you’re trying to be a good steward, so to speak, a good steward of your community and a positive impact, you know, potentially could be, you know, how you’re going to minimize traffic to surrounding business, you know, maybe things like how you’ve talked to like local residents about what they feel about it. So, you’re just really, the rule in this is. You know, be a good neighbor, and if you don’t have plans yet of how you’re going to impact the community, develop them quickly so you maximize your points.

Now, I want to conclude here on, opening and dispensary involves a lot of meticulous planning and strict compliance with state regulations and laws. And it also can be a lot of paperwork that you’re filling out. You want to consider all aspects very, very carefully to ensure your success. Understand what you’re putting down, work with counsel, you know, work with people that can help maximize your points because you’re going to be with a lot of different people potentially when these open up. So, you want to make sure that you’re getting every single point. It’s like an exam. You know, you want to get, you want to get those easy points. You know, don’t leave any answers blank on the exam. Always fill something in. But with all those things, you know, lawyers can help you guide you through the planning, the entity formation, the lease reviews, zoning approvals, and others, just regulatory compliance as well. So if these applications for a medical marijuana dispensary had ever come up, which we saw that they recently did come up for people who already had a cultivation license, they could come back again for people that don’t necessarily have a cultivation license. So, it’s going to be thinking about these things, thinking them over, seeing if this does become a thing, understand the application, appreciate the application, understand it very quickly. And with those things, your dream of owning a cannabis dispensary in Pennsylvania could become a reality.

This has been Norris McLaughlin’s Legally Grown, a limited podcast series where we weed through the topics of cannabis law in New Jersey and Pennsylvania, and beyond. I want to thank you, the listener, for being a part of the conversation. Be sure to tune in next time for a brand-new episode, and if you’d like to learn more, please email me at legallygrown@norris-law.com.