I am writing this on Tuesday, June 20, which is the day that Pennsylvania is awarding 12 grower-processor permits for medical marijuana in the state. That equates to two for each geographic region, including Region 4 – North Central. Region 4 includes Centre, Bradford, Clinton, Columbia, Lycoming, Montour, Northumberland, Potter, Snyder, Tioga and Union counties. In addition, the state Health Department expects to issue dispensary permits by the end of June.
Twenty-nine states plus Washington, D.C., have approved medical marijuana as Pennsylvania did last year. Each approved grower in Pennsylvania will be required to begin growing in six months and the growing facilities must exist in warehouses that are fully secure.
Marijuana is big business, as economists expect Pennsylvania s medical marijuana markets to be worth $150 million in the first year.
The state has already made money on the applications. Growers had to submit a nonrefundable $10,000 application fee and dispensaries had to pay a nonrefundable $5,000 application fee. Pennsylvania has raked in between $2.5 million to more than $5 million from nearly 500 packages containing applications before any operations are running.
On top of these numbers, growers also sent a $200,000 permit fee, which is refundable if the permit is not granted and proof of $2 million in capital. In other words, deep pockets need only apply. Dispensaries also come with a steep price: a $30,000 permit fee, which is refundable if the permit is not approved and proof of $150,000 in capital. The proof of capital is important so the growers and dispensaries can be up and running by 2018.
Other than financial resources, no less than 30 criteria were reviewed to select the winners. Criteria are weighted with the largest percentage (20 percent) depending on diversity and community impact. Other benchmarks to be met included good moral character, sanitation, safety and diversion prevention (keeping the marijuana out of the wrong hands).
Of course, with medical marijuana approval, the talk of full legalization is in the air. Four states, Colorado, Alaska, Oregon and Washington, have launched recreational pot programs. Four more states, including California, have it in the works. In Colorado, the total sales of recreational and medical marijuana hit $1.3 billion in 2016. That equated to $200 million in tax revenue for the state last year.
For a state facing a deficit like Pennsylvania, the tax revenue is attractive. Pennsylvania has a budget shortfall of $1 billion and continuing pension shortfalls.
As of 2015, states face a combined pension funding gap of $1 trillion. The tax revenue to each state would most likely not be as large as Colorado just as gambling revenue and taxation were a boon but hurt destination spots like Atlantic City as it spread the wealth to other states. It would also decrease the costs of litigation and arrests for the drug. Arrests for possessing small amounts of the drug exceeded those for all violent crimes in 2015 according to a study by Human Rights Watch.
No matter which side you are on in the debate, medical and recreational marijuana are big business but still not federally legal. This causes a problem when dealing with banks and credit card companies. Federal law still labels marijuana a controlled substance and sale or production of the drug is still federally illegal. In turn, banks must disclose any transactions with producers or dispensaries as suspicious activity.
Given this scenario, marijuana businesses are known for a large buildup of cash. In June 2016, Travis Mason, a security guard at a dispensary in Colorado, was shot and killed during a robbery.
Due to the dangers of holding so much cash and the increasing state legalization, the Secure and Fair Enforcement Banking Act (SAFE Banking Act) was introduced in April that would permit banks to work with legal marijuana businesses. Many banks already try to work with the businesses but in a very quiet way.
Finally, in an effort to prove that where there is a will there is a way, a credit union named Fourth Corner was set to open in Denver in January 2015 to serve the legal cannabis industry. However, a judge rejected the approval of Fourth Corner saying it would facilitate criminal activity . This was a reminder that while states may approve of medical marijuana and other uses, the product is still illegal under federal law.
We will see where the businesses go from here, but locally we may be watching from a distance. No grower-processor permits were issued for Centre County. For Region 4, permits in the initial round were awarded to applicants in Clinton and Montour counties.
CLEVELAND, Ohio — Personal health information for 1,708 Ohio residents who have health insurance through Aetna was exposed online, Aetna Inc. said in a statement Friday. The protected information was “inappropriately available online for a period of time,” the company’s statement said.
“The information available online generally included first name, last name, Aetna member identification number, provider information, claim payment amount, and in some cases procedure/service codes and dates of service.
“There are no instances of Social Security numbers or bank account or credit card information being involved,” the statement said. The company said it is sending letters explaining the situation to affected plan sponsors and individuals, and will have a toll-free number for affected individuals to call with questions.
Aetna said it confirmed in May that a privacy breach had occurred “involving two computer services that display documents to members.” The company said it subsequently took steps to block search engines from displaying information from the documents.
“At this time, we are not aware of any misuse of the information made available online as a result of this incident,” Jim Routh, chief security officer for Aetna, said in the company’s statement.
Aetna has more than 750,000 members in Ohio, according to the company’s website.
Working is progressing on the multi-purpose fitness trail going in on Cedar Hill, a gateway into Cleveland Heights. Tom Jewell/Special to cleveland.com
CLEVELAND HEIGHTS, Ohio — Legislation allowing for a medical marijuana dispensary in town could be introduced by City Council in July. A June 9 update from the Economic Development Department indicates that the company Buckeye Relief remains interested in putting one its dispensaries in Cleveland Heights. This would be separate from the cultivation and processing license the Chagrin Falls-based company is seeking for a planned facility in Eastlake, possibly in the former JFK Senior Center on Curtis Boulevard.
Meanwhile, the State of Ohio is expected to grant 60 dispensary licenses in the initial round of applications, which will be due in October with approvals granted in November, the memo states. From there, the approved dispensaries are expected to open in the third or fourth quarter of 2018. Cleveland Heights council has not issued a moratorium on medical marijuana, which precludes cities from being considered.
At the same time, city administration has not recommended significant additional local restrictions, since Ohio’s medical marijuana program is considered “among the most restricted and regulated in the country.”
While the city had a few preliminary inquiries regarding cultivation, “nothing of substance came of those conversations,” at least for the state’s initial licensing round, the memo states. City Economic Development Director Tim Boland and Business Manager Brian Anderson see two potential revenue sources from a dispensary: employee income taxes and licensing fees.
“Based on feedback from Buckeye Relief, it is expected that a dispensary will generate 8-12 full-time equivalent jobs, plus an additional contracted security guard during hours of operation,” the memo states. This could grow, but for now, city officials project that total payroll for a proposed dispensary would be, conservatively, between $200,000 and $300,000 per year.
At 2.25 percent, this would translate to $5,000 and $7,500 in income tax revenue to the city per year. As for the licensing fee, Buckeye Relief is proposing $15,000 a year, although nationally, those numbers, at least for dispensaries, are significantly lower. Buckeye Relief has agreed to a $25,000 annual licensing fee in Eastlake for a potential cultivation and processing facility.
And across the border, South Euclid has set licensing rates of $2,500 annually for a dispensary license fee and $5,000 for an annual cultivation license. This is in line for the most part with Akron and Canton, which have also established “provisional license fees” for all marijuana facilities of $250 and $500 respectively. Anderson and Boland are also proposing a $250 non-refundable administrative fee, although council could set a higher amount.
That has already led to some council debate on whether the city should profit from patients in search of what amounts to treatment, or maximizing revenue from the new state laws. And as one council member expressed earlier in hopes of achieving a balance, those two approaches need not be mutually exclusive. Marijuana facilities would not be permitted within 500 feet of institutions like schools, churches, libraries, parks and playgrounds, and security plans will have to be approved by the police chief.
Additional funds may also be tacked on if more police are needed.