Canna Business 101: Pa. Grow/Processor Regulations
With Arizona recently receiving 750 applications for 31 medical marijuana dispensary licenses, Pennsylvania's Department of Health is bracing for the tidal wave of medical marijuana program applications for the 25 grow/processor and 50 dispensary permits.
On Aug. 18, Pennsylvania's Department of Health issued two sets of temporary regulations under its Medical Marijuana Act, 35 P.S. Sections 10231.101-10231.2110: Article IX. Medical Marijuana Program "Chapter Section 1141 General" and "Chapter Section 115 Growers/Processors and Medical Marijuana Organizations," (temporary regulations).
Offering few surprises, the temporary regulations provide staggering application requirements, emphasize the program's deep diversity commitment, but fail to provide any "residency requirements" barring out-of-state investment or ownership.
Green Earth Wellness Holding Supports Enforceability of State-Legal Cannabis Contracts in Federal Courts
Operators in any industry need the certainty of knowing that their contracts will be enforceable in court. But cannabis entrepreneurs who obey state law face uncertainty regarding whether a defaulting party will claim that a cannabis-related contract is unenforceable on grounds of public policy. Chief Judge Krieger's holding in Green Earth Wellness Center, LLC v. Atain Specialty Ins. Co. 13-CV-03452 2016 WL 632357 (D. Colo. Feb. 17, 2016) provides persuasive authority for the proposition that federal courts should enforce cannabis contracts that are legal under state law.
Canna Business 101: Funding Types and Sources
Unlike more mature industries, cannabis ventures are predominantly "startups" differently situated in evaluating whether to seek debt or equity financing. While debt, (i.e., loans secured by assets), is preferable, equity, or convertible debt, is more common.
Because it is 100 percent violative of federal law, it is almost impossible for "plant touching" marijuana businesses to obtain a loan from a federally charted bank or credit union. Specifically, because the Comprehensive Drug Abuse Prevention and Control Act, 21 U.S.C. Section 801, Et. Seq (1970), prohibits the "manufacture, distribution, and dispensation" of cannabis. And any transfer or deposit of monies yielded from cannabis sales may be deemed "money laundering" in violation of the Currency and Foreign Transactions Reporting Act, 31 U.S.C. Section 5311-5330, most banks and credit unions refuse to provide marijuana growers, processors or dispensers with financial services.