The ranking regulator of the state’s nascent medical marijuana program opened up Tuesday about an expedited timeline for patients and new program rules that favor larger industry players.
Jason Frame, director of the West Virginia Office of Medical Cannabis, discussed a $4.1 million minimum capital reserve requirement (on top of permit and application fees) for vertically integrated business, and a plan to beat earlier estimates of being three years away from real product sales.
“Our goal is to have products available in less than two years,” Frame said.
The 2017 law technically went live July 1, though an array of the program’s key components are miles from in place. The new timeline comes on the heels of state Treasurer John Perdue having tentatively awarded a marijuana banking contract to a South Charleston credit union — patching a gaping hole in the program since the state’s banking vendor announced its unwillingness to handle marijuana funds in 2018.
The department recently unveiled a new set of rules that are in effect on emergency status, pending final approval by the Legislature. Those rules require, among other provisions, capital reserve requirements for different entities in the industry.
Those holding a growing permit will need to have at least $2 million in the bank to operate — same for those holding processor permits. Anyone with a dispensary permit will need to have $150,000 in the bank for each of the 10 locations the law allows.
This comes on top of a nonrefundable $5,000 application fee for a growing or processing permit and a $2,500 application fee for a dispensary. And that’s not to mention a $50,000 fee for a growing or processing permit itself, or a $10,000 fee for each dispensary location.
Frame, an Elkview native and seven-year veteran of the Department of Health and Human Resources’ Bureau for Public Health, said it’s his job to ensure the stability of permit holders, not tilt the market to either small or large business specifically.
“My concern as a regulator is to have successful businesses obtain these permits. We don’t want to issue a permit to an entity and then to have it close,” he said. “What the economic background of that entity is, is really not my concern as a regulator.”
Most entrants to the market, Frame said, will probably be vertically integrated, meaning they will have growing, processing and dispensing permits under the same umbrella.
While one of the lessons he said he learned from other states is on “ensuring the safety of these products,” Frame largely declined to comment whether he sees marijuana as a dangerous product. He said he’ll leave that for physicians and legislators.
“Like anything else, if it’s used in the wrong way, it has the potential to have a down side,” he said.
There’s a long way to go before a qualifying patient can walk into a dispensary and purchase a medical cannabis product.
Once applications come in, Frame and a selection committee will score the bids. He said he has no position yet on whether the committee will judge the applications with knowledge of who’s submitting them, or if they’ll do so on a “blind” basis.
After the permits are awarded, recipients will have six months to be deemed operational by Frame’s staff — five people and counting — before they can plant a seed and begin a roughly four-month growing process.
Likewise, the state needs to implement a process for training doctors who wish to certify patients, and to track and build up a registry of certifying physicians.
State code calls for a Medical Cannabis Advisory Board, tasked with reviewing the program and recommending possible changes to the Legislature. The board hasn’t met since February 2018. At the time, it recommended lawmakers expand the program to allow patients to use dry leaf marijuana, which is not currently allowed.
This never became law. Frame said he doesn’t think any patients should consume combustion products (smoke), but he also opposes any changes to the law in general until there’s a live program.
“We would prefer not to see major changes to the act this January simply because we will already be in the evaluation period for permits,” he said.
Medical marijuana is currently illegal under federal law, but an advisory opinion from Attorney General Patrick Morrisey found that businesses operating legally under state law to do so under a “safe harbor” from federal prosecution.
However, Mike Stuart, U.S. Attorney for the Southern District of West Virginia, has made his distaste for medical marijuana known, via social media and a lawsuit he filed against a Mason County hemp farm that was ultimately dismissed.
Frame declined comment on Stuart’s position.
“There has been no federal action against the medical cannabis program,” Frame said “Until something factual happens, I can’t comment on it or speculate on rumors.”