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Christopher R. Vaccaro
Massachusetts voters legalized medical marijuana in a 2012 referendum. Next month voters will consider another referendum which would legalize recreational marijuana use, as Colorado and Washington have already done. Federal and state marijuana laws are newsworthy as election day draws near.
After the 2012 referendum, Massachusetts enacted a statute permitting medical marijuana use for “qualifying patients” suffering from “debilitating medical conditions” like cancer, AIDS, hepatitis C and ALS. Physicians may, without risking state prosecution, advise qualified patients on medical marijuana use and issue written certifications that in effect allow them to possess a 60-day supply of medical marijuana. The statute provides for registered marijuana dispensaries (RMDs) that can cultivate, process and sell marijuana to qualifying patients, thus creating a new industry in Massachusetts.
The Massachusetts Department of Public Health (DPH) regulates this industry. DPH is not limited on how many RMDs it can approve in a given community, but only nonprofit corporations having at least $500,000 can apply. RMDs must cultivate their own marijuana and cannot buy it from suppliers.
Applicants are limited to three dispensaries. Aspiring RMD operators may file applications of intent with DPH, with a nonrefundable $1,500 payment and background information on their managers and investors. If satisfied with the initial application, DPH can invite applicants to submit detailed management and operations profiles, with another nonrefundable $30,000 payment. Applicants may not submit management and operations profiles without DPH’s invitation.
If DPH approves the management and operations profile, the applicant must secure DPH acceptance of its dispensary and cultivation sites. Invited applicants must file siting profiles for each dispensary and cultivation site, along with letters of local support or non-opposition from municipalities hosting the sites. Applications cannot proceed without these letters.
Still A Federal Crime
Municipalities have no obligation to issue the letters, but apparently some will do so for a price. According to the Boston Globe, an applicant promised to pay the city of Worcester $450,000 over three years, and $200,000 per year thereafter, for a letter of support or non-opposition. Springfield negotiated for up to 7 percent of the applicant’s revenues, plus a $50,000 annual donation to its police department.
Successful applicants receive provisional certificates of registration and, after completing their facilities and passing inspection, final certificates of registration permitting them to operate.
So far, out of 175 applications, 41 RMDs have received provisional certificates of registration and only seven are open for business. The number of operating RMDs is expected to grow, as the application process and experience with RMDs becomes more familiar.
Despite Massachusetts developments, marijuana remains a prohibited controlled substance under federal law. Federal agents have sought civil forfeitures against medical marijuana dispensaries, instead of criminal prosecutions. Forfeiture laws allow police to seize suspected proceeds of illegal drug trade, without arresting people or proving their guilt. Following widespread criticism of this tactic, Congress amended the federal budget in 2014 and 2015 to prevent the U.S. Department of Justice (DOJ) from spending federal money to prosecute medical marijuana dispensaries and qualifying patients. Federal regulators in 2014 authorized banks to provide financial services to marijuana-related businesses operating legally under state law. Nevertheless, recent events reveal continuing tensions between federal and state law.
Last January, San Diego police raided facilities of Med-West Distributors, a medical marijuana extractor, seizing an estimated $1.4 million in product, bank accounts and cash, but in May the DOJ dropped charges against Harborside Health Center of Oakland, one of California’s largest marijuana dispensaries, after years of hard-fought litigation. A federal appeals court in California decided United States v. McIntosh in August, holding that DOJ cannot spend funds to prosecute individuals who strictly comply with state medical marijuana laws, but can prosecute individuals who fail to strictly comply. This month in United States v. Apicelli, a federal appeals court upheld the conviction of a New Hampshire man sentenced to a year in prison for illegally cultivating marijuana. Because of continuing legal uncertainties, and the inherent risk for banks in handling deposits from marijuana dispensaries even in states that permit marijuana sales, dispensaries often must transact business in cash, requiring them to maintain large on-site safes. The cash-only nature of the business also hinders tax collectors.
Federal law on its face remains hostile to marijuana, but movement toward decriminalization continues. More states are legalizing medical marijuana, and some are legalizing recreational marijuana. Depending on November’s referendum results, retail sales of marijuana in Massachusetts may someday become as accepted as sales of tobacco once were.
