Comments - NYS Department of Health proposed medical marijuana rules

SCAVONE LAW FIRM 303 East 57th Street – #12C – New York, NY 10022

[email protected] – ph. (518) 312-0987 Ms. Katherine Ceroalo New York State Department of Health Bureau of House Counsel, Regulatory Affairs Unit Corning Tower – Room 2438 Empire State Plaza Albany, New York 12237 VIA EMAIL to [email protected] February 17, 2015 Re: Proposed Medical Marihuana Regulations Dear Ms. Ceroalo: Please find below my comments on, and proposed amendments to, the proposed regulations of medical marijuana under the Compassionate Care Act, published by the Department on December 31, 2014. I appreciate your time and consideration. 1. AMEND REFERENCES TO “OWNERS” FOR CONSISTENCY WITH SECTION 80-1.5(b). The suggested amendments, in italics, are intended to clarify which “owners” must be disclosed in an application. The amendments are intended to create uniformity and consistency with the language of Section 80-1.5(b) (stating that applications by sole proprietorships must be signed by the “owner of a proprietary applicant”) while excluding potentially thousands of de minimis shareholders of corporate applicants with wide bases of shareholders:

Section 80-1.5(b)(6). The application shall set forth or be accompanied by [. . .] (6) the name, residence address and title of each of the board members, officers, managers, owners of proprietary applicants, partners, principal stakeholders, directors and any person or entity that is a member of the applicant. Section 80-1.6(b)(9). In deciding whether to grant an application, or amendment to a registration, the department shall consider whether [. . .] (9) the moral character and competence of board members, officers, managers, owners of proprietary applicants, partners, principal stakeholders, directors, and members of the applicant’s organization. Section 80-1.14(b). No board member, officer, manager, owner of a proprietary applicant, partner, principal stakeholder or member of a registered organization shall have an interest or voting rights in the laboratory performing medical marihuana testing.

So amended, these sections would preserve the integrity of the regulations and the full measure of the Department’s authority to conduct background checks on those individuals with

significant day-to-day control over successful applicants, while avoiding consuming the valuable time and resources of applicants and Department staff. 2. INCLUDE GUIDELINES THAT WILL GOVERN THE STATEWIDE GEOGRAPHICAL

DISTRIBUTION OF REGISTERED ORGANIZATIONS’ FACILITIES. While I appreciate the difficult position that the Department is in when it comes to locating dispensing and cultivation sites in a manner that fulfills the Department’s obligations under the Compassionate Care Act, the ongoing uncertainty is, without a doubt, causing various applicants to each take its “best guess” as to where it will locate its facilities. Applicants should be focusing on building top-quality cultivation and dispensing sites that can get safe, consistent medical marijuana into the hands of patients at the soonest date possible, and on a continuing basis thereafter. By settling questions of geography sooner rather than later, the Department will create the conditions for success in terms of timely implementation of the medical marijuana program, and the critical issue of ensuring timely availability of medical marijuana products to patients. 3. LICENSE AN ADDITIONAL CLASS OF “RETAIL-ONLY” REGISTERED ORGANIZATIONS. Section 80-1.6(b) provides that the Department shall initially register up to five applicants as registered organizations, and the Regulatory Impact Statement suggests that each registered organization may be granted the right to operate four dispensing sites each. The Commissioner presently has authority to license a class of “retail-only” registered organizations, as detailed in EXHIBIT A. Patient demand is likely widely geographically distributed, and twenty dispensaries for the entire state will create an unnecessarily strained retail dispensary locations and excessive travel demands on patients and caregivers. For purposes of comparison, I note that the state has more than 5,000 pharmacies, distributing a wide variety of opiates and other narcotics, according to recent data published by the NYS Department of Education’s Office of the Professions, annexed hereto as EXHIBIT B. By authorizing such a class now, the Department would help to ensure that cultivation applicants are prepared from the outset to cultivate enough cannabis to meet demand as it would exist unconstrained by the currently proposed limited channels of distribution. 4. TRANSPORT BETWEEN CULTIVATION FACILITIES AND DISPENSING SITES. Section 80-1.13(n)(1) requires that a registered organization submit a shipping manifest to the Department at least two business days prior to transport. It is reasonable to expect fluctuations and “spikes” in patient demand upon the initial implementation of the medical marijuana program, and the requirement limits the ability of thoroughly-vetted licensee registered organizations from addressing such fluctuations in real time. As an alternative, Section 80-1.13(n)(1) could be amended as follows:

“A copy of the shipping manifest must be transmitted to the dispensing facility that will receive the products and to the department at least two business days prior to prior to dispatch of the shipment, and a copy shall be submitted to the department within two business days of such transport.

5. LIMIT THE REQUIREMENT TO IDENTIFY EQUIPMENT. Section 80-1.5(b)(3) requires an applicant to identify “all equipment that will be used to carry out the manufacturing, processing, transporting, distributing, sale and dispensing activities described in the application and operating plan.” This could be interpreted to include every last stapler and keyboard owned by a registered organization. To avoid that result, limiting language – possibly in the nature of a dollar threshold – may be useful in ensuring adequate disclosure by applicants and proper oversight by the Department, without compromising the integrity of the regulation. 6. CLARIFY THE “ONE YEAR SUPPLY” REQUIREMENT. Section 80-1.11(c)(7) provides that “Each registered organization shall ensure the availability of at least a one year supply of any offered brand unless otherwise allowed by the department.” The requirement is unclear as to when and how a registered organization proves that it has “ensured the availability of at least a one-year supply of any offered brand,” or when and how it might be called upon to so demonstrate. While it is important that each registered organization is capable of sustaining production on a continuing and long-term basis, the requirement, so stated, does not provide meaningful guidance to applicants, nor does it create for the Department a means of measuring and assessing compliance. The language should be significantly revised, or deleted in its entirety. 7. ON-DUTY PHARMACISTS. The requirement that a licensed pharmacist be on site at all opening hours of a dispensing facility will impose a significant cost that will ultimately be borne by patients and their caregivers. Pharmacists in New York routinely earn $120,000 annually, and to require registered organizations to expend roughly $60/hour at four locations for approximately eight hours a day each, seven days a week, will be a significant fixed ongoing expense. While this caution and more are warranted for conventional pharmacies, it is of limited value in the context of dispensing sites. Dispensing sites have limited inventory, consisting solely of medical marijuana products, which have zero risk of acute toxicity, compared with the neverending stream of new, novel, and risky compounds dispensed at conventional pharmacies, which universally have significantly more extensive risks of acute toxicity and drug interaction. The goals of the Department in this regard can be met by the stipulation that each registered organization must have, at all times, an on-duty pharmacist available at one of the registered organization’s dispensing locations, who is also available to discuss questions and concerns with patients who are at other dispensing locations operated by the registered organization via telephone

or video conference. That requirement may be augmented by requiring designation of one pharmacist as the registered organization’s Chief Pharmacy Officer, who would be charged with developing and maintaining Department-approved staff training curricula on compliance issues regarding patient consultations, and leading Department-approved training sessions for the registered organization’s staff, on a monthly, quarterly, or biannual basis. 8. BRAND CONSISTENCY. While consistency in production is valuable, the requirement of Section 80-1.11(b) and (c), that lots of a “brand” be consistent within 95-105% of the target THC and CBD levels is so narrow that it creates a risk of a situation in which destruction of perfectly good, safe, and effective medical marijuana products could be subject to destruction. This has the potential to put patients’ supply unnecessarily at risk. That risk would be significantly reduced by allowing a tolerance of 90-110% of the target THC and CBD. 9. TECHNICAL AMENDMENT SUGGESTIONS. The following are offered as minor corrections and clarifications:

Section 80-1.10(a)(3): “[A] registered organization shall . . . only manufacture and dispense approved medical marihuana products in an indoor, enclosed, secure facility facilities located in New York State which may include greenhouses.” Section 80-1.11(c)(3): “Each brand final approved medical marihuana product shall have a maximum of 10 mg total THC per dose” Section 80-1.11(c)(2)(x): “any other known cannabinoid component at > 0.1%” Section 80-1.13(i): “All marihuana that is not part of a finished product must be stored in a secure area or location within the registered organization manufacturing facility, dispensing site, or delivery vehicle accessible only to the minimum number of employees essential for efficient operation.” Section 80-1.13(o): “A registered organization shall only transport approved medical marihuana products from a manufacturing facility to dispensing facilities, a laboratory approved by the department under subpart 55-2 of this title, or, in the event of a product recall, from dispensing facilities and laboratories to the registered organization’s manufacturing facilities.” Section 80-1.21(a): “No person, except for a certified patient or designated caregiver, or an approved laboratorian shall open or break the seal placed on an approved medical marihuana product packaged by a registered organization and provided to the certified patient.”

Sincerely, Adam Scavone

EXHIBIT A

RETAIL CANNABIS POSSIBILITIES FOR NEW YORKUNDER THE COMPASSIONATE CARE ACT

Adam ScavoneScavone Law Firm

[email protected]. (518) 312-0987

There has been a lot of misreporting on the Compassionate Care Act.

A rumor spread that there would be a maximum of twenty dispensaries in all of New York State.

“The law limits the number of [registered organizations] with dispensing sites in New York to five, with no more than four dispensing sites wholly owned and operated by each RO.”

- Francis J. Serbaroli, Esq.Partner, Greenberg Traurig LLPin the New York Law JournalA Primer on New York’s Medical Marijuana Law

published July 22, 2014

INCORRECT.

The text of the Compassionate Care Act does not put a ceiling on the number of dispensaries.

It only limits vertically integrated dispensaries –those that are wholly owned and operated by the holders of cultivation licenses.

CCA Section 3365(9)

The Commissioner shall register no more than five registered organizations that manufacture medical marihuana with no more than four dispensing sites wholly owned and operated by such registered organization.

- AND -

The Commission[er] may register additional registered organizations.

The first part creates five cultivation licenses, but (confusingly) refers to these as “registered organizations that manufacture medical marihuana.” We’ll call these “cultivation licenses.”

It then caps the number of “dispensing sites” that are wholly owned and operated by the holder of “cultivation licenses.”

That last part of Section 3365(9) –

The Commission[er] may register additional registered organizations.

requires us to ask, what other “registered organizations” are there?

CCA Section 3364

A registered organization shall be a for-profit business entity or not-for-profit corporation organized for the purpose of acquiring, possessing, manufacturing, selling, delivering, transporting, distributing ordispensing marihuana for certified medical use.

These are all categories of licenses that the Commissioner could issue, alone or in combination. A delivery-only license. A dispensing-only license. A manufacturing-and-dispensing license (max five). A selling-and-distributing license.

QUESTIONS?

[email protected]. (518) 312-0987

EXHIBIT B

License Statistics

Licenses Issued, Past 5 Calendar Years

Profession Title 2010 2011 2012 2013 2014

Pharmacist 1178 1161 1118 1282 1185

Pharmacist, 3year limited license 0 0 0 0 0

Geographic Distribution*

Pharmacists | Pharmacies | Manufacturers | Repackers | Wholesalers

Pharmacists (as of January 1, 2015)

County Number County Number County Number

Albany 453 Jefferson 112 Saratoga 462

Allegany 29 Kings 1,924 Schenectady 244

Bronx 301 Lewis 20 Schoharie 13

Broome 189 Livingston 46 Schuyler 15

Cattaraugus 57 Madison 68 Seneca 16

Cayuga 59 Monroe 860 Steuben 61

Chautauqua 96 Montgomery 47 St. Lawrence 91

Chemung 89 Nassau 2,901 Suffolk 1,284

Chenango 32 New York 822 Sullivan 35

Clinton 94 Niagara 212 Tioga 40

Columbia 36 Oneida 297 Tompkins 61

Cortland 25 Onondaga 569 Ulster 97

Delaware 20 Ontario 109 Warren 66

Dutchess 283 Orange 286 Washington 54

Erie 1,381 Orleans 27 Wayne 68

Essex 26 Oswego 81 Westchester 928

Franklin 39 Otsego 66 Wyoming 31

Fulton 39 Putnam 85 Yates 9

Genesee 38 Queens 2,894 NYS TOTAL 19,712

Greene 58 Rensselaer 191 OTHER US 5,511

Hamilton 2 Richmond 661 NONUS 40

Herkimer 61 Rockland 452 TOTAL 25,263

* County of location reflects the licensee's primary mailing address on record with the State Education Department. Thisaddress may either be the licensee's home or practice address. Licensees must be registered in order to practice within NewYork State; being registered, however, does not necessarily mean the licensee is actively engaged in practice.

Pharmacies (as of January 1, 2015)


Office of the Professions

http://www.nysed.gov/

http://www.op.nysed.gov/

http://www.op.nysed.gov/


Allegany 12 Kings 836 Schenectady 40






Chemung 24 Nassau 333 Suffolk 333







Erie 251 Orleans 10 Wayne 19




Genesee 13 Queens 673

Greene 13 Rensselaer 30 NYS TOTAL 5,398

Hamilton 0 Richmond 104 OUTOFSTATE 1,008


Manufacturers (as of January 1, 2015)




















Genesee 0 Queens 2

Greene 1 Rensselaer 2 NYS TOTAL 142

Hamilton 0 Richmond 0 OUTOFSTATE 307

Herkimer 0 Rockland 10 TOTAL 449

Repackers (as of January 1, 2015)




















Genesee 0 Queens 9




Wholesalers (as of January 1, 2015)




















Genesee 0 Queens 24


Hamilton 0 Richmond 4 OUTOFSTATE 1,072


Outsourcing Facilities (as of January 1, 2015)




















Genesee 0 Queens 0




Documents

Comments - NYS Department of Health proposed medical marijuana rules