Duties of a Medical Marijuana Business in Minnesota

On May 29, 2014, Governor Mark Dayton signed a bill legalizing medical marijuana (medical cannabis) in the State of Minnesota. The law creates a registry program for the oversight of production and distribution of medical cannabis, and outlines specific duties and protections afforded patients, health care practitioners, and manufacturer-distributors of medical cannabis.You can access the full text of the new law here.

Incidentally, the law also creates a huge opportunity for the medical marijuana industry, especially as relates to the business of medical cannabis manufacture and distribution. The following is a series of articles designed to answer some general business questions regarding medical marijuana in Minnesota.

What duties does a medical marijuana business have under Minnesota’s medical marijuana laws?

Minnesota’s medical marijuana statute creates a host of duties pertinent to medical marijuana manufacturers, adding layers of compliance issues that businesses must be prepared to navigate whether starting a new medical marijuana business or expanding a business into Minnesota’s fledgling marketplace. Duties include, but are not limited to, the following:

Duty to operate facilities

A medical marijuana manufacturer also serves as the distributor. To illustrate, the law provides that a medical marijuana business may only operate one location wherein it cultivates, harvests, processes, packages, and otherwise manufactures medical marijuana. Besides manufacturing, the statute indicates that a manufacturer shall operate four distribution facilities. Of these four locations, one may be the same as the place of manufacture. Distribution must begin at one location no later than July 1, 2015, and from all distribution facilities by July 1, 2016.

Concerning location, one might suspect (correctly) a prohibition against any operation, whether for manufacture or distribution, that would occur within 1,000 feet of a (preexisting) public or private school. Rather, the law directs that the manufacturer must operate its facilities in locations within Minnesota based on “geographical need,” thus improving patient access.

Important Deadlines:

  • July 1, 2015: Manufacturer must commence distribution from at least one medical marijuana distribution facility.
  • July 1, 2016: Manufacturer must commence distribution from all of its medical marijuana distribution facilities.

Duty to produce medical cannabis

A medical marijuana manufacturer is obligated to provide a reliable and ongoing supply of medical marijuana, but only in forms allowable under the law. Medical marijuana in this state is referred to as “medical cannabis,” and is defined narrowly to include marijuana reduced to the forms of liquid (including oil), pills, and any vaporized form. The statute, however, specifically proscribes delivery methods using dried plant material, i.e. smoking.

Duty to contract with an approved laboratory

A medical marijuana manufacturer must contract with a laboratory approved by the Minnesota Commissioner of Health (hereafter, the Commissioner). The manufacturer is responsible for laboratory testing to verify that the manufacturer’s medical cannabis comports with the law.

Duty to develop internal procedures

Medical marijuana businesses operating in Minnesota must develop internal procedures addressing oversight, record keeping, and security. Minnesota law requires that those measures be detailed within a business’s operating documents, specifically: procedures for the oversight of the manufacturer; procedures ensuring accurate record keeping; and procedures for implementing security measures.

Duty of security

Medical marijuana manufacturing and distribution facilities will have two highly attractive commodities: marijuana and cash. As a precaution, the law requires that manufacturers implement security measures at each of their locations. For example, each location must have (at minimum) a fully operational security alarm system, facility access controls, perimeter intrusion detection systems, and a personnel identification system. In addition, all manufacturing (from cultivation of marijuana plants to packaging medical cannabis) must take place at an enclosed, secure facility, and the location must be disclosed to the Commissioner.

Duty to remain independent

Medical doctors or clinics that prescribe medical marijuana may direct patients to a medical marijuana distribution center where they may fill a prescription, and it is foreseeable that a medical marijuana business may wish to direct patients to doctors willing to make an appropriate diagnosis and prescription. Minnesota law, however, limits those referral relationships to remove financial incentives. For example, a manufacturer may not have any financial relationship with, share office space with, or refer patients to any Minnesota licensed medical doctor, physician’s assistant, or advanced practice registered nurse.

Duty to hire “legal” employees

A medical marijuana manufacturer may not employ anyone under the age of 21 or who has been convicted of a “disqualifying felony offense” (i.e. felony-level drug offense). To confirm an employee’s eligibility, the law provides that before working, the employee must submit his or her full set of fingerprints and a completed criminal history records check consent form to the Bureau of Criminal Apprehension for investigation. With respect to distribution in particular, only licensed pharmacists may distribute the manufacturer’s medical cannabis. And finally, should a manufacturer’s employees need to transport medical cannabis, the manufacturer must ensure that its employees carry identification demonstrating their lawful employment by the manufacturer.

Duty to verify

Before distributing medical cannabis to a patient, Minnesota law compels a manufacturer to verify that it has received a “registry verification” from the Commissioner for that particular patient. A manufacturer must also verify that the person appearing to collect the medical cannabis is either the actual patient; the patient’s “registered designated caregiver”; or the patient’s parent or legal guardian.

Additional verification requirements include assigning tracking numbers to all medical cannabis that is distributed; ensuring that pharmacist employees have consulted with the patient to determine an appropriate dosage; properly packaging medical cannabis with the patient’s identifying information, dosage, and chemical composition of the medical cannabis; and limiting distribution to a 30-day supply.

Duty to report

For each patient, a manufacturer must submit a monthly report to the Commissioner as to the amount and dose of medical cannabis distributed, its chemical composition, and the tracking number assigned.

Duty to comply with the Commissioner of Health

Finally, there is a general requirement that manufacturer-distributors comply with all requirements of the Commissioner, as well as all other obligations under the medical marijuana statute. The Commissioner’s rules are unclear to date, however, given the age of the law. The Commissioner will publish proposed rules no later than January 1, 2015. If adopted, the rules would likely create an additional set of obligations for manufacturers, which may be addressed separately from this piece.

Learn more about operating a Medical Marijuana Business in Minnesota.

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