The market for medical marijuana has been a hot topic for potential business owners for several years now. The shift in legalization – or talk of such a shift – has prompted many to consider the opportunities in the marketplace. However, in more than half of the United States, marijuana for medical use is still illegal, and recreational use is still far from a talking point for legislators. For those in Pennsylvania keeping an eye on upcoming changes in the arena of medical marijuana sales, there may soon be news to celebrate.
In June of 2015, a bill was submitted to the Pennsylvania legislature to provide for the legal use of marijuana for medical purposes. Qualified medical conditions including terminal illnesses like cancer, HIV/AIDS, Parkinson’s disease, multiple sclerosis, and Huntington’s disease allow patients to receive medical cannabis, so long as they are undergoing care from a qualified physician. In April 2016, the bill received final approval from the Pennsylvania House, giving way to 25 grower and processor permits and up to 50 dispensary permits. Entrepreneurs in the state have an opportunity to take part in the potentially lucrative medical marijuana business, but only when specific requirements are met.
Business Requirements in Pennsylvania
The recently passed bill spells out several requirements for business owners in the medical marijuana market in the state, not the least of which is the need for a surety bond. Historically, marijuana sales have deep-rooted connections to illegal enterprises, shrouded in criminal and unethical activities. The shift in legislation makes sales to qualified patients a legal transaction, although it is not without risk.
A surety bond for medical marijuana sales in Pennsylvania is required to protect all parties in transactions relating to the business. The main players include the oblige, which is the government agency requiring dispensary owners to pay taxes on from sales; the principal, which is the dispensary owner purchasing the bond; and the surety, which is the company enforcing the bond. The requirement to buy a surety bond provides protection against a dispensary owner from failing to pay taxes on business revenues.
In addition to surety bonds for dispensary owners, Pennsylvania also requires applicants to pay a fee of $5,000 for each dispensary location. Growers and processors of medical marijuana must also submit an application along with a $10,000 fee. A business license may also be required as part of the process so that taxes can be tracked and assessed accurately. Growers and processors pay a 5% tax on the sale of marijuana to dispensaries, while dispensaries pay the standard business tax on all revenue from the business. Medical marijuana is not available in the form of edibles under the new law, although vaporization, pills, oils, creams, and ointments are allowed.
The current medical marijuana laws in Pennsylvania are due to sunset three years from implementation, based on the federal government’s rescheduling of the substance. At this time, business owners interested in taking part in medical marijuana sales must follow the guidelines set out by the state government in order to avoid criminal charges and penalties associated. This is a lucrative opportunity for those with the business acumen and capital, understanding of the unique medical marijuana needs of patients, and the ability to follow through with qualification requirements as a dispensary, grower, or processor.
Author:
Eric Weisbrot is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry under several different roles within the company, he is also a contributing author to the surety bond blog.
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What Does “Surety Bond” Mean? A Surety Definition Everyone Can Understand
Surety bonds are an insurance policy for the party requiring the bonds, called the obligee. In most instances, the obligee is a government agency and the bond is in place to protect the government and its citizens. The obligee requires the principal (you) to obtain and pay for the surety bond (performance bond costs are reimbursed when included in the bid). If you’d like to understand pricing, you can read our guide that explains how much surety bonds cost.
People will sometimes incorrectly refer to surety bonds as an “indemnity bond” (a specific type of bond related to loans) or a “security bond” (a mispronunciation of surety bond and not an actual bond type).
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The market for medical marijuana has been a hot topic for potential business owners for several years now. The shift in legalization – or talk of such a shift – has prompted many to consider the opportunities in the marketplace. However, in more than half of the United States, marijuana for medical use is still illegal, and recreational use is still far from a talking point for legislators. For those in Pennsylvania keeping an eye on upcoming changes in the arena of medical marijuana sales, there may soon be news to celebrate.
In June of 2015, a bill was submitted to the Pennsylvania legislature to provide for the legal use of marijuana for medical purposes. Qualified medical conditions including terminal illnesses like cancer, HIV/AIDS, Parkinson’s disease, multiple sclerosis, and Huntington’s disease allow patients to receive medical cannabis, so long as they are undergoing care from a qualified physician. In April 2016, the bill received final approval from the Pennsylvania House, giving way to 25 grower and processor permits and up to 50 dispensary permits. Entrepreneurs in the state have an opportunity to take part in the potentially lucrative medical marijuana business, but only when specific requirements are met.
Business Requirements in Pennsylvania
The recently passed bill spells out several requirements for business owners in the medical marijuana market in the state, not the least of which is the need for a surety bond. Historically, marijuana sales have deep-rooted connections to illegal enterprises, shrouded in criminal and unethical activities. The shift in legislation makes sales to qualified patients a legal transaction, although it is not without risk.
A surety bond for medical marijuana sales in Pennsylvania is required to protect all parties in transactions relating to the business. The main players include the oblige, which is the government agency requiring dispensary owners to pay taxes on from sales; the principal, which is the dispensary owner purchasing the bond; and the surety, which is the company enforcing the bond. The requirement to buy a surety bond provides protection against a dispensary owner from failing to pay taxes on business revenues.
In addition to surety bonds for dispensary owners, Pennsylvania also requires applicants to pay a fee of $5,000 for each dispensary location. Growers and processors of medical marijuana must also submit an application along with a $10,000 fee. A business license may also be required as part of the process so that taxes can be tracked and assessed accurately. Growers and processors pay a 5% tax on the sale of marijuana to dispensaries, while dispensaries pay the standard business tax on all revenue from the business. Medical marijuana is not available in the form of edibles under the new law, although vaporization, pills, oils, creams, and ointments are allowed.
The current medical marijuana laws in Pennsylvania are due to sunset three years from implementation, based on the federal government’s rescheduling of the substance. At this time, business owners interested in taking part in medical marijuana sales must follow the guidelines set out by the state government in order to avoid criminal charges and penalties associated. This is a lucrative opportunity for those with the business acumen and capital, understanding of the unique medical marijuana needs of patients, and the ability to follow through with qualification requirements as a dispensary, grower, or processor.