Green Medicine: The Business of Medical Marijuana

Green Medicine: The Business of Medical Marijuana

For many, medical marijuana is a panacea capable of alleviating a wide range of symptoms. As Pennsylvania begins allowing the drug’s medical use, patients are relieved — and business is booming.

One night in 2016, Roman Salamon flitted from room to room in his Shaler Township home, doing what he usually does. Eleven-year-old Roman, who is severely autistic, was wandering around the house while the rest of the family watched TV, flapping his hands, tapping, clucking his tongue and making “eeeee” sounds. Not talking — Roman stopped speaking when he was a toddler.

Pennsylvania had just legalized the use of marijuana for serious medical conditions, including autism, and the state was giving parents “safe harbor letters” to buy cannabis medicines elsewhere until it was available here. Jennifer Salamon — Roman’s mother and the communications director of Autism Connection of Pennsylvania — had one of those letters.

She and her husband had read reports from parents saying cannabis oil helped their children with autism relax, wind down and focus. So that night she ordered a small bottle from a company in another state; when it arrived, she started putting drops in Roman’s juice.

The reaction, she says, was almost immediate. He was calm. He made eye contact. The flapping and tapping stopped. His teachers and therapists noticed a difference.

A few weeks passed. Then one night, as she was helping him get ready for bed, Roman said the first word he had said to her in a decade. It was “Mom.”

He had this look on his face like he was so proud of himself,” Salamon says.

But when the bottle ran out after a month, she couldn’t get a refill. The manufacturers no longer shipped out of state, fearful of federal prosecution. She got a replacement cannabis oil from Colorado; it helps Roman sleep better, but he hasn’t spoken again.

Now Salamon is excited to shop in a well-stocked Pennsylvania dispensary and consult with a licensed pharmacist about various products. She figures it will cost between $150 and $200 monthly — an expense not covered by health insurance. But it’s a small price to pay if Roman says “Mom” again.

This is the year Pennsylvania begins allowing the manufacture and sale of marijuana to patients with any of 17 qualifying medical conditions. The federal government still treats cannabis as an illegal drug with no currently accepted medical use, but 29 states (and the District of Columbia) now have programs like Pennsylvania’s — including every state on its borders.

Weed is no longer a red state/blue state issue. Republican-controlled legislatures passed medical marijuana laws in Harrisburg and Ohio in 2016 and West Virginia last year. A majority of voters in 2016 pulled the lever for both Donald Trump and medical marijuana in Florida, North Dakota and Arkansas.

Pennsylvania has the potential to become a lucrative market. One relatively conservative estimate, from the Washington, D.C.-based cannabis market analysis and consulting firm New Frontier Data, forecasts $88 million in legal marijuana sales in the commonwealth in 2018. In November 2017, the Pennsylvania Department of Health officially opened online registration for patient I.D. cards; more than 2,100 people applied in the first 48 hours.

Among Salamon’s options for local cannabis distributors: Cresco Yeltrah, a partnership between the Hartley family in Butler and an Illinois medical marijuana company. Cresco Yeltrah has dispensaries in the Strip District and Butler, with a forthcoming third location yet to be announced; it is also a producer, and its facility just off I-80 in Brookville, roughly two hours from Pittsburgh, was the first in the state to receive health department approval to start growing. Watched over by a network of video cameras, employees there tend to plants that are individually tagged and tracked on a state database from seed to sale. “It’s probably harder to get into my facility than to get into the Pentagon,” says Trent Hartley, chief operating officer, of the site’s security.

Maturing under grow lights, the plants there are nearly ready for their first harvest this month. Atop the familiar fronds of seven sawtoothed leaves, the flowering buds are powerfully aromatic and sticky with resin. But instead of drying those flowers to be smoked — which is still prohibited under state law — Cresco Yeltrah and the other growers will extract the resins and manufacture them into allowable forms: tinctures, oils, waxy concentrates, capsules, creams, pills, patches and pre-loaded vape cartridges.

“It’s probably harder to get into my facility than to get into the Pentagon.” Trent Hartley, C.O.O., Cresco Yeltrah

Hartley is familiar with the parental anxiety Salamon is going through. His daughter Barrett began suffering from inflammatory bowel disease as a teenager about six years ago. Her condition was severe enough to require several emergency room visits, and one time, a full week in the hospital. She was miserable, and nothing the doctors tried seemed to work.

Desperately searching for a cure online, Hartley read research from Israel suggesting marijuana can ease gastrointestinal inflammation. He himself had started smoking pot as a teenager and says it unexpectedly cured his seasonal asthma. Maybe, he reasoned, it could help his daughter.

So Hartley bought what he considered a promising strain of marijuana from a California dispensary and smoked it with Barrett. “She never took a pill again, never saw a doctor again, never went back to the hospital again for constipation,” he says.

It worked so well that Hartley bought his children an expensive vaporizer so they also could use cannabis. Hartley’s son, now a college freshman, takes it for Crohn’s disease; his older daughter for fibromyalgia. And Hartley still uses it too; he says it alleviates chronic back pain from an old surgery and also helps him concentrate.

He then persuaded his father and brother to join him in a new business venture to supplement the family’s Butler County glass factories: marijuana farming. Teaming with Cresco Labs, a leading cannabis cultivator in Illinois, Cresco Yeltrah — the second word is Hartley spelled backwards — secured one of the 12 grower licenses the state awarded this past summer.

​Cresco Labs founder and CEO Charlie Bachtell has similarly unexpected origins in the industry. He was the legal counsel for a Chicago-based mortgage company in 2013 when medical marijuana became legal in Illinois. Bachtell and a business partner had been looking for an entrepreneurial opportunity and decided this was ideal for their skillset. “It’s amazing how much being part of mortgage banking, the most scrutinized and regulated industry in America, prepared us to participate in the medical cannabis business, the new most scrutinized and regulated industry,” he says.

Success for Cresco Yeltrah and the other 11 growers and 26 dispensary operators the state has approved so far will depend not solely on how many patients want to buy medical cannabis. It also will rely on how many doctors are available to enable them to do so.

To get a marijuana card, a patient must visit a physician registered through the state’s medical marijuana program, who then certifies that the patient has one of the conditions named in the law and is likely to receive therapeutic or palliative benefit from cannabis. In New York and New Jersey, critics say too few doctors in the state registries has led to bottlenecks keeping patients from getting the medicine they need.

A Pittsburgh-based startup called Compassionate Certification Centers is trying to solve this problem by operating medical marijuana clinics across the state. The first opened in Gateway Center; co-founder Melonie Kotchey says she plans to have 10 going by spring and another 10 by year’s end. In April, the company will host its second World Medical Cannabis Conference and Expo at the David L. Lawrence Convention Center, and Kotchey says she is also planning an IPO this spring, aiming for a nationwide expansion. “We want to really take this big,” she says.

Medical Marijuana ConditionsMore than 120 doctors have been approved to join the physician registry, even though the Pennsylvania Medical Society publicly opposed the passage of Act 16, the medical marijuana bill. The professional organization’s formal policy states it “opposes broad-based legalization of cannabis for medical use” but also calls for more scientific study and clinical research into the drug.

Research is one way Pennsylvania might set itself apart. The state law uniquely calls for the Department of Health to petition the U.S. Food and Drug Administration and the Drug Enforcement Agency to greenlight clinical studies of medical marijuana treatment for any serious medical condition that 25 patients have signed up for in the registry.

Additionally, it creates a special category of up to eight clinical registrants in Pennsylvania to partner with research hospitals. Regulations are still being written, and no licenses are being awarded yet; at this point, one of the few established rules is that applicants must have $15 million in the bank. But interest is building. The clinical research framework envisioned in the law would protect intellectual property rights and commercialization potential for the companies, while giving institutions access to corporate funding for their research.

“Pennsylvania could become one of the most sophisticated medical cannabis research markets not only in the country but in the world,” says John Kagia, executive vice president for industry analytics at New Frontier Data. He says his firm already is in contact with clients who plan to apply.

In a South Side Hyatt House conference room in the fall, some 50 area health professionals gathered for a presentation by marijuana expert Michael Backes, author of Cannabis Pharmacy, a compendium of plant strains and treatments. Backes gave a detailed overview of the active ingredients of cannabis, explaining how they interact with neurotransmitters in the brain that regulate things like memory, emotion, appetite, pain sensitivity and coordination.

Dr. Adele Towers, an associate professor of geriatric medicine at the University of Pittsburgh and vice president of the Allegheny County Medical Society, sat in the front row. She voiced a concern she said many doctors share: their input is limited basically to a yes or no, rather than a prescription or a dosage. Nevertheless, Dr. Towers said she plans to certify patients. She already knows elderly patients who buy joints for their chronic pain, and she says legal medicines are preferable. “I know that patients will ask for it, and patients will drive this,” Dr. Towers said.

The country is in the midst of an opioid crisis, with 40 people fatally overdosing on prescription opioids each day, according to the Centers for Disease Control and Prevention. Multiple studies have shown opioid use declines when marijuana is legally available as an alternative treatment for pain. While regular marijuana users can become psychologically dependent on the drug, they don’t face the powerful physical withdrawal symptoms, including hallucinations and seizures, that opioid addicts suffer. According to the Drug Enforcement Agency, there are no recorded cases of death from cannabis overdose.

Crisis or not, marijuana is still an outlawed drug. For large and small operations, the special challenges of running a cannabis business can be daunting. Banks are generally off limits, for example. Corinne Ogrodnik and Joseph Vesely, a married couple who founded the dispensary company Maitri Medicinals, had to abandon one planned Pittsburgh location when the landlord discovered his mortgage prohibited him from leasing his storefront for illegal activity. The couple is currently focusing on opening their first dispensary in Uniontown in March, with a city location to follow soon.

Ogrodnik is working on her doctoral dissertation in sociology and organizational studies at Pitt, while Vesely left his job as a research programmer at the Rand Corporation to launch their company. They’ve been together 14 years; they met when she worked at East End Food Co-op and he was singing and playing guitar for a punk band. Now they’re energized by the chance to do something entrepreneurial. “That’s as American as apple pie,” Vesely says.

Another motivator is personal experience. Ogrodnik suffers from neuropathy, chronic muscle pain and fatigue resulting from a late-diagnosed case of Lyme disease. For years, she tried various prescription drugs, but they did not relieve her symptoms. Then in 2014, when Colorado legalized marijuana for adults, she and Vesely visited Denver-area dispensaries while on a ski trip.

“I always look forward to those trips, when I can have a week of full relief of my symptoms.” Corrine Ogrodnik, Maitri Medicinals

She sampled it both as a tincture and smoking; within a half hour, her pain had abated. A deep sleep that night led to feeling even better the next morning. Since then, they have made trips to Colorado at least once a year (for market research — never to buy marijuana for later sale elsewhere, which would be a federal crime). “I always look forward to those trips, when I can have a week of full relief of my symptoms,” Ogrodnik says.

Besides potentially helping ill patients, medical marijuana is touted as an economic elixir. The state already has collected more than $6 million in application and registration fees for growers and dispensaries, and a wholesale-to-dispensary 5 percent tax growers pay on all sales to dispensaries will bring more revenue. That money is mostly earmarked for the state health department for operations, medical marijuana research, drug abuse programs, and low-cost marijuana for patients with financial need.
In McKeesport this summer, a who’s who of local politicians took the stage for a ribbon-cutting ceremony for PurePenn, a new processor on the site of a former steel mill. At the end, PurePenn produced a giant $50,000 check for a new McKeesport Community Fund. Hundreds lined up to apply for 25 jobs at a 21,000-square-foot production facility then still several months away from construction.

“I’ve lived here my whole life and never thought I’d see this in a state that still controls its liquor,” says Gabe Perlow, a Pittsburgh commercial real estate lawyer and one of PurePenn’s founders. After he decided to get into the business, he sought out a partnership with Moxie, a California producer whose products Perlow’s cousin in Michigan swears by for treating his Crohn’s disease.

“I’ve lived here my whole life and never thought I’d see this in a state that still controls its liquor.” Gabe Perlow, Co-Founder, PurePenn

Jordan Lams, Moxie’s founder, says watching his sister suffering as a child from terminal leukemia made him vow to make better pain medicines. Moxie’s proprietary growing and extraction methods and extensive product testing, he says, are all focused on creating something that marijuana is not currently known for: a consistent product.

“What you get in California is going to be the same thing you get in Pennsylvania,” Lams says.

Which raises an interesting point. California launched the nation’s first medical marijuana program in 1996. But after years of lax regulation — virtually any adult there could get a marijuana card for the vaguest of symptoms — California this year allows sale to any adult. And when someone in California goes into a dispensary, they can buy Moxie simply to get high.

At about $50 for half a gram of resin — a long weekend’s worth at least — the brand is considered top shelf. One can easily find online videos of stereotypical stoners heating it up in “dab rigs,” vaporizers that to the untutored eye look strikingly similar to bongs.

The fact is, medical marijuana is marijuana. “There’s not a strain that’s medical and one that isn’t,” Lams says.

A person can take a puff from an electronic vape pen to stave off epileptic seizures, or ease symptoms of PTSD, or obtain relief from chemotherapy or multiple sclerosis or Lou Gehrig’s disease or Parkinson’s disease or several other ailments. They can also take a puff from an electronic vape pen just to get buzzed.

Many people already do. And that number will certainly increase this year as California shifts to full adult legalization. So does Massachusetts, in 2018. So does Canada. New Jersey’s governor-elect has promised his state will be next.

Support for full legalization is growing rapidly. Sixty-four percent of Americans now favor it, according to the latest Gallup poll, including — for the first time — a majority of Republicans. Needing a doctor’s permission to get marijuana may one day seem as ridiculous as the pre-printed pads physicians once used to write prescriptions for whiskey during Prohibition.

“I know that patients will ask for it, and patients will drive this.” Dr. Adele Towers, Vice President, Allegheny County Medical Society

Meanwhile, people in Pennsylvania still get arrested for marijuana possession. Busts are down substantially in Philadelphia and Pittsburgh, where it has been decriminalized to a summary offense. But they’re up in most counties, so that across the state, the number of arrests holds steady at approximately 18,000 a year.

Pittsburgh criminal defense attorney Patrick K. Nightingale has represented many clients charged with possession; with his new Downtown law firm, Cannabis Legal Solutions, he is also taking clients who want to start legal marijuana business ventures. Nightingale’s experience includes more than six years as an Allegheny County district attorney.

Since 2009, Nightingale — a longtime user himself — has been executive director of the Pittsburgh chapter of NORML, the National Organization for the Reform of Marijuana Laws. He met his current wife, Theresa, at a Pittsburgh NORML meeting. The two of them have been judges at Cannabis Cup competitions organized by High Times magazine.

Nightingale will become a legal cannabis user in Pennsylvania. He has post-traumatic stress disorder, a consequence of the sudden death of his 7-month-old daughter in 2005. But he argues other conditions should qualify that aren’t on the state list, such as depression. “Isn’t that between me and my physician?” he says. “Why should it be between me, my physician and the legislature?”

Joe McGurk stood shoulder to shoulder with Nightingale at several Harrisburg rallies in favor of Act 16. But the insurance broker and father of four says he made it clear to legalization advocates from the start that his advocacy went only as far as his children.

​McGurk never touched marijuana as a kid. His father was an agent for the U.S. Bureau of Alcohol, Tobacco and Firearms, for one thing. But then two of his daughters, Leah and Oliviah, were diagnosed with Dravet syndrome. The genetic form of epilepsy causes severe, even life-threatening, seizures. Phenobarbital is a common anticonvulsant prescribed for the condition, but the tradeoff for parents is that it has been known to stunt cognitive development.

When he saw news stories about marijuana as a treatment for Dravet, McGurk wondered if it might be better for his kids than their cocktail of prescriptions. A friend whose daughter has a similar affliction gave him a bottle of cannabis oil, and he mixed it in the girls’ applesauce. The seizures stopped almost completely, and both girls seemed more alert. “It kind of restored their personalities,” McGurk says.

After Gov. Tom Wolf signed Act 16 into law, McGurk told Nightingale he had undergone a change of heart. Now he supports not only expanding the list of qualifying medical conditions, but full legalization, with consumption regulated and taxed. And he is doing something about it. In October, McGurk announced his candidacy for the state house district seat in Beaver Falls.

“I don’t think there’s a stomach for it yet,” he says of legalization. “But hey, when I started lobbying for medical marijuana, there was no stomach for that, either.”

Source: Mark Houser, Pittsburgh Magazine
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