Alabama is the 36th state to permit cannabis for medicinal purposes when Governor Kay Ivey signed the Darren Wesley ‘Ato’ Hall Compassion Act on May 17, 2021, covering the following categories: (1) Cultivators; (2) processor; (3) pharmacy; and (4) “integrated facility” (which can grow, process, transport, and dispose of medical cannabis under one license) and a number of licenses for safe carriers and testing laboratories to be determined. A 14-member Medical Cannabis Commission licenses and regulates the medical cannabis program, with the Alabama Department of Agriculture and Industries contributing to cultivation matters. The law requires the Commission and the Ministry to enact regulations by September 1, 2022 that allow license applications.
This article provides an overview of the requirements for purchasing a processor license. Future articles will provide similar overviews for the other five license categories.
What is a processor license?
A processing license entitles the licensee to: (1) purchase and transfer cannabis from a breeder; (2) Process “cannabis into medicinal cannabis”, which includes the “proper packaging and labeling of medicinal cannabis products”; and (3) selling or giving medical cannabis to a pharmacy.
How many processor licenses are issued?
The law empowers the Commission to issue four processing licenses. At least one license must be granted to a business unit that is 51% owned by persons of “African American, Indian, Asian or Hispanic descent” and is “administered and controlled” by such persons “in daily operations”.
What are the requirements for purchasing a processor license?
Applicants for a processor license must pay a non-refundable application fee of $ 2,500. Every “owner, shareholder, director, [and] Board member ”of an applicant must submit to a“ state and national criminal record ”together with every“ person who has an economic interest in an applicant ”. When an “owner, director, director, or controlling person” has been “found guilty or released” [any] Capital felony ”or“ convicted of an offense in connection with a controlled substance ”within the last 10 years, the applicant is not entitled to obtain a permit.
The law requires applicants to provide a wealth of information in their applications, including:
- The identity of all persons with “direct or indirect ownership” of the applicant.
- The identity of companies active in the cannabis industry and associated with the applicant, or any person who has an interest in the applicant.
- A complete criminal history of the applicant’s owners, directors, directors and majority shareholders.
- Estimated or actual number of employees of the applicant.
- “Financial information” in the “nature and form” required by the Commission.
- Records showing “that the majority of the property is owned by one or more persons with proof of [Alabama] Residence … for an uninterrupted period of at least 15 years prior to the application date. “
The law requires licensees to have at least $ 2,000,000 in “liability and casualty insurance,” and the Commission may regulate “minimum levels of other financial guarantees” that licensees must maintain. If an applicant cannot demonstrate their ability to meet these requirements, they cannot obtain a license.
The law lists numerous criteria that the commission can use to evaluate license applications, including:
- The “ability of the applicant to capitalize and carry out the business activities proposed in its business plan, including business experience in related areas”.
- Several other criteria focused on the applicant’s financial support and business acumen.
- Any history of non-compliance with regulatory requirements.
- That the applicant’s “proposed location”[s] of all proposed medical cannabis facilities ”are“ suitable for all activities ”and“ not in conflict with the applicable zoning ”.
- The “ability of the applicant to serve an identifiable geographic area”.
Before issuing a license, the Commission must introduce a 30-day period in which anyone can submit “written comments on the applicant” and the Commission must take into account any comments received. If an applicant is denied a license, it can request that the Commission “arrange for a public investigation to give the applicant the opportunity to provide testimony and evidence to determine their eligibility for a license”. The Commission must offer such a hearing upon request.
Every applicant (for all types of license) must certify in his application that he “has no economic interest in others” [Alabama medical cannabis] License. “Licenses and ownership interests in licensed entities cannot be transferred without the consent of the Commission.
How competitive is the licensing process?
Alabama is not the first state to introduce a “limited license” regime for state-legal cannabis, and the experience of its predecessor states (including neighboring Florida) shows that the battle for licenses will be extremely competitive. Some of the most established cannabis operators in the country (and the world) will apply for a small number of Alabama licenses. In addition, the evaluation criteria for license applicants are largely subjective, and the evaluation process ensures that obtaining a license is partly a question of influence.