June 10, 2015 / by Stephen P. Pingree

Hawaii is poised to legalize medical marijuana dispensaries; as of this posting, HB 321 is in the Governor’s review period. It will become law, or be vetoed, this month and effective July 1, 2015.

Under the legislation, eight (3 Oahu, 2 Maui, 2, Hawaii and 1 Kauai) initial dispensary licenses will be awarded by April 15, 2016. The initial application period begins on January 12, 2016, and closes on January 29, 2016.

For some, assembling a competitive application by January 2016 is simply too soon given the expertise and resources required, and the uncertainty involved. On the uncertainty front, the merit criteria for the license award process may not be released until January 4, 2016, a mere eight days before the application period commences. It would seem prudent to retain experienced (in other jurisdictions) counsel that have a clear understanding of the basic, and some detailed, requirements of the State License applications. Much can be anticipated and prepared for now.

Additional dispensary licenses may be available as soon as October 1, 2017. While the legislation is silent, the application period for additional licenses could be approximately ten weeks earlier, in July 2017, if the initial application period is a guide.

If January 2016 is too soon, what should prospective applicants for second-round licenses be considering and evaluating from legal and regulatory perspectives?

I have several suggestions:

  1. Establish (or acquire) an appropriate potential applying entity and open a bank account. Hawaii legislation appears to require twelve months of bank statements to be submitted with the application. Maintain the entity appropriately, file tax returns, and ensure it complies with federal law and state requirements for a licensee.
  2. Be sure that all potential owners and participants meet the requirements of Hawaii law. News reports and experiences from other jurisdictions have consistently indicated that many prospective applications (and submitted applications) fail due to problems with participants’ personal backgrounds or financial limitations. Due diligence and vetting should not be considered optional or left to the last minute.
  3. Follow the Department of Health proposed regulations as they are announced, and consider participating in the rule-making process at the comment or hearing stage. As well make sure your counsel is in contact with DOH as the regulations are formulated.
  4. Make sure you have a team in place that can advise and assist you with these and other legal aspects related to medical marijuana, and are actively working with them as you develop your prospective business. See my previous blogs for the general outline of requirements.

For more information, please refer to www.hawaiimarijuanabusinesslawyer.com
Stephen P. Pingree, J.D.