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October 13, 2017

Medical marijuana dispensaries begin conversion to retail

Zachary Comeau The DPH is advising medical marijuana dispensaries on how to convert to a for-profit retail operation.

The Department of Public Health has issued guidance for registered marijuana dispensaries interested in converting to for-profit corporate entities, an option afforded to them in the marijuana law the Legislature passed this summer.

Jesse Alderman, an attorney at Foley Hoag who writes for the firm's Massachusetts Marijuana Counsel blog, said the green light from DPH is a "blessing" for dispensaries because they "were forced to adopt complex corporate structures" under previous state law that required them to register as non-profits.

The guidance from DPH advises registered marijuana dispensaries with a provisional or final certificate of registration, or an application pending, to complete forms provided by the secretary of state's office, submit them to DPH for certification, then submit that certification to the secretary of state's office and finally submit a certificate of good standing to DPH.

Alderman said the conversion process for dispensaries "will not be as simple" as filing paperwork with two state offices.

"In addition to choosing the right for-profit structure, there may be a number of unanticipated tax consequences depending on the chosen structure for conversion. For instance, the issuance of shares upon becoming a for-profit entity can be a taxable event," he wrote on the MA Marijuana Counsel blog. "Much to consider. It’s a good legal development, but not necessarily an easy one."

DPH has overseen the state's medical marijuana program since voters approved it in 2012. But the new marijuana law directs the Cannabis Control Commission to coordinate with DPH to oversee a transfer of the medical program from the auspices of DPH to the oversight of the CCC.

That transfer of responsibilities, personnel and funds is required to take place no later than Dec. 31, 2018.

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