Author Archives: Benesch

The Ohio Department of Commerce Proposes “Factsheet” in Advance of Publishing Draft Cultivator Rules

By: Rachel Winder, Government Relations Manager, and Jeff McCourt, Attorney

On November 1, 2016, the Ohio Department of Commerce released its “Cultivator Rules” factsheet, which outlines the key elements of its initial draft rules for cultivation licenses under the Ohio Medical Marijuana Control Program. The rules have not been proposed in full yet, though it appears likely they will be released later in the day.

The rules contemplate two levels of cultivation licenses, “Level I” and “Level II.” The rules cap the total number of Level I cultivation licenses at 12, and require a $20,000 application fee and $180,000 license fee. Level II cultivation licenses are more restricted in number, to six total licenses, but cost 1/10th the amount of the Level I licenses, with application fees set at $2,000 and license fees set at $18,000. The multiple levels of licenses suggest that Commerce is looking to facilitate both large cultivation facilities and smaller, possibly craft, cultivation facilities.

The licenses will initially be provisional when granted, and the cultivator must pass inspection and be prepared to cultivate within nine months of issuance. In addition, a cultivation license applicant must include quality assurance and security plans upon application, as well as demonstrate “adequate capital to meet facility plans and operational needs.” Capital requirements in other states have created a significant barrier to entry, so this requirement will be of particular interest to market participants, particularly those targeting Level II cultivation licenses.

The factsheet does not provide detail on critical items such as canopy limits or geographic distribution of the cultivators, though these items may be covered in the full rules once released.

The factsheet states that the first opportunity to comment will be starting tomorrow November 2, 2016 and be open through November 15th. The full factsheet and related information is available on the Ohio Medical Marijuana Control Program’s website (medicalmarijuana.ohio.gov).

Members of Benesch’s Regulated Industries Group will continue to monitor and provide updates on the Medical Marijuana Advisory Committee meetings and rulemaking process.

Senators Introduce the CREATES Act

by Darrell Taylor and Kristopher Chandler

In furtherance of the government’s efforts to bring down healthcare costs, Senators Patrick Leahy (D-VT.), Chuck Grassley (R-IA), Amy Klobuchar (D-MN), and Mike Lee (R-UT) have introduced the Creating and Restoring Equal Access to Equivalent Samples (“CREATES”) Act.  The CREATES Act is intended to give low priced, generic alternatives to brand-name drugs an easier path into the marketplace.

The CREATES Act is designed to facilitate access to samples of branded pharmaceuticals and the related safety protocols.  Currently, generic manufactures must prove that their low-cost alternative is as safe and effective as its brand-name competitor.  Access to the samples of the brand-name drug are needed in order to make the necessary comparisons.  Pharmaceutical companies with branded products are reticent to provide samples of the brand-name drug to generic companies.  Without samples, generic manufacturers are limited in their ability to do the comparisons needed to fast track FDA approval to bring their lower-cost alternatives to market as soon as possible.

Pharmaceutical companies, in addition to limiting access to their proprietary samples, also restrict generic manufacturers’ access to shared safety protocols for distribution of drugs.  To gain FDA approval for certain types of drugs, generic manufacturers are required to join brand-name competitors in a shared Risk Evaluation Mitigation Strategy with Elements to Assure Safe Use (“REMS”) distribution safety protocol.  Pharmaceutical companies often refuse to negotiate a shared safety protocol with generic manufacturers because they would be undermining their market share, which likely would have a negative impact on their business.

As drafted, the CREATES Act allows generic manufacturers to seek injunctive relief from federal courts against both these practices.  The CREATES Act allows generic manufacturers to obtain a court order compelling the pharmaceutical company to supply samples of brand-name drugs for comparison testing.  The CREATES Act also allows generic manufacturers to seek a court order compelling a brand-name manufacturer to enter into a shared REMS with the generic manufacturer or demonstrate that the FDA has waived the requirement to be a part of a shared REMS.  Finally, the CREATES Act allows a generic manufacturer to seek an award for damages from a federal court against a brand-name pharmaceutical that will not provide samples or access to shared REMS.

The CREATES Act is supported by the American Hospital Association, the Generic Pharmaceutical Association, and many other advocacy groups that are trying to lower the costs to obtain prescription drugs.  With the heighten scrutiny over drug pricing, it will be interesting to see where the CREATES Act goes from here.  The entire text of the introduced bill can be found here.

Please contact a member of the Benesch Health Care & Life Sciences team if you have any questions about how the CREATES Act may impact your business.

Darrel Taylor is a partner in Benesch’s Health Care & Life Sciences group.  Kristopher Chandler is a law clerk at Benesch.

Policy Perspectives Dominate The Discussion As The Medical Marijuana Task Force Looks To The Experts For Answers

By Ted Bibart, Legislative Analyst[1]

Another marathon evening session of the Ohio House of Representatives’ Medical Marijuana Task Force (“Task Force”) was held on Thursday, March 10, 2016, as the Task Force heard testimony past 11 p.m. Chairman Kirk Schuring (R-Canton) was faced with the daunting task of managing a docket of fifteen witnesses and a packed house in the committee room.  Members of Benesch’s Regulated Industries Group (the “RIG”) were there to analyze the witness testimony and Task Force inquiries.

The evening’s expert testimony began with “A Perspective From Maryland” as Commissioner Deborah Miran, one of the fifteen members of the Maryland Medical Marijuana Commission, provided an in-depth discussion of the robust regulatory scheme crafted by the Maryland legislature. The Task Force members were clearly intrigued by the pertinent experience of Commissioner Miran. Having sat on the task force that in 2014 helped to overhaul Maryland’s prior (and largely unsuccessful) attempts to legalize medical cannabis, Commissioner Miran empathized with the enormity of the Task Force’s responsibilities in considering the question.  Her expertise, based on more than twenty years in the pharmaceutical industry, made for persuasive testimony.  Commissioner Miran took part in drafting and promulgating the regulations that govern medicinal cannabis in Maryland, which rely heavily on the regulatory schemes implemented in Arizona, Nevada, and Rhode Island.  Although Maryland’s medicinal market is not yet open to patients, industry experts have praised the comprehensiveness of its regulatory scheme, particularly with regard to product safety measures.  Commissioner Miran acknowledged that it had not been an easy road to legislation, and more wrinkles would have to be ironed out.  But she encouraged the Task Force to follow Maryland’s lead by not “reinventing the wheel” when crafting Ohio’s regulatory scheme.  Maryland identified the most effective and  robust elements of the various state approaches and innovated where necessary to serve the contours of Maryland’s market.  She thought a similar approach might be warranted for Ohio.

Another national expert, Dr. Malik Burnett, MD, MBA, a preventative medicine physician from Johns Hopkins University who trained in medicine and business administration at Duke University, advised the Task Force on the intersection of medicinal cannabis and public health.  His experience collaborating with policymakers and public health officials around the world provided a powerful medical perspective on some of the most complex regulatory questions that the Task Force members hope to answer.  State Representative Dan Ramos (D-Lorain), Jimmy Gould (Walnut Group/Responsible Ohio), and Dr. Brian Santin (Ohio State Medical Association) asked probing questions regarding physician autonomy, medical management, and patient access to a broad range of medical cannabis therapeutic options.  In all respects, Dr. Burnett advocated that any regulatory scheme must protect the sanctity of the doctor-patient relationship, and that patient access to medicinal cannabis should not be overly encumbered by the unnecessary, bureaucratic constraints, such as those that have crippled markets in Illinois and New York.  Linda Hondros, representing the Ohio Chamber of Commerce, presented a novel question, not yet posed by the Task Force, regarding information sharing by way of electronic medical records.  Dr. Burnett opined as to the possible benefits for patient care, as well as to the challenges such a system would present.  Dr. Burnett pointed to Maryland, and Commissioner Miran, as examples for the ability of legislators to come together with outside experts to make  state-based decisions that would rightly choose the appropriate approach in response to complicated policy considerations of this type.

Tom Downey, a national expert and prominent regulatory attorney in Denver, Colorado, echoed the sentiments of Commissioner Miran and Dr. Burnett, in highlighting the opportunity Ohio has to create a robust regulatory scheme ahead of industry implementation. Mr. Downey’s extensive experience as a Colorado Regulator, Director, and in drafting the original policies and procedures for Denver’s  legalized cannabis licensing structure, were extremely timely as the Task Force considers the best possible approaches to regulate medicinal cannabis.  He advocated a system that would not impose overly restrictive barriers to entry, but that would be intensive enough only to support sophisticated operators.  Key considerations included a regulatory scheme that was not initially under-funded, and that did not over-tax medicinal cannabis thereby fueling the black market.  Mr. Downey addressed the challenges and concerns resulting from the lack of financial institutions willing to serve marijuana related businesses, and encouraged legislators to seek the expertise of outside experts to investigate solutions.  Finally, Jimmy Gould asked Mr. Downey to consider the present state of Colorado after full implementation of legalized medicinal cannabis.  Mr. Downey assured the Task Force that the fear of the imagined “horror stories” that might result from legalization had proven unfounded in Colorado, instead the economy was booming, tourism was up, and the state budget was being balanced on the strength of $135 million in taxes and fees collected in 2015 alone.

The Task Force also continued to hear touching, anecdotal evidence from patients who had received exemplary benefits of medicinal cannabis therapies. Scarlett Leisure testified with fourteen month-old daughter Savannah in her arms to the incredible impact cannabis oil treatments have had on Savannah’s “catastrophic form of intractable epilepsy” resulting from a deletion mutation of one of her X-chromosomes.  Savannah was forced to endure a ketogenic diet and four medications at a time, and was still having at least 5 tonic-clonic seizures a day (all requiring the use of oxygen).   With no functioning solution in sight, Scarlett took Savannah to Colorado and started cannabis oil therapy on her own.  It was a calculated risk, as there was no medical supervision available in Ohio, but as a result Savannah has only had 8 seizures in the last 5 months (where under the traditional treatments she was receiving, she would have had approximately 750 in that time-span.)  In rebuttal to this anecdotal evidence, Dr. Michael Privitera, MD of the University of Cincinnati (also President of the American Epilepsy Society) cautioned that more testing was necessary to assure this type of cannabis therapy was safe and truly effective.  In Dr. Privitera’s opinion, legalizing medicinal cannabis therapies without the Food and Drug Administration’s (“FDA”) approval was premature.  Dr. Privitera had professed to limit the scope of his testimony to the sphere of epilepsy, but as it veered into other treatment modalities and broader generalizations were made about other fields of medicine, Dr. Santin was there to rein him in, particularly in the area of physician autonomy and patient access.  Finally, Jimmy Gould asked Dr. Privitera to reflect on the testimony and experience of Scarlett and Savannah Leisure. The doctor did acknowledge the effectiveness of medicinal cannabis, and clarified that in his opinion more testing should be done.

Lastly, Jöelle Khouzam of Bricker & Eckler testified on behalf of the Ohio Manufacturers’ Association (“OMA”). While Ms. Khouzam presented many open questions her client had regarding employment-related issues, she was unable to address many of the regulatory solutions other states had devised to satisfy the challenges to employers that these questions presented.  The Task Force looked to Ms. Khouzam for data substantiating the depth of concern underlying the issues she presented for consideration, and unfortunately none was presented in her testimony.  To help clarify her position, Dr. Santin, Chris Stock, State Representative and physician, Dr. Steve Huffman (R-Tipp City), and Rep. Ramos all drew analogies to present employer-related issues with opioid medication in hopes of elucidating the OMA’s stance and the manner in which medicinal cannabis would create different and greater concerns.  While the responses failed to demonstrate the uniqueness medicinal cannabis presents employers, it did highlight that there are existing answers in both existing, state regulatory schemes and case law.

[1] Ted Bibart, and the Benesch team, will continue to provide detailed analysis and comprehensive coverage of Task Force meetings and on-going developments surrounding the issue.

Ohio’s Medical Marijuana Task Force Continues to Hear Testimony

By Jeff McCourt and Aaron Mendelsohn

Ohio’s Medical Marijuana Task Force (“Task Force”) continued to hear testimony on Thursday, February 25, 2016, as eleven individuals provided their thoughts related to medical cannabis in Ohio.  Most of the testimony was from proponents of medical cannabis, while one opponent, Captain Jeffrey Orr of the Trumbull County Sheriff’s Office, and one interested party, Dr. Anup Patel of Nationwide Children’s Hospital and The Ohio State University College of Medicine, offered alternative perspectives.

Dr. Patel’s testimony was of particular interest to the Task Force, as it lasted over forty-five minutes and included an open dialogue between Task Force members and Dr. Patel regarding his clinical studies using purified cannabidiol (CBD) compounds to treat severe epilepsy in children.  Dr.  Patel stated that the clinical studies he is leading at Nationwide Children’s Hospital are one of only two such studies sanctioned by the U.S. Food and Drug Administration (FDA) for CBD use to combat epilepsy in children.  Early indicators from his study suggest that CBD could reduce seizure frequency and has an adequate safety profile. Dr. Patel stressed that his research on the use of purified CBD extracts is different than that of “whole-plant” applications of medical cannabis, which he says have not received the same FDA review as CBD-only studies.  Dr. Patel’s research, along with others in the scientific community, seeks to determine the efficacy of purified CBD treatments (which contain none of the psychoactive ingredients in whole-plant medical cannabis), and Dr. Patel urged the Task Force to be cautious in crafting a legislative framework that legalizes anything without adequate scientific research to support its use.  Later testimony challenged some of Dr. Patel’s assertions, noting that the dearth of FDA sanctioned studies on whole-plant applications of medical cannabis is a direct result of the plant’s status as a Schedule I controlled substance under the Controlled Substances Act.

Of the evening’s proponent testimony, Dr. Michelle Price, a Dayton pharmacist, and Tamara Dietrich, of Scottsdale, Arizona’s Beacon Information Designs, provided particularly  interesting perspectives.  Dr. Price spoke at length about the historical use of medical cannabis in the US prior to its prohibition, the US Department of Health’s patent on medical cannabis, and some of the global research done on the endocannabinoid system.

Ms. Dietrich offered expertise regarding the need for a strong regulatory structure supported by information systems to track and maintain the entire medical cannabis system and infrastructure. Beacon Information Designs has done extensive research on this subject for the State of Arizona, and Ms. Dietrich provided the Task Force with much of this information, as well as offered her own opinions on which state regulatory structures have been successful.  For example, Ms. Dietrich spoke about her home state of Arizona’s lack of required testing, and the issues it has caused within the medical cannabis supply chain.   She also spoke about the perceived unfairness behind provisions of the Nevada medical cannabis law that only permit “homegrown” cannabis for patients who live twenty-five miles from a licensed dispensary.  Task Force member Lora Miller (Ohio Council of Retail Merchants) engaged Ms. Dietrich in dialogue regarding whether Ohio should have physician education requirements for recommending medical cannabis to patients, similar to laws in Maryland or New York.

Captain Orr’s opponent testimony began with him holding two bags of police-seized cannabis representing the two maximum weights for the two lowest misdemeanor criminal charges for possession of cannabis in Ohio.  The gesture grabbed the Task Force’s attention, and at times Captain Orr’s testimony took the tone of a cross examination as Task Force member Chris Stock (Markovits, Stock & DeMarco) probed Captain Orr regarding his proffered knowledge of an increased black market for cannabis in states that have recreation cannabis use.  After a repeated line of questioning by Mr. Stock, Captain Orr admitted to having never visited or raided dispensaries in any of these states but stated that he had worked with law enforcement joint-task forces in those states to bolster his testimony.

Of all the proponent testimonies, the most impactful may have come from the night’s last, as Patrick Rogers of Dayton limped to the podium to offer his heart wrenching story.  As a young cancer survivor, Mr. Rogers discussed how he traded being cancer free for a life of bone disease and other various painful afflictions that he said was caused by his cancer radiation treatments. He articulately spoke on how his personal use of medical cannabis has allowed him to walk relatively pain free, maintain a 40 hour a week job, and be a productive, tax paying citizen of Ohio.  Without access to medical cannabis, Mr. Rogers said he would be unable to move and provide for his family, and urged the Task Force to permit legal home grown medical cannabis.

The Task Force is off the week of February 29, but will resume with its final three sessions on Thursday, March 10 at 7 p.m., Thursday, March 17 at 3 p.m., and Thursday, March 31 at 3 p.m..

The Benesch team will continue to provide detailed analysis and comprehensive coverage of Task Force meetings and on-going developments surrounding the issue.