February 5, 2023

Volume XIII, Number 36

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February 03, 2023

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February 02, 2023

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Taking Stock of the Alabama Medical Cannabis Sweepstakes: Still Time to Enter

In the months immediately following passage of Alabama’s new medical cannabis law, there was a flurry of activity throughout the state to engage attorneys, lobbyists, and perceived influencers to help dozens of well-heeled individuals and investment groups obtain a medical cannabis license in Alabama. Now that the dust has settled, but before those same individuals and groups begin drafting applications, I find myself answering one question perhaps more than any other in my cannabis practice: Is there still time to get involved in Alabama’s medical cannabis sweepstakes? In short, absolutely – but it’s time to get moving.

The Competition for the Five Integrated Licenses Is Fierce

First, the current lay of the land: By any measure, the field of known competitors for the five integrated facilities is crowded. A “who’s who” of business leaders throughout the state, as well as a steady stream of out-of-state cannabis operators, have made it known they are in the running for one of these licenses. Many of these candidates are well-funded, well-credentialed, and well-advised. It is already clear that there will be more qualified applicants for the integrated licenses than there are licenses for the Alabama Medical Cannabis Commission to award. So, while it may prove extremely challenging to obtain an integrated license, Alabamians have good reason to believe that their medical cannabis program will hit the ground running.

There Is Still Room for Newcomers, Particularly for Non-Integrated Licenses

Given the number of credible and legitimate players in the mix for licenses, is there still room for new players to get in the ring? Yes!

By way of background, in addition to integrated licenses, applicants will compete for a limited number of cultivation, processing, and dispensing licenses. There will also be a to-be-determined number of licenses for secure transporters and testing laboratories.

September 2022 is coming fast for someone looking to establish a vertically integrated medical cannabis business from scratch –  but perhaps not too fast for someone looking to obtain one of the more specific, non-vertical licenses. Would-be cultivators, processors, dispensers, transporters, and testers have a far less steep hill to climb before operational readiness.

To that end, there seems to be two benefits to choosing the road less traveled – in this case, one of the non-integrated licenses: (1) a higher likelihood of being awarded a license and (2) a lower barrier to entry into the market. As to (1), the competition for a non-integrated license likely will be less daunting than the competition for an integrated license. It will be easier (even if only slightly) for an applicant to differentiate itself from the competition. And as to (2), one can stand out as a non-integrated applicant by expending far fewer resources than a serious integrated applicant would be required to expend.

But time is becoming of the essence. Those wishing to pursue non-integrated licenses should begin taking the following steps as soon as possible:

  • Determine which license to seek, remembering that you can hold only one at a time;

  • Make sure you meet the requirements for the license you seek (remaining mindful of things such as durational residency requirements, requirements to qualify as a minority applicant, horticultural/agricultural experience requirement);

  • Prepare a business plan, including how to work with licensees in other categories;

  • Prepare a security plan;

  • Retain necessary professionals, such as an attorney, an accountant, a bank, and, if necessary, a consultant with experience in the cannabis industry; and

  • Be ready to ramp up quickly if awarded a license, as the statute requires that cultivation commence within sixty (60) days of the awarding of the license.

Regular readers of this space know that we are fans of the late, great Jerry Reed and his ability to offer wisdom to virtually every situation. When it comes to obtaining medical cannabis licenses in Alabama, I advise my clients to heed the words of Mr. Reed: ‘[w]e've got a long way to go, and a short time to get there,” but “we gonna do what they say can't be done.”

© 2023 Bradley Arant Boult Cummings LLPNational Law Review, Volume XII, Number 12

About this Author

Whitt Steineker Cannabis Attorney Bradley Birmingham

Whitt Steineker has devoted his legal career to representing companies that provide a wide range of goods and services. He provides clients of all types with litigation counsel, transactional advice, and practical strategies for growth. Whitt advises clients of all sizes—from multinational corporations to local businesses—in transactional and litigation matters in jurisdictions across the country and around the world.

As co-chair of Bradley’s Cannabis Industry team, Whitt represents clients on a wide range of cannabis issues. In addition to...