Pot of Gold: Tycoons and others are in frenzied race to win Pa. medical marijuana licenses

David Z. Tuttleman at his medical marijuana growing facility, Matrix NV, in Las Vegas. Tuttleman, a Delaware resident, hopes to open another growhouse in Philadelphia if granted a license by the state.

Multimillionaires and aspiring entrepreneurs are hustling round the clock for a shot at the pot of gold that could come with a state license to grow, process, and distribute medical marijuana in Pennsylvania. The race, says a Main Line businessman right in the thick of it, has become “insanely” competitive.

The maneuvering is particularly frenzied -- and ferocious -- in this region, with eight counties in Southeastern Pennsylvania, designated to receive only two of the first 12 grower/processor licenses being issued under the medical-marijuana law enacted last year.

Among the known aspirants are an automotive-repair chain magnate, the daughter of the late Flyers owner Ed Snider, and a prominent Delaware County real estate family.

Sensing a chance to marry financial ambitions with humanitarianism, applicants are scrambling to secure land and zoning approvals as prerequisites. One Philadelphia-area investor is lining up nearly $1 million in required fees and deposits to submit multiple applications by the March 20 deadline.

The winners will help deliver new treatments to Pennsylvanians suffering from cancer, childhood seizures, and other ailments -- and they will be positioned to build potentially multimillion-dollar medical-marijuana business empires.

“I’m sure there are people putting in 11- to 15-hour days seven days a week. No doubt about it,” said Keith Morgan, 55, the Lower Merion Township heir to the AAMCO transmission-repair fortune who also holds Krispy Kreme rights in the region. Morgan said he hoped to establish a grower and processor facility in West Pottsgrove, Montgomery County, or in New Castle, outside Pittsburgh. He also wants the state’s blessing to open three dispensaries across Southeastern Pennsylvania. Morgan will submit five applications to boost his chances.

In addition to the 12 initial grower licenses, regulators are accepting applications for 27 permits to open up to 81 dispensaries, where prescriptions could be filled, across the state.

“We are putting our heart and soul into it at this point,” said Jennifer McKee of Delaware County, who works for her family's real estate company, the McKee Group. McKee, 40, is leading a family group vying to run a grower/processor facility at a former machine shop adjacent to a quarry in Aston Township.

“I am working nights [and] weekends,” said McKee, a mother of two. “My 7-year-old is a little girl, and she knows that mommy is trying to start a new business and that I’ll be making medicine. It feels great to tell her that.”

McKee and Morgan are among an estimated 25 potential bidders in the southeast region.

The application window opened Feb. 20. And although the Department of Health won’t say how many have been filed so far, hundreds of applications are likely by the March 20 deadline.

The department also is mum on who is seeking the licenses, but names and locations have trickled into the public domain as prospective applicants have gone before municipal councils or civic groups in recent weeks to obtain zoning support for desired sites. Others have spread word of their interest through news releases, albeit devoid of specifics. They run the gamut, from out-of-state investment groups to small-scale individual entrepreneurs.

Among the higher-profile applicants are Lindy Snider, whose late father owned the Flyers and unsuccessfully sought a state casino license a decade ago. Also, Delaware apparel fortune heir David Z. Tuttleman, a Philadelphia native who already runs a medical-marijuana-growing business in Nevada, hopes to win a license.

Snider is pursuing a hoped-for 125,000-square-foot growing and processing facility on 14 acres of former industrial land in Northeast Philadelphia near Bucks County.

Tuttleman, a former nightclub operator and scion to The Limited fortune, said only that he is eyeing a 10-acre plot on which he hoped to secure the right to operate a 28,000-square-foot grow facility.

“It’s a piece of ground that has been excluded from normal use, and this is the perfect use for this space,” Tuttleman said in a recent interview. “At this time, I can’t say a lot more about it.”

Morgan, the AAMCO heir, recently spoke with civic leaders in Northeast Philadelphia about opening a dispensary in Bustleton and is looking at an undisclosed location in Bensalem Township, Bucks County.

Gov. Wolf's administration has moved swiftly to draft regulations since the law legalizing marijuana for medicinal purposes and pain control was approved by the GOP-controlled legislature and signed by the Democratic governor in April.

The law aims to supply cannabis to seriously ill patients who have any one of 17 qualifying ailments. It was an easy sell for the conservative legislature: Polling found that nearly 9 out of 10 Pennsylvanians approved of medical marijuana, which already is legal in some other states, including New Jersey. Also, the law prohibits the drug from being made available in dry leaf or plant form — only in pill, oil, gel, vapor or liquid forms.

The à la carte permits to be doled out in the months ahead represent only the first phase of a frenzied bidding process. The state also is preparing to offer what one industry insider called a "Godzilla License."

That credential would allow eight academic medical centers to select investor partners to establish research, growing, and dispensary networks of their own. Health systems have been soliciting potential suitors for months.

Just one of those "clinical registrant" permits could be worth as much as $50 million on the day of issue, said Troy Kaplan, a New Jersey attorney who specializes in medical-cannabis law and is advising clients in Pennsylvania. Each of those permits packs a punch by bundling the right to grow and process marijuana, conduct research under the auspices of a medical school, and operate up to six dispensaries, Kaplan said.

People across the wealth and professional spectrum are angling for a way in, according to attorney Mark L. Alderman, chairman of Cozen O’Connor Public Strategies, whose firm is working with unnamed clients seeking medical-marijuana permits.

“Private equity, pharma execs, out-of-state operators, entrepreneurs, pharmacists, farmers,” Alderman said. “This is everything from agriculture to pharmacology to all of the above.”

The state has said that up to 900 applicants might apply. The cost of entry, however, will filter out all but the most well-heeled suitors.

To apply as a grower/processor, the state requires a nonrefundable $10,000 application fee and a $200,000 deposit refundable only to the losers. Investors also must have at least $2 million in capital, of which $500,000 must be on deposit with a financial institution. 

Dispensary applications require a nonrefundable $5,000 fee and $30,000 cash for each of up to three desired locations attached to each permit, plus $150,000 on deposit with a financial institution. 

Morgan, who is partnering with Rick Genderson, a Washington, D.C., grower, said he is concerned about the unknowns, but is staying aggressive. This month, he will put in five separate applications: two for growing locations on both ends of the state, and three for dispensaries in and around Philadelphia.

“If the program is done right,” Morgan said, “I see absolutely no downsides.”

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