Massachusetts Medical
Marijuana dispensers’
association
Medical Marijuana
Dispensary Guidelines
COTTENS AND CARP, LLC
March 30, 2013

DPH Regulations
The Department of Public Health has
issued preliminary regulations as of
yesterday – remember these are draft
regulations.
THEY CAN BE FOUND AT:
www.mass.gov/medicalmarijuana

WHAT WE WILL
COVER TODAY
• CORPORATE STRUCTURE AND
BYLAWS
• COMPLIANCE FORMS
• DISPENSARY BUSINESS PLAN
• OPERATION HANDBOOK
• INVENTORY CONTROL & FORMS
• GROWING GUIDE
• EMPLOYEE HANDBOOK

WHAT WE WILL
COVER TODAY
CONTINUED
• ZONING REGULATIONS
• HIPAA COMPLIANCE
• CITY AND STATE PERMITTING
• FINANCIAL FORECASTS
• CORPORATE AND TAX
PROTECTION

Corporate structure and
bylaws
WHAT IS THE CORRECT CORPORATE STRUCTURE
FOR A DISPENSARY APPLICATION?
ANSWER – NOT FOR PROFIT STRICTLY ON
A STATE LEVEL.
THE FEDERAL GOVERNMENT STILL CONSIDERS
THIS TRAFFICKING IN CLASS ONE SUBSTANCE

Corporate structure and
bylaws
WHY?
THE STATE MANDATES A NOT FOR PROFIT CORPORATION
FOR APPLYING FOR A DISPENSARY LICENSE.
REMEMBER
NOT FOR PROFITS DO NOT
HAVE SHAREHOLDERS
What does this mean?

Corporate structure and
bylaws
1. Not for profit structure requirements
2. http://www.sec.state.ma.us/cor/corpweb/cornp
/npfrm.htm
NECESSARY LANGUAGE IN BYLAWS
Except as otherwise expressly provided, a corporation may by its
by-laws determine the manner of calling and conducting its
meetings; the number of members which shall constitute a
quorum; the mode of voting by proxy; and the tenure of office of
the directors and officers and the manner of their selection and
removal; and may annex suitable penalties to such by-laws, not
exceeding twenty dollars for one offense; but no by-law
inconsistent with law shall be made by a corporation. Special
meetings of the members may be called by the president or the
directors, and shall be called by the clerk, or in the case of the
death, absence, incapacity or refusal of the clerk, by any other
officer, upon written application of members representing at least
ten percent of the smallest quorum of members required for a vote
upon any matter at the annual meeting of members. In case none
of the officers is able and willing to call a special meeting, the
supreme judicial or superior court, upon application of said number
of members, shall have jurisdiction in equity to authorize one or
more of such members to call a meeting by giving such notice as
is required by law.

Corporate structure and
bylaws

Corporate structure and
bylaws

Corporate structure and
bylaws

Corporate structure and
bylaws

Corporate structure and
bylaws

COMPLIANCE ISSUES AND
COMPLIANCE FORMS
• VERY POSSIBLY THE MOST
IMPORTANT PART OF YOUR
APPLICATION –THE DPH WILL BE
LOOKING TO SEE IF YOU KNOW
HOW TO COMPLY NOT WITH JUST
THE MEDICAL MARIJUANA LAW,
BUT WITH OTHER STATE
STATUTES.

COMPLIANCE ISSUES AND
COMPLIANCE FORMS
WHAT DO I HAVE TO INCLUDE?
a. Federal and State HIPPA
compliance
b. State medical waste disposal
guidelines
c. Data Security Guidelines 201 CMR
1700

COMPLIANCE ISSUES AND
COMPLIANCE FORMS
WHAT DO I HAVE TO INCLUDE?
d. Waste water disposal
e. Zoning Adherence
f. City/Town Business License
g. Sales Tax Certificate
h. Certificate of Occupancy

COMPLIANCE ISSUES AND
COMPLIANCE FORMS

COMPLIANCE ISSUES AND
COMPLIANCE FORMS

Dispensary
business plan

Dispensary
business plan

Dispensary
business plan

Dispensary
business plan

Dispensary
business plan

Dispensary
business plan

Dispensary
business plan

Dispensary
business plan

Dispensary
business plan

Dispensary
business plan

Dispensary
business plan

Dispensary
business plan

Operation
handbook

Operation
handbook

Operation
handbook

Operation
handbook

Operation
handbook

Operation
handbook

Operation
handbook

Operation
handbook

Operation
handbook

Operation
handbook

Operation
handbook

Operation
handbook

INVENTORY
CONTROL

Growing guide

Growing guide

Growing guide

Growing guide

Growing guide

Growing guide

Growing guide

Growing guide

Growing guide

Growing guide

Growing guide

Growing guide

Growing guide

Growing guide

Growing guide

Zoning regulations

City and state
permitting

City and state
permitting

City and state
permitting

City and state
permitting

City and state
permitting

City and state
permitting

City and state
permitting

City and state
permitting

City and state
permitting

City and state
permitting

Financial forecasts

HIPPA
COMPLIANCE

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

Dispensary
employee handbook

The SHORT LIST OF
COMPLIANCE DOCUMENTS
requirements

SAMPLE FORMS
Qualifying Patient Information Change Form
This form is to be used to notify the Department of Health of any change in the qualifying patient’s
name, address or primary caregiver, or if the qualifying patient ceases to have their debilitating
medical condition.
Date:___________________
Registration Card Number:______________________
Type of Change (check as many as apply)
Patient’s Name ☐
Address ☐
Primary Caregiver ☐
Cessation of Debilitating Medical Condition☐
Please print all answers
Patient’s Former Name:______________________________________
Patient’s New Name:________________________________________
Patient’s Former Address:___________________________________
Patient’s New Address_____________________________________
Patient’s Former Caregiver:_________________________________
Patient’s New Caregiver:_____________________________________
Qualifying Condition (terminated)____________________________
The above information is true to the best of my knowledge. I authorize the
officers/employees/agents of this Medical Dispensary to report this information to the
Massachusetts Department of Health. Under the pains and penalties of M.G.L. Sections 1-10 I
certify the information in this form complies with all other parts of the regulation.
SIGNED:_______________________________________
Copyright Massachusetts Medical Marijuana Dispensers’ Association, Inc.
All rights reserved

CULTIVATION
FORMS
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Setting up for
business

OPERATIONS
HANDBOOK

HOW DO I GROW
THE RIGHT
AMOUNT?

Notable issues

Notable issues

Dea’s position

IRS SHUTDOWN
• Excerpt from the SAR Activity Review
• Money Laundering of Marijuana Sales Proceeds
• Four individuals involved in the distribution and sale of marijuana were
sentenced to prison terms ranging 12 to 21 months followed by up to
36 months probation. These sentences resulted from guilty pleas by
the targets on one count each of money laundering for the manner in
which they handled between $350,000 and $600,000 in funds
traceable to marijuana trafficking. According to court papers filed, two
of the defendants structured cash derived from the sale of marijuana
into various accounts and then transferred the funds by check, wire
transfer, or cash to the other two targets, operators of a concert
promotion and nightclub business. These individuals subsequently
used this business as a way to launder the money from the marijuana
distribution business, disguising the money as legitimate business
receipts and mixing it with proceeds from promotions and concerts.
• This investigation was initiated from the analysis of two SARs filed by
two separate financial institutions, regarding the deposits of cash to the
target’s bank accounts. Many of the deposits were for amounts under
$10,000 and structured to avoid the currency reporting requirements.
The structured transactions were conducted by depositing cash on
consecutive days, making several deposits on the same day, and
spreading the deposits among bank accounts at different institutions.
• Agencies participating in this investigation include the IRS-Criminal
Investigation, the FBI and a local police department. (Source: IRS-
Criminal Investigation)

IS THERE ANY WAY AROUND THE IRS
– YES IF YOU USE A GOOD
LAWYER
Californians Helping To Alleviate Medical
Problems, Inc.) that was decided largely
in favor of another, now closed,
marijuana dispensary. In the CHAMP
case, the IRS conceded that 280E
doesn’t preclude deducting the cost of
goods sold (i.e. the cost of the
cannabis). The court also ruled that
CHAMP could deduct the cost of
providing extensive counseling and
caregiving services to its members,
although not the cost of actually
distributing the marijuana.

ANOTHER IRS
SOLUTOIN

WHERE DO I
BANK?
• Though marijuana’s acceptance as a legitimate medicine is gaining
ground, the Federal Government still classifies cannabis as a schedule
1 drug and prosecutes those who grow and posses it. While your
personal and business finances may be on the up and up, your
banking activity can still trigger a Suspicious Activities Report. SAR’s
often land on the desk of IRS agents who may choose to open an
investigation and subpoena your bank records. As a grower or user of
marijuana, the last thing you want is Federal Agents wandering around
your house with a search warrant looking for something suspicious.
• What Is A Suspicious Activities Report?
• Every bank in the United States is required to follow a compliance
program outlined in the Bank Secrecy Act and Anti-Money Laundering
(BSA/AML). This means that any transaction (not just a currency
transaction) that is made or attempted, by, at, or through a bank is
monitored by bank employees. If a bank employee knows, suspects, or
has reason to suspect a transaction, they are required to fill out and
submit a SAR Form on the transaction. The criteria for suspicious
transactions are as follows:
• Transactions suspected of involving funds derived
from illegal activities or intended to hide or disguise funds or assets
derived from illegal activities or to avoid any transaction reporting
requirements under federal law.
• Transactions that have no apparent lawful
purpose or are not the sort in which the particular customer would
normally be expected to engage in.

HOW DO I BANK?
• Threat of federal intervention appears to be
growing. American Express announced last May
it would no longer handle medical marijuana-
related transactions because of fear of federal
prosecution.
• A month later, U.S. Deputy Attorney General
James M. Cole gave banks an explicit directive
about pot.
• “Those who engage in transactions involving the
proceeds of such activity may also be in
violation of federal money laundering statutes
and other federal financing laws,” Cole wrote in
a memo.
• Cole’s memo spooked the few small banks still
doing business with marijuana growers and
sellers.
• “You’d have one bank at a time saying, ‘We’re
going to pull out of this.’ Then everybody would
go to the next bank, and the next bank, until all
the banks pretty much shut down,” Fox said.

WHERE DO I PUT
MY MONEY?
ST. LOUIS, June 17 (Thomson Reuters Accelus) - Marijuana
dispensaries in states that have legalized medical pot are
struggling to obtain service from banks and credit-card
companies, pressured by federal authorities who consider
illegal the business estimated at $1.7 billion annually.
• Operators and supporters of marijuana dispensaries say
banks are turning away their business because they risk
falling afoul of anti-money-laundering and drug-trafficking
laws.
• The largest U.S. bank, Bank of America Corp, said it
started withdrawing services from dispensaries after
receiving a warning from the U.S. Drug Enforcement
Administration in late 2007 or early 2008. The DEA said it
has also told other big banks that they face potential legal
liabilities if they do business with the dispensaries.

Hipaa compliancy

Contact us
MASSACHUSETTS MEDICAL
MARIJUANA DISPENSERS’
ASSOCIATION, INC.
INFO@BAYSTATECANNABIS.COM
WWW.BAYSTATECANNABIS.COM
COTTENS AND CARP, LLC.
WWW.COTTENSANDCARP.COM