News & Events

Alabama Legalizes Medical Marijuana

On May 17, 2021, Governor Kay Ivey signed SB 46 into law.[1] SB 46, also known as the “Darren Wesley ‘Ato’ Hall Compassion Act,”[2] or the “Alabama Compassion Act”[3] (hereinafter referred to as the “Act”), makes Alabama the 37th state to legalize medical marijuana (or, as it’s referred to within the Act, “medical cannabis”). License applications will open September 1, 2022,[4] giving the newly created Alabama Medical Cannabis Commission (the “Commission”) and the Department of Agriculture and Industries (the “Department”) roughly 15.5 months to both: (i) establish a comprehensive statewide seed-to-sale tracking system capable of, among other things, monitoring inventory, tracking transfers, and verifying and documenting sales,[5] and (ii) flesh out the particulars of cultivating, processing, dispensing, and using medical cannabis in Alabama.

While many of the particulars of Alabama’s regulatory scheme are still to be determined—both the Commission and Department are afforded rulemaking authority to “implement, administer, and enforce”[6] the new law—the Act paints a relatively clear picture of what’s to come for prospective applicants, physicians, and patients.

Cultivation, Processing, Production, and Dispensing of Medical Cannabis

Commercially, the Act identifies the following kinds of licenses:

License Type Maximum Number Regulating Agency Authorized Activities
Cultivator 12[7] Department – Cultivation of cannabis

– Sale or transfer (by means of a Secure Transporter) of cannabis to a Processor

– Sale or transfer of medical cannabis to a Dispensary (if the Cultivator contracts with a Processor to process cannabis into medical cannabis on the Cultivator’s behalf) [8]

Processor 4[9] Commission – Purchase or transfer of cannabis from a Cultivator

– Processing of cannabis into medical cannabis (including packaging and labeling)

– Sale or transfer (by means of a Secure Transporter) of medical cannabis to a Dispensary[10]

Dispensary 4[11] Commission – Purchase or transfer (by means of a Secure Transporter) of medical cannabis from a Processor

– Purchase or transfer (by means of a Secure Transporter) of medical cannabis from a Cultivator (if the Cultivator contracts with a Processor to process cannabis into medical cannabis on the Cultivator’s behalf)

– Purchase or transfer (by means of a Secure Transporter) of medical cannabis from an Integrated Facility

– Operate up to 3 dispensing sites, each of which must be in separate counties

– Dispensing and sale of medical cannabis only to a registered qualified patient or registered caregiver[12]

Secure Transporter No limit[13] Commission – Store and transport cannabis and medical cannabis for a fee upon request by a licensee[14]
State Testing Laboratory No limit[15] Commission – Possess and test cannabis and medical cannabis products cultivated or processed at licensed facilities[16]
Integrated Facility License 5[17] Department and Commission – Cultivation of cannabis

– Processing of cannabis into medical cannabis (including packaging and labeling)

– Dispensing and sale of medical cannabis only to a registered qualified patient or registered caregiver

– Transport of cannabis or medical cannabis between its facilities

– Sale or transfer of medical cannabis to a Dispensary[18]

Notably, at least one-fourth of all licenses (other than Integrated Facility licenses) and at least 1 of the 5 available Integrated Facility Licenses are to be awarded to minority-owned businesses.[19] A full list of the requirements for each one of the aforementioned licenses is beyond the scope of this article, but there are some worth noting at the outset:

  • Dispensaries will not be allowed to operate in “any municipality or unincorporated area of a county” unless that municipality or county has specifically authorized the operation of medical cannabis dispensing sites within its boundaries.[20]
  • Each applicant must provide records indicating that a majority of ownership is attributable to an individual or individuals with proof of residence in Alabama for a continuous period of no less than 15 years preceding the application date.[21]
  • Integrated Facility and Cultivator license applicants must provide records indicating a majority of ownership is attributable to an individual or individuals, or an entity or entities, with cumulative business experience in the field of commercial horticulture or agronomic production for a period of at least 15 years.[22]
  • Each owner, shareholder, director, board member, and individual with an economic interest in an applicant, as well as any officers, employees, contractors, and other individuals with access to medical cannabis or the facilities are required to submit to a state and national criminal background check, with their fingerprints submitted to the Alabama State Law Enforcement Agency.[23]
  • Applicants cannot have an economic interest in any other license under the Act.[24]
  • Application fees are set at a minimum of $10,000, with any additional costs paid by the applicant.[25]
  • Each applicant will be subject to a 30-day public notice and comment period, with hearings held, if necessary.[26]

Use of Medical Cannabis

As for the use of medical cannabis, the list of qualifying medical conditions is as follows (each, a “Qualifying Medical Condition”):

  • Autism
  • Cancer-related Cachexia, nausea or vomiting, weight loss or chronic pain
  • Crohn’s disease
  • Depression
  • Epilepsy or condition causing seizures
  • HIV/AIDS-related nausea or weight loss
  • Panic disorder
  • Parkinson’s
  • Persistent nausea not significantly responsive to traditional treatment (other than pregnancy, cannabis-induced vomiting, or cannabinoid hyperemesis syndrome)
  • PTSD
  • Sickle-cell anemia
  • Spasticity associated with a motor neuron disease (ALS)
  • Spasticity associated with MS or spinal cord injury
  • Terminal illness
  • Tourette’s
  • Chronic or intractable pain in which conventional therapeutic intervention and opiate therapy is contraindicated or has proved ineffective[27]

Notably, the existence of a Qualifying Medical Condition is not sufficient, in and of itself, to qualify for medical cannabis; rather, absent the use of medical cannabis being the standard of care, there must be documentation that “indicates that conventional medical treatment or therapy has failed.”[28] Additionally, prospective patients (or caregivers) must meet the following criteria:

Patient Type Requirements
Registered Qualified Patient

(Adult)

– 19+ years of age

– Resident of Alabama

– Certified by a Registered Certifying Physician as having a Qualifying Medical Condition

– Registered with the Commission

– Issued a valid medical cannabis card[29]

Registered Qualified Patient

(Minor)

– <19 years of age

– Resident of Alabama

– Certified by a Registered Certifying Physician as having a Qualifying Medical Condition

– Has a Registered Caregiver who is the patient’s parent or legal guardian[30]

Registered Caregiver – 21+ years of age, unless he or she is the parent or legal guardian of, and caregiver for, a Registered Qualified Patient

– Registered with the Commission

– Issued a valid medical cannabis card[31]

A certification for medical cannabis (which will generally take the form of an oral tablet, capsule, gelatinous cube, or nebulizer rather than combustible or food-based consumption methods)[32] requires that a prospective patient visit a “Registered Certified Physician,” or a physician that has (1) an active medical license; (2) completed a 4-hour course on medical cannabis, (3) completed a medical cannabis exam; (4) paid a registration fee (not to exceed $300); and (5) met additional qualifications established by the Alabama Board of Medical Examiners (hereinafter referred to as a “Registered Certified Physician”).[33] Registered Certified Physicians are responsible for, among other things, entering prospective patient data into the Alabama Medical Cannabis Patient Registry System (the “Patient Registry System”), which will contain all relevant information regarding prescriptions for medical cannabis.

Following a Registered Certified Physician’s certification that a prospective patient has a Qualifying Medical Condition, a prospective patient (or designated caregiver) is responsible for registering with the Patient Registry System, after which (assuming all other aforementioned eligibility criteria are met, including the payment of a $65 application fee) the Commission will issue a medical cannabis card.[34] The medical cannabis card will allow the cardholder to purchase up to 60 and possess no more than 70 daily dosages of medical cannabis.[35]

Financial Impacts of Medical Cannabis

In addition to the relatively high license application fees, beginning January 1, 2022, the Act provides for the collection of 2 kinds of taxes: (1) a 9% tax on the gross proceeds of retail sales of medical cannabis; and (2) a privilege tax on licensees, the calculation of which is based on the licensee’s net worth.[36] With respect to the privilege tax, a licensee’s net worth is determined using the guidelines set forth in Section 40-14A-23 of the Code of Alabama 1975, with the precise amount and rate of tax computed as follows:

If taxable income of the taxpayer is:
at least but less than The tax rate shall be
$1 $0.25 per $1,000
$1 $200,000 $1.00 per $1,000
$200,000 $500,000 $1.25 per $1,000
$500,000 $2,500,000 $1.50 per $1,000
$2,500,000 $1.75 per $1,000[37]

It is anticipated that the revenue generated by the Act will initially be utilized for the implementation, administration, and enforcement of the Act itself.[38] Beginning October 1, 2025, however, any funds generated in excess of the Act’s expenses (plus 10%) will be allocated 60% to the State’s general fund and 30% to the Medical Cannabis Research Fund to fund medical cannabis research grants awarded by the Medical Cannabis Research Consortium.[39]

Butler Snow will continue to monitor and publish analysis of the Act as the Department and Commission promulgate the many regulations still to come.


[1] Darren Wesley ‘Ato’ Hall Compassion Act, No. 2021 – 450 (May 17, 2021) (to be codified at Ala. Code § 20-2A-1 et seq.). Citations contained in this article will cite to the Act as it will be codified within the Code of Alabama 1975. A link to the text of the Act can be found here.

[2] Ala. Code § 20-2A-1.

[3] See id. at § 20-2A-32 (referring to the Act as the “Alabama Compassion Act”).

[4] See id. at § 20-2A-34(a).

[5] See id. at § 20-2A-54 (describing the seed-to-sale tracking system).

[6] See, e.g. id. at § 20-2A-53(a).

[7] See id. at § 20-2A-62(b).

[8] See id. at § 20-2A-62(a).

[9] See id. at § 20-2A-63(b).

[10] See id. at § 20-2A-63(a).

[11] See id. at § 20-2A-64(b).

[12] See id. at § 20-2A-64(a).

[13] The Act does not establish a maximum number of Secure Transporter licenses, although the Commission may still determine that a limit is appropriate.

[14] See Ala. Code § 20-2A-65(a). Note that transport of medical cannabis by a Secure Transporter to a registered qualified patient or registered caregiver is prohibited. See id.

[15] The Act does not establish a maximum number of State Testing Laboratory licenses, although the Commission may still determine that a limit is appropriate.

[16] See id. at § 20-2A-66(a). Note that transport of medical cannabis by a Secure Transporter to a registered qualified patient or registered caregiver is prohibited. See id.

[17] See id. at § 20-2A-67(b).

[18] See id. at § 20-2A-67(a).

[19] See id. at § 20-2A-51(b). For purposes of the Act, “minority group” is defined to mean individuals of African-American, Native American, Asian, or Hispanic descent. See id.

[20] See Ala. Code at § 20-2A-51(c).

[21] See id. at § 20-2A-55(a)(10).

[22] See id. at § 20-2A-55(a)(11).

[23] See id. at § 20-2A-55(b). See also id. at § 20-2A-59(a).

[24] See id. at § 20-2A-55(e).

[25] See id. at § 20-2A-53(a)(8).

[26] See id. at Code § 20-2A-56(a).

[27] See id. at § 20-2A-3(21).

[28] See id.

[29] See Ala. Code § 20-2A-30(a).

[30] See id. at § 20-2A-30(b).

[31] See id. at § 20-2A-30(c).

[32] See id. at § 20-2A-3(14).

[33] See id. at § 20-2A-31(a).

[34] See id. at § 20-2A-35(a)-(b).

[35] See id. at § 20-2A-30(d).

[36] See id. at § 20-2A-68. The Medical Cannabis Research Consortium will also monitor the research it is funding, encourage dialogue among “interested entities,” disseminate research findings, and issue an annual report to the Governor and others regarding its projects, findings, community outreach initiatives, and future plans. See id. at § 20-2A-68(d)-(e).

[37] See Ala. Code § 40-14A-22(b).

[38] See id. at § 20-2A-10(a).

[39] See id. at § 20-2A-10(c).