Pennsylvania cracks down on Cannabis
On Wednesday Pennsylvania threatened to revoke some of the biggest permits in the keystone state. A Phoenix-based company who holds the rights to open the most medical marijuana dispensaries in this state. Looking in discomfort as they wait for the final say on there seven limited liability companies.
The action was prompted by what officials called “blatant misrepresentation” in a statement issued by Harvest Health & Recreation, which announced Tuesday that it is acquiring a Pennsylvania weed company.
The multi-million dollar deal to acquire CannaPharmacy would make Harvest one of the biggest marijuana companies in the United States. Harvest claimed it owned rights to open a total of twenty-one retail marijuana establishments. In addition, the company said it would gain ownership of a marijuana growing operation in Reading.
This all contradicts the state medical marijuana laws, which only allows a single company to operate no more than fifteen dispensaries and prohibits permits being transferred.
This warning shot from the state is offering a window to other companies alike who may be trying to take advantage of legal loopholes in their accompanying states. Far too often this shuts out smaller entrepreneurs out of a lucrative but nascent industry.
Being the first time state regulators had heard of CannaPharmacy, which cast itself as the parent of Franklin Labs LLC.
Franklin Labs holds a permit to grow cannabis in a former Pepsi Warehouse near Reading. This politically well-connected company(chairman being former Gov. Tom Wolf adviser John Hanger) was deemed operational more than a year ago and has yet to provide a single gram of marijuana to any medical marijuana dispensary in the state of Pennsylvania.
On Wednesday, the state’s Department of Health fired off a very stern letter at Harvest, calling its claims of a massive Pennsylvania footprint “a blatant misrepresentation.” The health department stated that Franklin Labs’ grow permit is “non transferable under section 603(B) of the Medical Marijuana Act.
“We are fully committed to always operating within state guidelines and working closely with Pennsylvania’s Department of Health on their medical cannabis program.”
If the state does allow Harvest to acquire Franklin Labs, the letter from the state says, “Franklin Labs will retain ownership of the permit and Harvest Health & Recreation Inc. may not represent that it owns the permits issued to Franklin Labs LLC.
Harvest also said that it was allowed to open 21 retail dispensaries with the permits they claimed to have. The Department of Health said that was not true. In fact in its rebuke to the company’s CEO, Steve White, the health department said Harvest “did not apply for, or receive, any permits in Pennsylvania.
Harvest won more permits to sell marijuana than Pennsylvania allows. They accomplished this by using multiple affiliates to apply and receive permits in the state.
Under state regulations, companies may only own five permits. Each of which allows for three marijuana dispensaries. Instead of applying as Harvest Health & Recreation, the company applied as seven limited liability companies. Each of seven applications was a winner.
“Because each business is recognized as a separate legal entity under law, the department expects each to operate as independent entities as represented in the permit applications,” said the letter, signed by John Collins, the director of the state’s medical marijuana program.
“Any continued misrepresentation that these entities are one and the same will be construed as a falsification of the permit applications and will result in the office taking action against each entity, including possible revocation of permits.
What is to happen to Harvest and how will this affect the Pennsylvania cannabis market and community?
Source – https://www.philly.com/business/weed/marijuana-cannabis-harvest-pennsylvania-misrepresentation-permits-20190411.html