PA regulators allege Harvest Health misrepresented its state marijuana holdings

Pennsylvania regulators are threatening to take away the medical marijuana dispensary licenses of Arizona-based Harvest Health & Recreation for allegedly misrepresenting its cannabis holdings in the state.

The issue stems from claims Harvest made earlier this week when announcing the acquisition of CannaPharmacy, The (Philadelphia)  Inquirer reported Thursday.

Here’s the crux of the situation:

  • In its news release, Harvest said it has seven state licenses allowing “up to 21 retail stores” in Pennsylvania and that the acquisition of CannaPharmacy would include a 46,800-square-foot cultivation and processing facility in the state.
  • Pennsylvania’s medical marijuana law, however, caps the number of dispensaries a company can operate at 15 and bans the transfer of cannabis permits.

In a letter sent to Harvest on Wednesday, state regulators accused the multistate company of “blatant misrepresentation” in terms of the dispensaries and said the cultivation permit would not be allowed to be transferred from CannaPharmacy’s Franklin Labs.

The letter was signed by John Collins, director of the state’s medical marijuana program.

In a statement emailed Thursday to Marijuana Business Daily, Harvest wrote: “This is a new and particularly acquisitive time in the cannabis industry and many transactions involve assets that fall within a number of individual state regulatory systems.

“Harvest will always evaluate its options in order to be fully compliant in any state in which it operates.”

The dispensary’s claim particularly upset regulators because Pennsylvania allows a single company to have only five licenses, with each permit entitling the company to open up to three dispensaries.

Harvest apparently got around that requirement by forming seven limited liability companies, which applied for and won permits.

In the letter, regulators told Harvest it can’t represent those permits as company licenses.

Instead, it must operate each permit as an independent entity, and any “continued misrepresentation” of the situation could lead to the “possible revocation” of the permits.

Join Harvest Health & Recreation CEO Steve White and Investor Intelligence Editor Lisa Bernard-Kuhn for a webcast on Tuesday, April 16, at 11 a.m. ET. Get access to this exclusive conversation, as well as in-depth market analysis and premium features on cannabis investing trends with a premium Investor Intelligence subscription.

3 comments on “PA regulators allege Harvest Health misrepresented its state marijuana holdings
  1. Adam Minz on

    I think the regulators are also at fault, as forming separate LLC’s is far from sophisticated, and becomes public record. If the state missed that, what else did they miss?

    Reply

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