A medical marijuana grower in Pennsylvania that laid off almost half its staff is planning to sue the state over what it alleges are anti-competitive business practices allowed by regulators.
According to the Patriot-News, Johnstown-based MMJ cultivator Hanging Gardens recently laid off or reduced the hours of 50 of its 110 workers, which the company says is a result of an oligopolistic market that has let a few multistate operators either acquire many competitors or drive them nearly to the brink of insolvency.
“I consider the Pennsylvania medical marijuana program to be in collapse,” Hanging Gardens owner Shane Kenney told the Mechanicsburg newspaper.
“The few remaining independent businesses who invested with the promise of fair competition may soon disappear.
“The existing monopoly has already resulted in some of the highest medical marijuana prices in the country and diminishing patient choice.”
Kenney said his company is preparing a lawsuit against the state because regulators have ignored a provision in the 2016 Pennsylvania law that established the MMJ market.
The law bars more than five companies from being vertically integrated and mandates that any retailer can own only up to 15 locations.
But, Kenney said, six multistate operators own about half of Pennsylvania’s 165 dispensaries, and five of those MSOs run more than 15 locations.
For instance, Massachusetts-based Curaleaf owns at least 17 retail locations in the state, according to a company news release in June.
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A spokesperson for the Pennsylvania health department, which oversees the state’s MMJ market, told The Tribune-Democrat of Johnstown that regulators don’t have the power to prevent MSOs from acquiring smaller companies or consolidating market share.
Kenney also told The Tribune-Democrat he believes other small medical marijuana companies are also laying off staff as a result of market consolidation.
