Pennsylvania probe targets Harvest Health and Recreation as officials look to close loopholes for big cannabis
Harvest Health and Recreation, an Arizona-based cannabis company that operates across the country, found itself in hot water earlier this month when a press release boasting of the company’s Pennsylvania footprint triggered a compliance check from the state Health Department.
According to a report in local paper The Philadelphia Inquirer, the West Coast firm, in a statement announcing its acquisition of regional company CannaPharmacy Inc. alluded to having seven state cannabis licenses, with plans to open 21 retail stores throughout the state. Pennsylvania state law allows any one company to hold a maximum of five licenses while operating 15 retail outlets.
The situation is not without some political intrigue as well, as the Inquirer writes that CannaPharmacy is the parent company of Franklin Labs LLC, one of the state’s first license-holders. Franklin’s board also includes a former adviser to current Gov. Tom Wolf, John Hangar, who ran unsuccessfully for the job himself in 2013.
Officials from the Department of Health now wish to learn if Harvest and any of its subsidiaries, along with the newly acquired CannaPharmacy misrepresented themselves when applying for permits to grow and sell cannabis. The Inquirer reports that the department has requested “all records, documents, and correspondence” that may shed light on the situation.
“This is a blatant misrepresentation of Harvest Health and Recreation’s status in Pennsylvania,” read the letter from the health department, before continuing to list a number of subsidiaries that were awarded licenses by the state.
“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,” the letter continued.
Big cannabis looks push small growers out of the market
Laws and regulations limiting licenses have become standard in many which have legalized cannabis, either for medical or recreational purposes, the purpose of which is to give small businesses a chance to thrive in the new market.
Still, big cannabis has begun to use loopholes, such as what Harvest allegedly did in Pennsylvania, to dominate the industry. In Massachusetts, the Cannabis Control Commission is now looking closely at licensed companies that propose ownership changes. The move follows an in-depth investigative report by The Boston Globe into companies such as Sea Hunter Therapeutics and Acreage Holdings that have obtained more licenses than allowed by law.
According to the report, not only did the companies skirt regulations; they “bragged” about it as well, showing a lack of respect and common decency for the rules put in place to keep a fair and level playing field.
In other states, such as Maryland, legislators have already begun to accede to the demands of big cannabis. As the Baltimore Sun reported, when companies found loopholes around the state’s one-dispensary rule, representatives voted to expand it to four, rather than increase scrutiny over multi-million dollar operators. The move helped Green Thumb Industries gain ownership of four dispensaries in Maryland.
“These out-of-state companies are not going to stop coming,” Mackie Barch, owner of the Culta dispensary in Baltimore’s Federal Hill told the Baltimore Sun.