Pennsylvania Advances Bill to Boost Independent Cannabis Firms

The passage is seen as an attempt to address imbalances within the market.

This week, Pennsylvania’s legislature passed a bill to allow more cultivators and independent dispensaries to grow and sell directly to consumers in the state.

Senate Bill 773, which is now awaiting Gov. Josh Shapiro’s signature, was passed by the state Senate and then altered in the House. It was at one point expected to address broader issues, such as home growing or full adult-use legalization, but the end version was more limited.

Instead, it focused on allowing qualifying medical cannabis growers and processors in the state more freedom to conduct direct sales.

According to Lancaster Online, the state’s health department determined that as many as 10 independent growers and four independent dispensaries across the state may be eligible for additional permits.

It’s a big shift, as currently, Pennsylvania law limits how many growers can also be retailers to five. That created somewhat of a concentrated oligarchy in the state market, with most growers having to sell to a few large retailers.

One of the key changes made in the House was the reduction in the number of dispensary permits available to independent growers/processors. The Senate version allowed for two, while the House cut that to just one, a move that frustrated some, including the bill’s author.

“That’s certainly frustrating to us because we did a lot of market research and calculations in terms of what we determined should be two permits versus one,” Sen. Chris Gebhard, a Republican from Lebanon County told Penn Live, adding that lawmakers put prospective grower and retailers “in a very difficult position long term to compete in the marketplace.”

Despite the reduction in permits, the Senate agreed to the House version.

“Half a loaf is better than no loaf at all,” said Senate Minority Leader Jay Costa, a Democrat from Allegheny County.

Changes made in the House also include provisions that permit stand-alone dispensaries to seek licenses to grow cannabis as well.

SB 773 also introduces a temporary moratorium on the transfer of licenses by grower/processors and dispensaries, specifically designed to shield independent growers and retailers from being taken over by larger conglomerates. Large, vertically integrated companies have previously dominated the landscape, overshadowing smaller independent entities.

The economic impact could be substantial. Pennsylvania’s medical market has experienced robust growth, with monthly sales figures reaching between $115 million and $140 million. According to Penn Live, the state also collected $37.5 million last fiscal year from a 5% tax on wholesale cannabis sales.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.


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