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A bill that will allow more of Pennsylvania’s medical marijuana growers and processors to also act as retailers — and vice-versa — fully cleared the legislature on Tuesday and will head to Gov. Josh Shapiro’s desk.
Despite some legislators’ predictions earlier this year that the bill could — or should — become a vehicle for home-growing or even full adult legalization, the bill that passed the state Senate in September was partially broadened and partially narrowed through deal-making in the House.
Most notably, the bill was amended in the House so that not only are independent growers/processors eligible to open dispensary locations but independent dispensaries are now eligible to apply to become growers.
However, the number of dispensary permits that independent growers/processors would be automatically eligible for was reduced by the House from two to one, much to the dismay of the bill’s original 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,” said Sen. Chris Gebhard, R-Lebanon County.
“We are putting them in a very difficult position long term to compete in the marketplace,” Gebhard said of prospective grower-retailers.
But the Senate still concurred to the House version of the bill on Tuesday, sending the measure to Shapiro, with Senate Minority Leader Jay Costa, D-Allegheny County, saying that “half a loaf is better than no loaf at all.”
Pennsylvania’s Medical Marijuana Act, enacted in 2016, currently specifies that no more than five of the state’s 25 grower/processor license holders be allowed to also hold dispensary permits and thus retail their product directly to medical marijuana patients.
The remainder must sell their products to a retail dispensary that acts as a middleman — but that system has grown into a near-monopoly, according to lawmakers, creating an imbalance that the bill aims to correct.
Under the final version of the bill, all independent growers — those who are not subsidiaries of another permit holder — would be eligible for a dispensary permit that would allow up to three retail locations. Similarly, all independent dispensaries would be eligible to make their own product.
Those entities would also be under requirements preventing them from transferring their permits for a period of time, intended to prevent larger entities from buying out independent growers and dispensers — although some legislators were still uncomfortable with these back-end provisions.
Sen. Camera Bartolotta, a vocal supporter of marijuana expansion generally, said Tuesday, “It’s very concerning to me what it allows foreign entities to do as far as purchasing licenses for dispensaries and growing on our soil.”
Although there are a number of issues with the current medical marijuana market, the bill is seen as a “targeted corrective,” House Health Committee Chair Dan Frankel, D-Allegheny County, said during a prior committee meeting the the bill.
While the legislature originally intended for limited vertically integrated operators, many companies have used subsidiaries to consolidate operations further, leaving the remaining truly independent entities at a disadvantage against those who both produce and retail medical cannabis, Frankel said.
“We believe it’s best to solve this problem and this problem alone” through the current bill, Frankel said.
Over the past two years, Pennsylvania has seen between $115 and $140 million in medical marijuana sales per month, according to health department data, and collected $37.5 million last fiscal year from a 5% tax at wholesale, according to state budget documents.
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