Pot company’s claims lead to a state inquiry over medical marijuana licensing rules

• Charles Thompson/PennLive
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  Thompson has covered state government for The Patriot since 1999. Prior to that, he had covered various Cumberland County municipalities and school districts. Thompson lives in Carlisle with his wife, Beth, and their two children.

A top West Coast marijuana firm has been asked to produce records to the Wolf administration in what amounts to a compliance check on whether it is keeping to rules designed to keep one firm from dominating Pennsylvania’s medical marijuana market.

The state Health Department has asked Harvest Health & Recreation Inc. to supply any correspondence and other records between the Tempe, Ariz.-based firm’s headquarters and each of seven Harvest-related entities granted dispensary licenses here in the last two years.

Harvest Health created seven separate companies — most of them limited liability companies with different ownership groups — to hold dispensary licenses in regions around the state. All list the same group of officers, and the same home address in Tempe, though that template is used by many of the dispensary license applicants.

The state’s attention was re-focused on Harvest Health by an April 9 press release in which Harvest Health announced its planned acquisition of CannaPharmacy Inc., a company with a medical marijuana presence in several Mid-Atlantic states.

Harvest Health said then that the acquisition, if approved by the necessary state regulators, would allow it to add a grower/processor facility in Reading that was originally licensed to Franklin Labs, a group including one-time Wolf Policy Secretary John Hanger.

On the state’s books, Franklin Labs is still the nominal holder of the Pennsylvania grow license, though in its initial filings with Health, two of Franklin Labs’ principals were listed as indirect shareholders of the company through CannaPharmacy.

The Franklin Labs facility has not produced any product to date.

In the same release, Harvest Health also claimed to have seven existing dispensary licenses in Pennsylvania, “allowing up to 21 retail stores throughout the state,” one of which is planned for the former Camp Curtin Bar-B-Q restaurant on North 6th Street in Harrisburg.

In an April 10 letter, the director of Pennsylvania’s Office of Medical Marijuana, John Collins, called Harvest Health & Recreation’s claim to have seven dispensary licenses “a blatant misrepresentation” of the company’s status here.

In a follow-up letter sent Friday, the office seeks “any and all records, documents and correspondence (in any form, including email and text messages)” between Harvest Health’s home office and the each of the seven Pennsylvania firms.

The Health Department probe is in part an attempt to see whether those firms, as they ramp up operations here, are actually operating as direct subsidiaries of Harvest Health & Recreation, in violation of the law’s cap on more than five dispensary licenses being held by any one firm.

The state’s inquiry, first reported Friday by The Philadelphia Inquirer, also seeks similar documentation pertaining to Harvest Health’s acquisition of the grower/processor permit.

Health department spokeswoman April Hutcheson noted Monday that under state law, the Franklin Labs’ license is nontransferrable, so any such transaction would actually require the approval of new principals for that firm by the state.

Hutcheson told PennLive Monday that it is premature to talk about consequences for any violations. “We need the permittees to submit the information first before we can make an informed decision as to the next steps,” she said.

But Pennsylvania’s 2016 medical marijuana law does give the state, in certain circumstances, the ability to revoke permits.

Sen. Mike Folmer, R-Lebanon County and one of the prime sponsors of the 2016 law, said Monday he’s pleased the Health Department is taking a harder look at Harvest Health’s activities. “The intent of the bill was never to allow one or two companies to dominate the whole industry in Pennsylvania,” Folmer said.

Health’s requests for records carry a May 9 deadline.

Harvest Health, which has opened only one of its potential 21 stores in Pennsylvania to date, responded to requests for an interview from PennLive Monday with the following emailed statement from company spokesman Alex Howe: “Harvest is committed to working closely with the Department of Health and to be fully compliant with all state regulatory policies. We look forward to serving the needs of patients throughout the Commonwealth.”

 

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