HARRISBURG, Pa. – Gov. Josh Shapiro (D) signed a bill into law Thursday that aims to help the state’s small number of independent medical cannabis growers and retailers compete against the major multistate operators (MSOs) dominating Pennsylvania’s multi-billion dollar market.
Ten MSOs including Cresco Labs, Curaleaf Holdings, Jushi Holdings, Green Thumb Industries, PharmaCann, TerrAscend, and Trulieve own operational licenses in Pennsylvania, competing against just ten independent grower/processors and a handful of independent dispensaries.
Under the new law, sponsored by seven Republicans and one Democrat, independent medical cannabis cultivators/processors will be allowed to apply for a dispensary permit with up to three retail locations to sell directly to the state’s nearly one million registered patients and caregivers. The new law also opens the door for independent retailers to apply for grow permits and start producing products for in-house sales.
Pennsylvania’s 2016 medical marijuana act stipulated that only five of the state’s twenty-five grower/processor license holders could vertically integrate and sell directly to patients. That meant the other twenty were forced to sell to dispensary middlemen, leading to an MSO monopoly that needed a “targeted corrective,” according to House Health Committee Chair Dan Frankel (D).
To help protect against further industry consolidation, independent license holders will not be allowed to transfer their permits for one year from the date on which the independent grower/processor receives an operational certificate.
In addition to supporting small businesses in the state, the new law could deliver an estimated $2 million in application and processing fees with an additional $90,000 annually from renewal fees.
With Ohio voting to legalize adult-use cannabis this year, Pennsylvania now shares a border with five states that have legalized recreational cannabis markets. U.S. Sen. John Fetterman (D-PA) believes it’s time for his state to stop falling behind on cannabis policy in the region.
“Four or five years ago, everyone thought I was weird or just a stoner because I believed that [cannabis law reform] was the right way to go,” said Fetterman. “Republicans at the time said, ‘We don’t want this, and the majority of people don’t either.’ We found out we actually do, and now we have been lapped by New York, New Jersey, Maryland, D.C., and now Ohio.”
According to The Philadelphia Inquirer, the outlook for full legalization in Pennsylvania in 2024 is at best hazy, citing a lack of Republican support despite two of three registered voters in the state supporting adult-use cannabis. Hope for change currently sits with SB846, A Bipartisan and Regulated Approach to Adult Use Marijuana Legalization in Pennsylvania, which was coauthored by Republican State Sen. Dan Laughlin and Democratic State Sen. Sharif Street, and referred to the Senate Law and Justice Committee on July 6, 2023.
This bill marks the second time Laughlin and Street have tried to push a bipartisan cannabis reform bill through the state senate. Gov. Shapiro has publicly supported full cannabis reform since 2019, going as far as proposing a 20-percent tax on adult-use sales in the 2024-2025 budget with the assumption sales would begin on Jan. 1, 2025. However, his proposal will be meaningless if his legislature doesn’t deliver adult-use regulations in time.