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Pennsylvania House Committee Approves Senate-Passed Bill To Let Medical Marijuana Growers Sell Directly To Patients



A Pennsylvania House committee has approved a Senate-passed bill that would allow all licensed medical marijuana grower-processors in the state to sell their cannabis products directly to patients, along with an amendment to further permit independent growers and dispensaries to expand their operations.

The House Health Committee passed the legislation from Sen. Chris Gebhard (R) on Monday—about one month after it cleared the GOP-controlled Senate.

Pennsylvania’s medical marijuana law currently says that only 25 businesses can be licensed for marijuana growing and processing, and only five of those licensees can sell directly to patients through vertically integrated dispensaries.

That’s created a near-monopoly in the state, giving select out-of-state operators dominance over the industry, and supporters say allowing independent in-state growers to vertically integrate represents a partial remedy.

“We were clear in the original statute that the number of vertically integrated businesses…would be limited. It has not turned out to be that way,” Rep. Dan Frankel (D), who chairs the panel, said ahead of the vote. “Instead, we’ve seen dramatic consolidation of the industry, and many of the companies that make medical marijuana products now also own retail stores to distribute those products. Unfortunately, that’s tilted the scales away from the people making products that don’t own dispensaries who can’t find shelf space for their medications.”

Before passing the bill in a vote of 20-5, SH, 773, committee members adopted an amendment reducing the number of permits that could be issued and adding new restrictions on the ability of businesses to sell ownership of their permits.

While Pennsylvania has yet to enact adult-use legalization, there’s a growing expectation that the state will eventually follow others in the region and begin allowing recreational sales. Some businesses have felt the strain as anticipation about the policy change builds, especially as wholesale marijuana prices drop and multi-state operators continue to acquire smaller businesses.

To that end, some lawmakers have discussed using the bill as a vehicle for additional reforms, including the possibility of legalizing cannabis for adult use, or at least permitting medical marijuana patients to grow plants for personal use.

Rep. Kathy Rapp (R), a member of the Health Committee, said in a press release on Tuesday that while she voted in favor of the legislation, she still has “some serious concerns with this bill.”

“First, this bill is touted as a ‘small business’ bill, and while it certainly will help independent grower/processors who are struggling to sell their product to dispensaries, this bill does not create an open market,” she said. “Second, why are we not requiring these entities to locate dispensaries where there are currently none? If these new dispensaries open in concentrated markets like Philadelphia and Pittsburgh, what exactly are we accomplishing?”

“Finally, under this bill, there will be only a one- or two-year restriction on change of control transactions. Big conglomerates will attempt to get control of these permits,” she said. “I feel this bill needs to be debated on the House floor extensively before it will be ready to become law.”

Meanwhile, the Pennsylvania House Health Subcommittee on Health Care is set to meet on Wednesday for an informational meeting to hear from experts about adult-use marijuana legalization as legislators chart a path for the reform, with the panel’s chairman considering the possibility of incorporating a state-run cannabis sales model.

With a new, narrow Democratic majority in the House this session and support from Gov. Josh Shapiro (D), the prospects of legalization in Pennsylvania picked up—but there’s still an open question about how the GOP-controlled Senate might approach reform if the opposite chamber delivered it a bill.

That said, more Republican senators have come on board with the policy change, with a bipartisan legalization measure already having been filed in the body this session by Sens. Dan Laughlin (R) and Sharif Street (D), for example.

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House lawmakers have also filed separate bills to legalize marijuana sales through state-run stores and to provide permits for farmers and small agriculture businesses to cultivate cannabis once adult-use sales are allowed.

Also, earlier this month, the House approved a large-scale tax reform bill that contains language to provide state-level relief to medical marijuana businesses as they continue to struggle under federal financial barriers. The reform drew the ire of Republican members—who normally champion tax cuts—as a Democratic giveaway to the cannabis industry.

Former Gov. Tom Wolf (D), who came around to support legalization near the end of his term, also signed large-scale legislation last year that included provisions to protect banks and insurers in the state that work with licensed medical marijuana businesses.

Black lawmakers separately discussed the need to ensure equity considerations are at the center of any marijuana legalization plan at a conference last month.

Shapiro, the governor, supports enacting cannabis reform and proposed to legalize and tax adult-use marijuana as part of his 2023-2024 budget request in March.

Meanwhile, Laughlin, who is sponsoring legalization legislation this session, also sent a letter to state law enforcement in February, urging officials to take steps to protect gun rights for cannabis consumers, particularly medical marijuana patients, in light of a federal court’s recent ruling on the issue.

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Photo courtesy of Mike Latimer.

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