The medical marijuana dispensary that was coming to Shamokin relinquished its permit as part of a settlement with the Pennsylvania Department of Health, according to an announcement from the state agency this morning.
Harvest of North Central PA LLC, which had finished building its facility at 520 N. Shamokin St., was one of 23 applicants awarded a dispensary permit in December. Harvest of Northwest PA LLC in New Castle also had to relinquish its permit.
On Dec. 18, 2018, the department granted dispensary permits to six distinct Harvest entities. The permits were each applied for through separate and distinct legal entities, each bearing some form of the Harvest name along with identical ownership and management for each entity. Each entity moved forward with recruiting employees, building their individual dispensary and planning to become operational.
The fact that each used some form of the Harvest name, coupled with public statements made by an affiliate company, Harvest Health and Recreation Inc., gave the public appearance that all permittees were in fact one single entity holding more than the five permits per person allowed by statute, according to DOH.
Additionally, during the construction of these dispensaries, the department learned that the Harvest entities had used construction contractors not identified in the permit applications without notifying the department or seeking approval for the substitution, which is a regulatory requirement.
“Our medical marijuana program has been successful in its focus to provide evidence-based, quality options for patients suffering from serious medical conditions,” Secretary of Health Dr. Rachel Levine said in a media release. “In order to ensure that this program is successful, we have a statute and regulations in place for those companies looking to hold permits as either grower/processors or dispensaries. Companies interested in being part of this program must be aware of the law and abide by it.”
Rather than continuing to engage in prolonged legal action, which would delay patient access to medication for those suffering with any of 23 serious medical conditions, a settlement was reached after both parties worked closely together to resolve all outstanding issues, according to DOH.
The Arizona-based parent company of Harvest is Harvest Health and Recreation. The company’s Harvest of Ohio LLC is one of two medical marijuana companies in Ohio accused of exaggerating details in its application to gain an advantage in Ohio’s state-specific selection process, which was developed in 2016.
Harvest spokesman Alex Howe provided a media release about the Pennsylvania settlement with the DOH.
The question arose concerning Harvest's use of a small diverse business, Environmental Construction Services Inc. (ECSI 360). ECSI 360 was identified in the applications as the general contractor but was not able to act in that capacity for every location, Howe said. The Harvest entities transitioned the role to a different contractor without notifying the Department of Health. ECSI 360 was still used as a mechanical, electrical and plumbing contractor on all of the dispensaries and was paid the amount specified in the applications, according to Harvest.
"Rather than engaging in a lengthy legal dispute that would involve all of the Harvest Entities, our affiliate companies, Harvest of Northwest PA, LLC and Harvest of North Central PA, LLC, ultimately determined that not pursuing the permits granted to them would be the best way to ensure that the remaining Harvest affiliate companies get their dispensaries in Pennsylvania operational to serve as many patients as quickly as possible," according to Harvest.
Having already completed their state required training, Harvest is providing these impacted employees with company-paid services to help them find other employment, which includes a severance payment, resume reviews and access to transition and recruiting agencies, according to Harvest.
"Although this was not an easy decision to make, our affiliates believe it was the best decision for the remaining Harvest affiliated companies, the other employees across the state and country, and most importantly, the patients in the commonwealth of Pennsylvania," the company wrote in the media release.
Harvest "strongly believes" that state regulatory frameworks are essential to the success of the industry and are committed to operating within the bounds of the many cannabis policies across states, the company said in the release.
"We know these frameworks are new in our industry — and because of this we will continue to encounter challenges but are committed to working closely with all state regulators. Nevertheless, we are proud of achieving an exemplary record of compliance, while conducting well over a million transactions in various markets, and we are confident that our focus on compliance and strong partnerships with regulators is a key reason we’ve been awarded more licenses than any other cannabis company in the U.S.; a demonstration of the strength of our businesses," the company said.
Each Harvest affiliate is "glad to be moving forward in opening dispensaries in Scranton, Reading, Harrisburg and Johnstown and we are looking to bring our high-quality and premium medical marijuana experiences to those Pennsylvanians suffering with serious medical conditions very soon," according to the company.
This settlement allows Harvest to move forward with operation at Harvest of Southwest PA LLC, of Johnstown; Harvest of South Central PA LLC, of Harrisburg; Harvest of Southeast PA LLC of Reading; and Harvest of Northeast PA LLC of Scranton. These locations will be in addition to SMPB Retail LLC doing business as Harvest of Reading; a Phase I dispensary that is already operational.
DOH will return to the two companies within 30 days the fees paid for the dispensary permits in the amount of $30,000 each. The remaining Harvest entities will each deposit an amount of $40,000 each year for two years to establish a restricted account to provide qualifying patients with discounted medical marijuana products from their dispensaries. They must provide quarterly financial statements to DOH to ensure it's utilized appropriately, according to the settlement.
The remaining Harvest entities cannot seek any management services agreement or otherwise make any arrangements to directly manage a separately permitted medical marijuana organization, according to the settlement.
The settlement also notes that neither Harvest nor DOH will comment any further on the matter.
The Daily Item asked DOH spokesman Nate Wardle whether the two permits will be awarded to another company, but Wardle referenced the settlement agreement and said DOH will not be commenting.
'Beautiful' facility was toured in June
Shamokin Mayor John Brown expressed disappointment but noted that dispensary PharmaCann Penn LLC, which was awarded in December for Shamokin, still presents an opportunity for the city.
"It's unfortunate," said Brown. "It was another business we were depending on for our downtown revitalization, but we still have an opportunity to have one in the city. Hopefully, something will come out of it."
Brown and other city officials toured Harvest's facility in June. The store was going to open at the former Great Valley Consultants and former People's Bank and offices for the Shamokin-Coal Township Joint Sewer Authority.
"It was beautiful inside," said Brown. "The security, the technology and everything was absolutely astonishing. They put a lot of money into it. We won't see jobs or revenue from sales, we still have the property tax. Hopefully, something will go in there for the future."
The permits for dispensary PharmaCann Penn LLC and grower/processor Parea BioSciences, which was awarded in July 2018 for a site in Coal Township, are both pending, according to DOH.