Pennsylvania

insights

February 22, 2021
Notable Players

A Deeper Look At This State

Regulatory Framework

Pennsylvania boasts nearly 400K patients, making it the second-largest medical market. Pennsylvania awarded 50 licenses that allow for three dispensaries per license and 25 processors, five of which can be vertically integrated. Operators are allowed up to five retail licenses, for a total of 15 dispensaries. Qualifying medical conditions include chronic pain and anxiety, making this one of the least restrictive environments.

Pennsylvania also implemented a Clinical Research ("CR") license program. Program guidelines note that eight CR licenses will be issued to operators who are partnered with one of Pennsylvania's major university health institutions. Each of the eight license holders can operate up to six dispensaries and one cultivation site.

Notably, Governor Tom Wolf (D) is supportive of an adult-use program, and with Pennsylvania turning blue in the 2020 election, adult-use is more likely than ever. Watch for a ballot initiative here.


Notable Market Activity

November 2020 | Trulieve acquires PurePenn & Solevo

August 2020 | Ayr reaches an agreement to acquire and develop six retail dispensaries and a significant cultivation and production footprint in a limited license state for total consideration of $57MM

November 2019 | Harvest Health acquires CannaPharmacy


What's the Play?

The play in the Quaker State is to build out infrastructure in anticipation of adult-use. Through the new Clinical Research program, 200 dispensaries will ultimately be allowed in this market. That said, no single operator can own more than 15 total, which should allow for relatively broad market participation.

Dispensaries should look to maximize earnings in advance of selling/partnering with one of the 25 cultivators in need of retail presence. Cultivators currently hold the power in this market, with wholesale flower prices in the $4K per pound range. We don't anticipate an oversupply to impact pricing in the near-term, but the market will need adult-use to avoid such a fate. Expect the recently-seen flurry of acquisitions here to continue for the foreseeable future.


Market Snapshot

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

594/273

By The Numbers

Population

~12.8MM

Medicinal Legalization

2016

Adult-Use Legalization

N/A

MMJ Patients

~378K

Monthly Revenue

~$40MM

Cultivation Cap

No Limit

Cultivation Licenses

25/25 (Issued/Limit)

Retail Licenses

50/50 (Issued/Limit)*

Retail License Cap per Operator

5

Vertical Integration

Allowed

Delivery

Allowed

MMJ Qualifications

Less Restrictive

State Population / # Retail Licenses

MMJ Patients / # Retail Licenses

~8K

*Each retail license can open three dispensaries for a total of 150 dispensaries across the state.

Top Cultivators

Notable Market Activity

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Proprietary Sharp Capital Advisors data - compiled using various sources including state and local government data
Shit We Don't Know

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