Pennsylvania boasts over 500K patients, making it the second-largest medical market, despite having recently rejected the addition of five new qualifying conditions. 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 15dispensaries. 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 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.

In July 2021, the law was amended to allow patients to increase their basket size to a three-month supply and permanently allowing curbside dispensing.

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.

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September 2021 | Cresco announces plan to acquire Cure Pennsylvania's three dispensaries for $90MM

September 2021 | AYR announces plans to acquire PA Natural Medicine's three dispensaries for $80MM

May 2021 | GTI acquires NSE , The Healing Center & TerraVida

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
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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 dispensaries, which should allow for relatively broad market participation.

Dispensaries should look to maximize earnings in advance of selling by partnering with one of the 25cultivators in need of retail presence. Cultivators currently hold 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.

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