This June, the Pennsylvania Department of Health awarded twelve licenses allowing businesses to grow cannabis for medical use. But shortly after the announcement came rumors that some of these businesses were trying to flip these licenses for a profit. Health Department spokesperson April Hutcheson quickly put the rumors to rest, noting that “no permit may be sold or transferred without approval of the Department of Health.”
This week, it has been confirmed that one of the businesses that received a license is for sale, license included. A buyer willing to part with the princely sum of $20 million can purchase 100 percent of Franklin Labs LLC, along with the commercial grow license that the company was awarded in June. The offer does warn that the transaction must be approved by the state Department of Health, and notes that “the purchase of the company involves a high degree of risk, including the federal government’s current characterization of the growing and sale of medical marijuana as a felony.”
Franklin Labs CEO John Pohlhaus explained that the company has also applied for a special clinical research (CR) license, and only applied for the grow license as a backup plan. The CR license would allow the company to partner with a teaching hospital to conduct research on medical cannabis. “Our business has always wanted to do medical research. We’ve been clear about that from the beginning,” Pohlhaus said. “We applied for the commercial grow license only because the CR rules weren’t out. It was a backup. There’s nothing nefarious about it.”
Companies that are granted CR licenses will receive permits to open a growing facility as well as six storefront dispensaries for selling oil-based cannabis products. Pohlhaus said that his company would ideally like to keep the CR license as well as the commercial grow license, but state law forbids a company from operating multiple grow facilities. The state is offering a total of eight such licenses, and six growers, including Franklin Labs, have already partnered with medical schools.
The offer to sell Franklin Labs has drawn criticism from other canna-businesses, many of whom spent hundreds of thousands of dollars competing for the licenses, only to be denied. Lindy Snider, whose company Snider Health applied for a permit but did not receive one, said that she was “very surprised” by Franklin Labs' sale. “I didn’t think this was a possibility without state approval,” she said. “It’s unbelievable.”
Chester Mayor Thaddeus Kirkland has appealed to the state to disqualify Franklin Labs and another license-winner in hopes that a growing facility can open in his financially troubled city. Kirkland called the potential sale of Franklin Labs “disheartening and disappointing,” and added that “rather than try to sell, they need to step aside.”