Less than a month after opening, the Pennsylvania medical marijuana industry is basically out of pot. Dispensaries have been closing for days at a time as they wait for their allotment of the state’s limited inventory. Since sales kicked off around Valentine’s Day, every dispensary in the state has been purchasing their stock from one company. The winner of that golden ticket is Cresco Yeltrah.
Despite the state having already issued 12 cultivation licenses, with the last three coming this week, Cresco Yeltrah’s cultivation facility remains the only place distributing to the state’s patient base which reached 10,000 just before the turn of the year. And they aren’t kidding anybody, they know they’re behind the eight-ball.
“We’re the only processed grower right now,” Trent Hartley of Cresco Yeltrah told PA TV station WPXI. “It puts a little pressure on us, obviously, to keep product on the shelf. We’re doing the best we can.”
We reached out to Cresco Yeltrah and asked why they decided to temporarily put the entire Pennsylvania supply chain on their back.
“We look at this as medicine in patients’ hands — we had no concept of pressure other than getting patients access to medicine as soon as we possibly could,” Charlie Bachtell, co founder of Cresco Yeltrah told Cannabis Now. “In the last three weeks we’ve helped thousands of PA residents to find relief and manage their medical ailments. It’s hard to explain how rewarding that feels but it outweighs any sense of pressure.”
So what gives? Is this a policy issue or just the hiccups of a 3-week-old market? We reached out to the Marijuana Policy Project to find out. Their Legislative Counsel for Pennsylvania, Becky Dansky, explained that multiple things have contributed to the problem.
“One is that one producer was able to start sending out product long before the rest of them, which jumpstarted the market before it was ready,” Dansky said an email.
She went on to note another issue is that flower is not yet allowed, which slows down the whole process. Plus, everything then needs to be sent through labs with costs that can run into the millions, which definitely bumps up the price on the products coming out them in the early going.
“It looks like they will vote to add flower on April 9, but then it will still have to go through the rulemaking process,” Dansky said. “Estimates of when flower could be available are everywhere from this summer to next summer. Hopefully it will be sooner than later because that will help address supply and affordability issues.”
The final big factor is the fact that the Department of Health decided to only issue half of the total permitted licenses. So instead of the 25 cultivator/processors allowed by Act 16, they licensed 12.
“They also did the same thing with dispensary permits,” said Dansky.
This whole problem will could inflate over time if production doesn’t step up with Dansky saying estimates put the eligible patient population in Pennsylvania around 200,000 to 250,000.
“Of course not all of those people will choose to participate,” she said. “I imagine, like most programs, once it is up and running they will need to add more permits.”
Dansky closed by giving credit to Pennsylvania on the program’s successes.
“They did have a much higher number of permits than most states in the area and with similar population sizes,” she said. “In the first round of permits there were 12 grower/processor permits and up to 150 possible dispensaries compared to New York’s five to 25, New Jersey’s six and Delaware’s original one.”
Americans For Safe Access Legislative Counsel David Mangone echoed Dansky’s breakdown of operations timelines and the young market.
“You’ve had well over 10,000 patients register for Pennsylvania’s program, and when you have that many individuals in search of medicine with only one cultivation facility fully operational you are bound to run into supply and demand issues,” said Mangone. “Nonetheless, Pennsylvania deserves credit for moving through its implementation process as quickly as it has.”
Despite the industries setbacks around the kickoff, at least the industry in Pennsylvania can feel safe. Governor Tom Wolf has been a very vocal opponent at the possibility of the Department of Justice’s enforcing federal marijuana laws against state-licensed operators.
“Despite backwards moves by the Trump administration, I will continue to protect cancer patients, kids with epilepsy, veterans with PTSD and all Pennsylvanians seeking relief from legal medical marijuana,” Wolf said in a January statement. “In Pennsylvania, we legalized medical marijuana in an overwhelming and bipartisan fashion, and we are months away from getting this medicine to patients that need it.”
Philly.com’s pot pundit and longtime activist Chris Goldstein has not been impressed with the rollout. He spoke with Cannabis Now about his concerns.
Addressing Cresco Yeltrah’s permits in other states, Goldstein said, “The fact they’re willing to set the price so high is really a nod to Big Pharma. This is exactly what Martin Shkreli did.”
“They’re selling oil that goes for $35 dollars a gram [in California] for $144 a gram in Pennsylvania, which is exactly a 410 percent increase,” said Goldstein.
But could that just be them trying to recuperate costs while in their unique situation?
“They shouldn’t be in a golden ticket situation,” Goldstein said. “Pennsylvania is very different. In New Jersey and New York the limited suppliers jump on the phone and set the price like OPEC does with oil. So you’re not going to get a lower price. What’s different about Pennsylvania is the law, Act 16, puts the state at the table in the price fix. The commissioner of the medical marijuana program is supposed to be able to set some sort of price cap. This is going to evolve to be very interesting because where industry doesn’t have price caps, so Pennsylvania would be the first fair pricing scheme to a limited number of providers.”
Goldstein says when you have a time with a single grower with a single price, that’s the time you execute that ability.
“It’s easy because you’ve only got one guy,” he said.
TELL US, have you experienced setbacks associated with your state’s implementation of medical or adult-use marijuana programs?