Harvest Inc., one of the nation’s largest marijuana companies, said Friday that it completed a $25.5 million purchase of a Pennsylvania cannabis grower with ties to an associate of Gov. Tom Wolf’s.
Harvest acquired Franklin Labs LLC for $15.5 million in cash and a $10 million promissory note.
Franklin Labs’ board of directors was helmed by John Hanger, a former adviser to Wolf and a onetime gubernatorial candidate. The Reading-based company was one of the first 12 firms to be awarded a permit from the state’s Department of Health to grow medical marijuana.
Harvest’s announcement came the day after it declared it had scuttled an $850 million plan to acquire another marijuana company, Verano Holdings of Chicago.
The Franklin Labs deal includes a 46,800-square-foot cultivation and processing facility in a former Pepsi warehouse in Reading. In a statement, Harvest said it hoped to begin growing and processing “this year during the second quarter.”
Harvest-affiliated entities own and operate five medical marijuana dispensaries in the Keystone State: two in Reading, and one each in Harrisburg, Johnstown, and Scranton. Harvest is headquartered in Arizona.
About 170,000 Pennsylvanians participate in the state’s highly regulated medical marijuana program.
Harvest has run afoul of regulators several times in Pennsylvania.
The announcement of the acquisition marks the second time that Harvest has attempted to get a foothold on the lucrative Pennsylvania market as a grower. It previously had a management services agreement to operate an Agrimed growing facility in Carmichaels, a small hamlet in southwestern Pennsylvania.
The Agrimed facility was shut down last June after a surprise inspection found serious security lapses. Marijuana plants were missing and security cameras were not functional, as required by state regulators.
Following the inspection, the Department of Health declared it would not renew a permit for a growing facility. The revocation of the permit was believed to be the first of its kind in the nation.
Harvest also was reprimanded by Pennsylvania for not using minority- or female-owned contractors to build dispensaries after it promised in its application to do so.
The Department of Health launched an investigation into Harvest in early 2019 after it boasted in a news release that it held Pennsylvania permits that would allow it to operate 21 dispensaries. State law caps the number of dispensaries that any one marijuana company can operate at 15. Harvest had collected more dispensary permits than allowed because it registered many of its limited liability corporations under slightly different names. However, each of the LLCs officially is headed by Harvest CEO Steve White.