Two affiliates of Harvest Health & Recreation will relinquish their medical marijuana dispensary permits in Pennsylvania after the Arizona-based cannabis conglomerate came under scrutiny from state regulators.

Harvest of Northwest PA LLC and Harvest of North Central PA LLC will no longer seek to operate facilities in New Castle and Shamokin, respectively, as part of a settlement with the Department of Health. Other Harvest affiliates will still pursue the five permits they’ve received, allowing them to open 15 dispensaries across the commonwealth, the company said Friday.

Early this year, Harvest 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 marijuana company can operate at 15. Harvest 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.

In addition, the Harvest entities had used construction contractors not identified in permit applications without telling the department or seeking approval for the substitution, which is a regulatory requirement, the department said.

Instead of engaging in a prolonged legal battle, both sides reached a settlement after resolving “all outstanding issues,” the department said.

“In order to ensure that this program is successful, we have a statute and regulations in place for those companies looking to hold permits as either grower/processors or dispensaries,” Secretary of Health Rachel Levine said in a statement. "Companies interested in being part of this program must be aware of the law and abide by it.”

Harvest said Environmental Construction Services Inc. (ECSI 360) was named the general contractor in six applications, but was unable to act as general contractor for all six of the permitted locations. The Harvest entities substituted a different contractor for the role without notifying the Department of Health. Despite the error, the Harvest entities still used ECSI 360 as a mechanical, electrical, and plumbing contractor on all of the dispensaries, and paid ECSI 360 the amount specified in the applications, Harvest said.

“Our affiliate companies, Harvest of Northwest PA LLC and Harvest of North Central PA LLC, ultimately determined that not pursuing the permits granted to them would be the best way to ensure that the remaining Harvest affiliate companies get their dispensaries in Pennsylvania operational,” Harvest said in a statement.

Relinquishing the two permits will affect 18 employees, who will receive company-paid services to help them find new jobs, Harvest said.

Harvest will move forward with plans to make entities operational in Johnstown, Harrisburg, Reading, and Scranton, the department said. SMPB Retail LLC, doing business as Harvest of Reading, is already operational, the department said.