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Pa. awards 12 licenses to grow medical marijuana

The state this afternoon released the names of the 12 winners that will be granted permits to cultivate medicinal cannabis, including the two firms that will supply the Philadelphia area.

In 2015, people line up to be among the first in Nevada to legally purchase medical marijuana at the Silver State Relief dispensary in Sparks, Nev.
In 2015, people line up to be among the first in Nevada to legally purchase medical marijuana at the Silver State Relief dispensary in Sparks, Nev.Read moreSCOTT SONNER / AP FILE

Pennsylvania officially launched its medical marijuana industry Tuesday, awarding licenses to 12 growers, including two firms in Berks County, but none in Philadelphia or its suburbs.

Many of the winning firms featured political and financial heavyweights linked to out-of-state cannabis powerhouses, each coveting a market expected to be worth up to $150 million the first year.

The two Berks County licenses went to firms linked to Chase Lenfest, son of philanthropist H.F. "Gerry" Lenfest, and to John Hanger, Gov. Wolf's former policy chief who once ran for governor on a platform of legalizing marijuana. Both firms have extensive marijuana operations in other states.

The licenses were awarded by the state Department of Health.

In Western Pennsylvania, a company fronted by Jack Ham, a former linebacker for the National
Football League's Pittsburgh Steelers, was granted a license to grow in Greene County under the banner of AGRiMED Industries LLC.  And Keith Morgan, the Lower Merion Township heir to the Aamco transmission fortune, won a growing license for the northwestern region of the state with his company Holistic Farms.

"It was an incredibly competitive process, and there were numerous outstanding applicants," Morgan said. "Unfortunately, many of them were left disappointed, but that's the nature of a highly competitive process."

Several of the region's prominent individuals were shut out in this round. Among them were David Z. Tuttleman, a Philadelphia native who runs a medical-marijuana-growing business in Nevada; Lindy Snider, an entrepreneur whose late father, Ed Snider, owned the Philadelphia Flyers; and several former professional athletes, including Steelers great Franco Harris.

"We are committed to the industry," Tuttleman said. "Philadelphia and the surrounding area could be a great center for cultivation. There's great talent here. This is not like bottling or making widgets. We have the potential to develop an artisanal marijuana culture."

Said Snider: "I'm not going away that easily."

Each unsuccessful company can reapply and submit another $10,000 application fee for another chance at a permit, a spokeswoman for the state Health Department said.

After carving the state into six geographic regions, state officials scrutinized 177 applications before awarding two permits for each zone.

One winner in the southeast, Prime Wellness of Pennsylvania, lists Chase Lenfest as a principal and financial backer. He is the son of cable billionaire and philanthropist H.F. "Gerry" Lenfest, the former  owner of Philadelphia Media Network, which operates the Inquirer, the Daily News, and

Chase Lenfest is a businessman with broad interests in real estate, television, advertising, and marketing, and has no connection to the newspapers and web site.

With its winning bid, Prime Wellness will soon operate in 11 states, said Prime Wellness of Pennsylvania's spokesman James Doherty III.  Doherty, a Scranton lawyer who is a nephew of Christopher A. Doherty, a former Scranton mayor, said the firm is also seeking a Pennsylvania license as a dispensary.

Prime Wellness' national operations are headed by Kevin Murphy, whose company, High Street Capital Partners, is a major investor in medical marijuana start-ups across the United States.

Franklin Labs LLC, where Hanger chairs the board, is refurbishing an old Pepsi bottling plant in Reading to cultivate and process cannabis for the pharmaceutical market.

Franklin is already operating in Colorado, Delaware, Maryland, and New Jersey, where its Garden State Dispensary was rated highest among applicants that received licenses, according to CEO John Pohlhaus. So it's no surprise the firm did well in Pennsylvania, he said.

J.J. Abbott, a spokesman for Wolf,  said that no one from the governor's office participated in scoring applications. He also said the scoring process was set up to be objective and prevent outside influence or lobbying in deciding who gets a license.

Michael Weisser, a real estate investor who described himself as Franklin Labs' primary financier, said the bid resulted from "a combination of experience we bring to the table. I've been in the business since 2010, when the dispensary model first appeared in Colorado and the fact we do things by the book. We're committed to helping people." Weisser said he was giving his share of the profits to charity.

The state released the names of 10 more winners statewide to cultivate medicinal cannabis.

Each winner is required to begin growing in six months. After the seeds or clones are planted, the first crop is expected to be harvested after as little as 14 weeks. (It grows like a weed, after all.) That cannabis will be processed into oils or tinctures that will be sold at medicinal marijuana dispensaries, where doctors' recommendations will be filled. Nothing that looks like plant material will be sold.

The state will announce the winners of 27 dispensary permits next week.

Sales of medical cannabis products are on track to start in early 2018, according to the state Health Department. Patients suffering from any of 17 qualifying ailments will require a doctor's recommendation before purchasing any marijuana-derived medicine at a neighborhood storefront.

The application process has already proved lucrative for the state. About 177 aspiring growers paid a nonrefundable $10,000 application fee — a total of $1.7 million — to get their feet in the door. The aspirants also had to put down a $200,000 deposit —refundable only to the losers — and show they had access to at least $2 million in additional capital.

The expenses did not end there. In addition, each of the applicants has had to pay for architectural plans, security studies, and zoning appeals.

Of the nation's 26 states where legal marijuana is grown, only Pennsylvania does not require applicants to be residents of the state. When the industry first took root in Colorado and Washington, those states made state residency a must.

The state review board, however, was required to give significant weight to whether there were minorities among the company's executives and managers. Pohlhaus, of Franklin Labs, cited two African American employees: Susan Taylor, a dermatologist and internist, is chair of the medical advisory board, and Berchard Suber, a retired state police lieutenant, is director of security.

A second round of permits is expected to be issued in the future, taking the number of growing facilities to 25. But the state is already bracing for lawsuits from those who did not win licenses.

And even today's permit winners are not guaranteed they will be farming marijuana by the end of the year. The state has not completed criminal background checks on the people working for the companies. A black mark could jeopardize any license awarded Tuesday.

Staff writers Mark Fazlollah and Dylan Purcell contributed to this article.