Harvest Health & Recreation (CSE: HARV) was dealt a blow today in the state of Pennsylvania, where one of its operators had its license to cultivate cannabis revoked by the Pennsylvania Department of Health.
Initially ordered on July 3 to stop harvesting or destroying plants without an agency inspector on site, Agrimed Industries of PA has since had its license revoked by the state entirely. While initially granted in June 2017, the firm had yet to produce a single gram for the medical market within the state.
UPDATE: EXCLUSIVE: Harvest Health’s Statement on Agrimed Industries Pennsylvania License
The Department of Health cited the company as flouting rules and the failure to meet production obligations as the reasoning for the license revocation. Regulations that were failed to be followed include video evidence of plant destruction as well as associated record keeping.
The series of events for Agrimed and Harvest Health was set forth on June 6, when the state conducted an unannounced inspection. The inspection found substantial issues at the facility, with John Collins, director of the Pennsylvania Office of Medical Marijuana stating in a letter, “that, at the least, the marijuana plants at issue were grossly mismanaged and, at worst, that they may have been diverted.”
Harvest Health had control of two marijuana growing facilities in Pennsylvania, with plans to open up to 21 dispensaries. Which is contrast to state laws, where in Pennsylvania a company can win up to five dispensary permits, each of which allows three separate stores, for a total of 15 retail outlets. For growing marijuana, a permit allows only one cannabis cultivation facility per company.
The company’s structure had them entering into a so-called management service agreement with Agrimed Industries to grow cannabis in southeastern Pennsylvania.
In April 2019, Harvest Health announced they were acquiring CannaPharmacy, the parent company of Franklin Labs, which owns a permit for growing at a facility just south of Reading. The terms of the acquisition were not disclosed in the announcement.
Harvest Health & Recreation’s full comment on the matter can be found here.
The company is roughly flat since going pubic and down approximately 49.5% from its 52 week highs, which is not uncommon for the sector.
Information for this analysis was found via the Pennsylvania Inquirer. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
