Cannabis Market Profile – Pennsylvania

Each week the EDGE Briefing will report on the conditions and trends in key cannabis markets across the country as we assess opportunities of interest to our investors in those markets.

This week’s focus – Pennsylvania

Well, the word Marijuana Business Daily uses for the current M&A activity in Pennsylvania is “sizzling!” More than $400 million in M&A deals have been announced just since March alone.  With the abounding growth of the Mid-Atlantic market local cannabis operators are selling out to large multistate operators (MSOs). Major MSOs active in the state are Chicago-based Green Thumb Industries, Cresco Labs, TerrAscend, Trulieve and Verano Holdings

MJBizDaily states these as the factors driving these deals:

  • A fast-growing medical cannabis market that could reach or even exceed $1 billion in sales this year.
  • A limited-licensing structure that nevertheless allows one company to open up to 15 dispensaries through five dispensary permits. Three storefronts are allowed per dispensary permit. Six storefronts are allowed per a vertically integrated licensing.
  • One of the highest number of registered medical marijuana patients of any state in the country – 528,000, according to the newly released MJBizFactbook. Only Florida is higher with 551 registered patients.
  • High consumer purchase averages.

Perhaps the biggest factor, though, is the potential of the state to approve adult use early next year. The state still faces a hurdle, however, limiting the speed of the implementation of adult use.  Benzinga reports that current state law limits investment in plant-touching brands to existing licensed operators. Legislation is being considered to amend this with bipartisan support in the Commonwealth still lacking.  Sources believe, though, that the strong medical marijuana infrastructure will eventually lead to a much more stable and efficient adult use roll out than other neighboring states are experiencing.

Nevertheless, all of the M&A transactions and attention by the large MSO’s, referenced above, make Pennsylvania very attractive for investment as the adult use rollout begins.