Philadelphia City Councilman Derek Green helped author the regulations that paved the way for the city’s first medical marijuana dispensaries and grow facilities. But now he’s worried that when the haze clears from a war over scant state licenses, Philadelphia will be left empty-handed.
“I definitely have a concern. You have the commonwealth broken into six regions, each getting two grow licenses. But the southeastern region includes not just the city, but also the surrounding counties and the Lehigh Valley,” Green said. “When you look at poverty and those types of things, there's a strong argument that Philly should get one grow license.”
The councilman could have reason to be concerned. The competition for the two licenses to grow within the state’s most populous region has reached a fever pitch, according to those involved with the applications.
There are, at the very least, dozens of grow applicants, and dozens more for the 10 dispensary permits that will be issued to the region. Green said he had personally spoken to around 10 different groups vying for permits.
Most applicants have formed teams that combine businesses from states with existing cannabis laws and local power players to make their applications more enticing. Some have already poured millions of dollars into a secretive licensing process – money for fees, consultants, lawyers, economic impact studies and any other advantage.
Local names rumored to be attached to applications include Southeastern Pennsylvania Transportation Authority Chairman and GOP bigshot Pat Deon; Ken Smukler, a top aide to U.S. Rep. Bob Brady; and members of the Lomax Companies, an influential minority-owned private capital firm based in Bucks County.
However, there are few certainties about the process. The Pennsylvania Department of Health has kept the application process secretive to tamp down outside influence, leaving many in the dark.
“Not a lot of information has come out from the commonwealth,” Green said. “They’re trying to keep out outside influence. There’s a lot of speculation.”
What is certain is that at least three bidders from Philadelphia have contacted Mayor Jim Kenney’s office looking for letters of support. These documents provide a glimpse into the larger, ongoing bidding war.
One letter was filed on behalf of Rise Labs, a company that would see a grow facility open in the city’s Tacony neighborhood. That submission is helmed by David Tuttleman – scion to his family’s multibillion-dollar fortune – and backed by partners José Garces, a celebrity chef, and David Maser, a lawyer and Union League fixture with deep ties to local politicians.
Another letter lauds an application filed by Keystone Alternative Care for a separate group of licenses that will allow clinical marijuana cultivation for use specifically by hospitals. The application envisions a facility at Second Street and Erie Avenue, in an industrial area. It promises to create between 50 and 75 jobs and would include a million-dollar community benefits agreement as a sweetener. Sources said that project is tied to Smukler.
A third letter was issued on behalf of Lindy Snider, daughter of late Flyers owner Ed Snider, who has made no secret of her interest in the medical marijuana industry. Snider recently announced she had amassed $7 million in investment capital for the venture.
“We did not turn down any requests for letters of support,” said mayoral spokesperson Lauren Hitt. “Our goal was to support facilities that would be located within the city limits and therefore bring economic benefits (and) jobs to the city.”
It’s unclear if the letters will make a difference. Many applicants have reportedly filed multiple applications in other regions – meaning a firm based outside of southeastern Pennsylvania might end up with a license to grow there, or vice versa.
Green said he was concerned that cities across the state that could use the new business will be shut out.
“Given that the vast number of people who have the various ailments that can be treated under this legislation live in Philadelphia,” he said, “it would also be beneficial because of the financial benefits it will provide. Of course, you can make that same argument for Norristown or Chester.”
What’s clear is that with just 12 grow facilities and 27 dispensaries statewide, there will be lots of losers in the application process. And there’s another dimension to the bidding process beyond city versus suburb, country versus town.
Philly state Rep. Jordan Harris says he remembers when businesses rushed to cash in on legalized gambling in the Keystone State. As money and consultants fanned out across the state, minority bidders ultimately got the short end of the stick.
“On the casino ownership piece, African-Americans were totally left out,” Harris said. “People of color have no ownership over that industry. We just ended up working at the casinos.”
Harris, who chairs the Pennsylvania Legislative Black Caucus, says he’s worried that people of color are about to lose out on another economic boom, and that his voting bloc will be keeping a close eye on the permitting process.
The Department of Health acknowledged that it is scoring licenses based on minority participation, but Harris said he was wary of tokenism in such a diverse state with millions of African-American, Latino and Asian residents.
“I’m not talking about one ceremonial license,” Harris said. “I’m talking about real inclusion on this process. People of color need to let everyone know that they are watching and that they aren’t going to be sitting on the sidelines.”
“It’s not an option,” he emphasized. “It’s a requirement.”