Recently enacted Pennsylvania Senate Bill 773 (SB773) introduces several amendments intended to expand opportunities and increase competition among existing cannabis licensees in Pennsylvania. The bill seeks to support independent licensees in the state and is a response to the consolidation among licensees that many states have seen as state-legal marijuana operators struggle under the weight of federal prohibition and competition from the unregulated marketplace.

Pennsylvania has had a medical-only cannabis program since 2016. The program allows for the licensing of 25 grower/processors (licensees who cultivate medical marijuana plants and process the medical marijuana into medical marijuana products) and 50 retail dispensary licensees that each could own up to three medical marijuana dispensary locations. The state initially envisioned limited vertical integration among grower/processor and dispensary licensees — the Medical Marijuana Act originally provided that only five of the 25 grower/processor license holders could be granted dispensary licenses. 35 P.S. § 10231.616(5). While the intent of the original legislation was to increase competition, the program has been criticized for creating a near-monopoly at the dispensary level, as many dispensary licenses consolidated under a few multistate operators (MSOs).

With the passage of SB773, lawmakers have targeted their efforts toward those licensees who have not yet become part of an MSO corporate family. These are referred to in the bill as “independent dispensaries” and “independent grower/processors.” Independent dispensaries will now be allowed one grower/processor permit to produce their own medical marijuana products, and independent grower/processors will be allowed one dispensary permit (with up to three locations) to be able to bring their products directly to market. This change is estimated to result in approximately 30 new dispensaries and four new grower/processor facilities.

Applicants for these additional permits must certify that they will not enter into a change of control transaction, defined as the consolidation, merger, or acquisition of more than 20% of the business’ securities or ownership interests, with any other person, for at least one year from the date their first dispensary or grower/processor location is deemed operational by the Pennsylvania Department of Health. One exception to this prohibition is that, after becoming operational, the licensee can enter into a change of control transaction with a disadvantaged business, minority-owned business, women-owned business, service-disabled veteran-owned small business, or veteran-owned small business.

While some hoped that the legislation would also expand the state’s medical marijuana program to include recreational marijuana sales, it appears Pennsylvania lawmakers are not ready to take that step. SB 846, which would provide for adult use cannabis, was introduced in 2023 but has not progressed out of committee. Lawmakers are instead reacting to the natural consequences of operating in a restricted, highly taxed, and highly regulated system: small, independent operators have a hard time staying afloat, making mergers and consolidation more appealing. It remains to be seen whether SB773 will provide the relief Pennsylvania’s remaining independent medical marijuana licensees are looking for.


Our Cannabis Practice provides advice on issues related to applicable federal and state law. Marijuana remains an illegal controlled substance under federal law.

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Photo of Christina Sava Christina Sava

Christina is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She helps clients navigate local, state, and federal regulations affecting the tobacco, hemp, and cannabis industries – including ancillary service providers. She brings extensive experience in the cannabis…

Christina is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She helps clients navigate local, state, and federal regulations affecting the tobacco, hemp, and cannabis industries – including ancillary service providers. She brings extensive experience in the cannabis industry to her work in the tobacco, nicotine, and vapor space, giving her a deep understanding of the challenges and opportunities of launching new products and marketing campaigns in a shifting regulatory landscape.

Photo of Jean Smith-Gonnell Jean Smith-Gonnell

Jean has dedicated her entire career to the cannabis sector, helping growers, dispensaries, investors, receivers, and other stakeholders achieve their business goals and prepare for unexpected issues. She has extensive experience with medical marijuana, retail marijuana, hemp, and CBD products, and helps clients…

Jean has dedicated her entire career to the cannabis sector, helping growers, dispensaries, investors, receivers, and other stakeholders achieve their business goals and prepare for unexpected issues. She has extensive experience with medical marijuana, retail marijuana, hemp, and CBD products, and helps clients as they establish their businesses, mitigate risk, and resolve disputes. Known for responding to clients within 24 hours or less, Jean is also a go-to advisor for a wide range of day-to-day operational issues.

Photo of Agustin Rodriguez Agustin Rodriguez

Agustin is sought after by clients for his strategic counsel on their most challenging competitive and regulatory compliance issues, including tobacco Master Settlement Agreement issues, federal and state enforcement investigations, licensing and excise tax issues, developing compliance programs, and evaluating advertising and marketing…

Agustin is sought after by clients for his strategic counsel on their most challenging competitive and regulatory compliance issues, including tobacco Master Settlement Agreement issues, federal and state enforcement investigations, licensing and excise tax issues, developing compliance programs, and evaluating advertising and marketing practices. A partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group as well as its Tobacco and Cannabis law practices, he represents manufacturers, distributors, retailers, and suppliers in all aspects of their businesses, including regulatory compliance, FDA requirements, administrative disputes involving federal or state governmental entities, mergers and acquisitions, commercial agreements, and taxation matters.