Hanging Gardens lays off dozens; blames state med marijuana oversight, hints at lawsuit

·3 min read

Jul. 13—JOHNSTOWN, Pa. — Johnstown-based medical marijuana grower Hanging Gardens is laying off dozens of workers, blaming out-of-state companies and lax state guidelines for squeezing them out of the market.

According to Chief Financial Officer Shane Kenney, 50 of the Iron Street company's approximately 110 workers were either given full or partial layoffs Monday — including 30 full-time employees.

Hanging Gardens and a handful of Pennsylvania-based "independent" growers said they plan to file a lawsuit against the state, which Kenney said isn't following the 2016 medical marijuana law it designed to prevent monopolies from occurring.

"These layoffs come with a very heavy heart and are in no way a reflection of the wonderful employees who have devoted themselves to creating life-changing medicine for Pennsylvanians," Kenney said in the company's statement.

"Hanging Gardens is not alone in this struggle; similar actions are being taken by the other independent grower/processors as a direct result of the lack of enforcement of the law by the Department of Health."

Hanging Gardens was part of a second wave of companies to be awarded growing/processing permits that enabled the opening of a facility in Johnstown and development of products sold exclusively to more than 100 dispensary shops across Pennsylvania.

Despite Act 16's attempt to limit the number of sites one single company may operate in Pennsylvania — such as limits of 15 dispensaries per-company — a number of multi-state companies have gobbled up licenses statewide, partly through acquisitions of other operators, Kenney said.

Those companies have more resources and capital to gain a stronghold on the state's medical marijuana market — and prioritize their products over competitors, Hanging Gardens officials said.

To Kenney, the program is "in collapse."

"The few remaining independent businesses who invested with the promise of fair competition may soon disappear," he said, maintaining that host communities would suffer.

Act 16 set limits among permit acquisitions but that does not mean Pennsylvania can simply prevent equity transfers by those permit-holders, Department of Health officials said Tuesday.

That includes "those used by multi-state operators in the medical marijuana industry," said the department's deputy press secretary, Maggie Barton.

In recent years, companies have added dispensaries and growing operations by merging with other holders in deals to manage their assets.

Kenney said he worries Pennsylvania's tens of thousands of card-holders may see fewer options to treat their state-approved conditions if the trend continues to force out independent producers, Kenney added.

According to Kenney, Hanging Gardens and fellow "independent" growers have collectively sought relief from the health department, Gov. Tom Wolf's administration and the Legislature — and their next step will be legal action.

"Nobody wanted a lawsuit, but we now have no other choice," Kenney said. "It's not right for the administration to allow this monopoly to continue to exist, and to take their tens of millions of dollars out of the state, while many of my former employees don't know how they will now put food on the table."