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Unsuccessful marijuana license bidders may get second chance

FILE -- In this file photo taken April 4, 2013, marijuana plant starts are seen at a growing facility in Seattle. One of the U.S. Justice Department's top concerns in allowing Washington and Colorado to move forward with plans to legalize and tax marijuana sales is seeing that the states keep criminals out of the industry. But the DOJ itself is refusing to let Washington run national background checks on those applying to run legal pot businesses, The Associated Press has learned, and those who have received the first legal pot licenses have done so without going through a national background check. (AP Photo/Elaine Thompson, File)

AP

FILE -- In this file photo taken April 4, 2013, marijuana plant starts are seen at a growing facility in Seattle. One of the U.S. Justice Department's top concerns in allowing Washington and Colorado to move forward with plans to legalize and tax marijuana sales is seeing that the states keep criminals out of the industry. But the DOJ itself is refusing to let Washington run national background checks on those applying to run legal pot businesses, The Associated Press has learned, and those who have received the first legal pot licenses have done so without going through a national background check. (AP Photo/Elaine Thompson, File)

A key lawmaker reviewing the controversial selection process for medical marijuana companies in Massachusetts said Thursday that the state Department of Public Health should reconsider some of the highly rated proposals that were not approved for provisional licenses.

“We’re essentially giving them another look,” said state Representative Jeffrey Sánchez, whom House Speaker Robert A. DeLeo tapped last month to investigate the process for issuing licenses.

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Sánchez wrote in a letter to the health department that any proposal from a company that scored at least 137 out of a possible 163 in the state’s scoring system should get another review “in the same manner” as the those that were recently selected for the 20 provisional licenses.

“Then DPH should rerelease the list of provisional registration recipients after the entire verification phase has been completed,” Sánchez wrote.

The Jamaica Plain Democrat’s recommendations came after questions surfaced regarding the qualifications of key staff of several dispensary companies and possible misstatements that firms made in their applications concerning support from local officials.

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The department will ultimately award up to 35 licenses to operate marijuana dispensaries in the state. The 20 provisional licenses approved in January are subject to further review.

Sánchez’s recommendation, if adopted by the Department of Public Health, would effectively add a dozen high-scoring proposals to the group still in contention for the first 20 licenses. Among the additional applications, six were turned down, and the other six were invited to reapply at an alternate location.

Some companies that received provisional licenses for certain locations also had highly rated proposals that did not make the cut.

In a statement, the department did not say whether the agency would adopt Sánchez’s recommendation.

“We thank Representative Sánchez for his response and look forward to continuing to work with him and his colleagues in the Legislature as we establish dispensaries that are responsive to patient needs and community safety,” the statement said. It added that Sánchez’s “recommendations are extremely helpful, and we will consider them in our ongoing efforts to ensure a thorough and transparent licensing process.”

Among the groups not selected was Mass Organic Therapy Inc., which scored 158 and lost out to a company headed by former US representative William Delahunt for a provisional license to open a dispensary in Plymouth. Delahunt's group, Medical Marijuana of Massachusetts, scored 160.

But questions have emerged about an arrangement in which the nonprofit led by Delahunt would give up to 50 percent of its revenue from three marijuana dispensaries to a management firm controlled by some of his business partners in the dispensary. Company officials have defended the arrangement, saying the firm would shoulder many of the initial expenses and ongoing costs.

Patrik Jonsson, chief executive of Mass Organic, declined to comment and Delahunt could not be reached Thursday night.

Dr. James Kurnick, chief executive of Mass Medicum Corp., which scored 137 on an application to run a facility in Holbrook and was invited to seek another location, reacted positively to Sanchez’s recommendation.

“If the DPH is agreeable to Representative Sanchez’s proposal, then we’d be happy to provide the DPH with whatever information they’d like,” Kurnick said.

Dr. Joseph Keenan, who heads Kind Medical Inc., which missed out on a provisional license for an Easthampton facility despite a score of 148, was also supportive of Sanchez’s recommendation.

“It will provide fair public access throughout Massachusetts,” Keenan said in an e-mail. “Furthermore, this proposal would result in equal treatment for all the top scoring applicants [such as Kind Medical], and would avoid the logistical difficulties and fundamental unfairness of starting the entire process from scratch.”

Officials from several other companies either could not be reached or declined to comment.

Among the concerns raised about applicants have been the business practices of John J. Czarkowski and his wife, Diane, who were forced to shut down their Colorado medical marijuana facility for numerous violations.

But the couple then resurfaced in Massachusetts as the managers of three companies that won preliminary state approval in January to run dispensaries. Two of those companies cut ties with the couple after the disclosure, and a third said it had severed relations earlier, but had failed to notify state officials.

Sánchez called for tighter verification procedures for future applications “to ensure that there are no loopholes for noneligible persons to be involved with a dispensary.’’

Changes could include “expanding the scope of background checks,’’ he said in his letter. “This will allow us to learn from the mistakes made this application cycle to ensure that the regulations are air-tight going forward.’’

He declined to say in a phone interview if he felt any of the companies that currently have preliminary approval are undeserving, since he has not viewed all the applications.

“At the end of the day, remember, the scoring process is one thing, but [the department is] making administrative decisions, as well,” he said.

Sánchez also questioned why ICF International — a firm that was paid $335,449 to review the applications, score them, and write summary reports — was selected for the task.

“At any point, did you consider reissuing the [request for proposals] to solicit more [bids], perhaps from companies with specific medical marijuana experience?” he wrote.

In addition, Sánchez, who chairs the Joint Committee on Public Health, questioned in the letter why the state has apparently reversed course on a requirement that applicants pay a nonrefundable $50,000 fee if they were selected for preliminary approval.

Karen van Unen, executive director of the state medical marijuana program, said last week that the state would refund those fees, even if companies provided inaccurate information.

“Why the change in policy?” Sánchez wrote.

The Public Health Department did not address his questions about the refund and ICF International in a statement provided to the Globe.

A spokesman for DeLeo said the House speaker “applauds chairman Sánchez for his hard work in this area and looks forward to meeting with him as he completes his final review.”

Kay Lazar, Shelley Murphy, and Mark Arsenault of the Globe staff contributed to this report. Travis Andersen can be reached at travis.andersen@globe.com.
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