The Department of Public Health’s decision to axe nearly half of the finalists who had been slated to receive provisional medical marijuana licenses is an admission that the process has not gone as smoothly as it should have.
Nine of the 20 companies who initially made the cut to receive a provisional license have received letters explaining that, after additional review, they are no longer being considered.
Among them are the companies who received the most bad press since the list of finalists became public in January: Good Chemistry, a Denver-based outfit that drew criticism from officials in Boston who complained that company officials lied about having local support; Green Heart Holistic Health and Pharmaceuticals, a California-based company run by two brothers who are the subject of the television series “Weed Wars”; and facilities connected to former Congressman William Delahunt, which drew accusations of political favoritism.
To the department’s credit, it has made public its letters to the companies, which detail the reasons they were crossed off the list. The letter to Good Chemistry says the company made misleading statements about meeting public officials in both Boston and Worcester. The letter to Green Heart complained that one brother, who had a 2001 marijuana conviction, had been left off the application.
But perhaps the most stunning letter is to Delahunt’s Medical Marijuana of Massachusetts, which explains that regulations require marijuana dispensaries to be nonprofit entities.
Delahunt’s group violated the spirit, if not the letter, of that requirement with its plan to hand off 25 percent of the nonprofit’s gross revenues to a for-profit management company called “Triple M.” Jonathan Herlihy, the COO of the nonprofit entity, was being paid $250,000 a year as a full-time employee, and yet was also the CEO of “Triple M,” and a major investor in it. The general counselor of the nonprofit, Lianne Ankner, was also slated to be paid $250,000 a year. Yet she is listed as the secretary of “Triple M” and is also a major investor.
The arrangement, reported by the Globe in February, should embarrass Delahunt, who was to receive a windfall himself. When he promised that he would set the “gold standard” of marijuana dispensaries, it looks like he meant “the goose that lays the golden egg” standard.
Brighton Health Advocates of Fairhaven had a similar arrangement, which had not been reported in the press. It was due to pay the for-profit Management Recovery Services “20 percent of gross monthly revenues; a 30 percent upcharge on employee salaries, lease payments under a sublease that doubled the rent charge, and repayments under a promissory note that almost doubled the interest rate,” according to the Department of Public Heath’s rejection letter.
The chief financial officer, chief executive officer, and the vice president of Brighton Health Advocates all happened to hold the very same positions in the for-profit company that was charging so much.
It is difficult to understand why alarms bells did not ring earlier at the Department of Public Health, which had access to information about these arrangements before it picked the finalists. Karen van Unen, executive director of DPH’s Medical Use of Marijuana Program, says the “verification” stage of the process was always meant to be more rigorous. But it is clear that the barrage of criticism is what prompted the Department of Public Health to investigate more rigorously.
Questions remain about whether the initial scoring that led to the list of finalists was too arbitrary, as plaintiffs in several lawsuits contend. It is helpful that the department has made the score sheets public, so people can judge for themselves.
It is worth remembering that as flawed as this process has turned out to be, state officials are performing an unprecedented task that they did not seek. It is encouraging that the Public Health Department has responded to public concerns and attempted to correct its mistakes.