Marijuana bidders getting help from politically savvy
Several former elected officials and politically connected figures have joined the sweepstakes to be part of the state’s potentially lucrative medical marijuana industry, partnering with applicants who need help navigating the regulatory process.
Former US representative William D. Delahunt, now a lobbyist, is the president of a nonprofit corporation that has applied for three marijuana dispensary licenses in Southeastern Massachusetts.
Former House speaker Thomas M. Finneran, as well as at least three former state senators, a former sheriff, and two former top aides to powerful officeholders are also associated with dispensary applicants, as investors or advisers, as they lobby for state and local support of their proposals.
A law approved last year by voters gives the state Department of Public Health authority to register up to 35 nonprofit dispensaries, with at least one — but not more than five — in each county.
The jockeying for those slots is extremely competitive, with 100 applications submitted on Thursday in the second and final round of the process.
State public health regulators have indicated that dispensaries with the support of the town or city where they are proposed will be seen more favorably. That’s a part of the process where the political figures could help the groups with which they are affiliated.
Also involved in applications are former state senators Brian P. Lees, Andrea F. Nuciforo, Henri S. Rauschenbach, and Guy Glodis, who is also a former Worcester County sheriff.
David A. Passafaro, former chief of staff to Mayor Thomas M. Menino of Boston, is part of another group — Prime Wellness of MA — that has submitted three applications.
Finneran is a registered State House lobbyist for Avum, whose nonprofit subsidiary has proposed facilities in Northampton, Worcester, and Lowell.
“I’m a guide to Massachusetts,’’ Finneran explained in describing his work on Monday.
Since the ballot initiative passed, applicants have been hurrying to set up not-for-profit corporations that will be the backbone of the marijuana distribution system. Despite the name, nonprofits can be highly lucrative for those involved.
“It’s an absolute gold rush,’’ said John Scheft, the attorney who represented the opponents to the 2012 voter-approved law that created the system. “You are an idiot if you are running a dispensary and you can’t make a couple of million dollars in profit.”
Interviews with several of the participants and a Globe review of preliminary applications indicate some of the political figures who have joined the Massachusetts marijuana market are investors in the firms while others say they are simply consultants.
Delahunt, who represented Cape Cod and much of the South Shore for 14 years, is part of Medical Marijuana of Massachusetts, a group that has applied for facilities in Plymouth, Taunton, and Mashpee.
Two weeks ago, Delahunt, a former Norfolk district attorney, appeared before the Plymouth board of selectmen along with several competitors to plead the case for his group.
The board initially hedged on taking action. But a week later, it endorsed Delahunt’s project.
Working with Delahunt is a political figure with connections in both the State House and the town — Kevin O’Reilly, who once served as a top aide to Senate president Therese Murray, a longtime Plymouth lawmaker, and has been her closest political adviser. He serves on the board of the Plymouth chamber of commerce. Former Barnstable county commissioner Mary J. LeClair, a veteran political figure on Cape Cod, is also working with Delahunt.
The initial financial backing for the group is coming from Jeffrey L. Feinberg, a California-based hedge fund manager, who, along with his wife, Stacey, has pledged $1.3 million as part of the firm’s demonstration of financial viability to state public health regulators.
Delahunt, who said he has never met Feinberg, repeatedly sidestepped questions about whether he was looking to financially gain from his involvement with the project.
“That’s yet to be determined,’’ he said last week.
Analysts say medical marijuana dispensaries tend to be lucrative endeavors.
Luigi Zamarra, a certified public accountant who has overseen the books for medical marijuana businesses in a half-dozen states, said the mark-up in dispensaries is usually about 100 percent.
“If you buy a pound for $2,500, you can retail that, when you break it all down, for $5,000,” he said, explaining that the average-size dispensary brings in $4 million to $5 million in gross revenues per year.
In Massachusetts, Zamarra said, the relatively limited number of dispensaries in the state indicates the potential for “strong profitability, depending on the size of the population of patients.”
But some proponents say the regulations and contours of the law will ensure that clinics will focus on patients not profits. Valerio Romano, a lawyer who represents seven organizations applying for marijuana dispensary licenses in Massachusetts, scoffed at the idea that the facilities would be cash-cows, saying his clients are involved to help patients.
“I think that that’s a contradiction on its face,” he said of the charges. “In the highly scrutinized medical marijuana industry, it would be unwise to try to extract profits from a nonprofit.”
Delahunt said his hope is that the dispensaries will ease the rising scourge of Oxycontin abuse and offer patients a chance to use high quality medical marijuana instead of buying from unregulated sources.
“This is an alternative,” said Delahunt. “But it has to be done in a highly professional way.”
In Western Massachusetts, Lees, the former Senate GOP minority leader, is an officer in a nonprofit hoping to operate a dispensary in Holyoke. He said he has no interest profiting from the enterprise, adding that the revenues will be put back into the community.
Nuciforo, also a Western Massachusetts politico, is an investor in Kind Medical, which wants to open a clinic in Easthampton. A Democrat, he served as a senator from Pittsfield through 2006, when he was elected to one term as register of deeds for Berkshire County’s middle division. He has committed more than $400,000 in financial backing, according to the group’s preliminary application.
Glodis is offering his law enforcement background as part of an outfit — Boston Wellness Association — that has its eye on opening a dispensary in Revere. He declined to comment.
Passafaro, who serves on the board of Boston Medical Center, is part of a group that applied to open dispensaries in Framingham, Roxbury, and Worcester. He is currently a vice president of Suffolk Construction.
He said he will not receive any of the revenues, but will advise the group on how to use the profits for community programs. Rauschenbach, a former Republican state senator from Cape Cod and now a State House lobbyist, is helping an outfit called the Kingsbury Group — founded by two Cape area businessmen — that is looking to convert a go-kart site in Bourne for a medical marijuana dispensary.
The group also hopes to open marijuana facilities in Provincetown and on Martha’s Vineyard. He said he is merely serving as an adviser, but did not discount that in the future, he could reap some of the profits.