Nearly half of Mass. marijuana applicants eliminated – Boston Globe

State health officials announced Friday that, after a further review, they have eliminated 9 of the 20 applicants given initial approval for medical marijuana dispensaries, including both in Boston and all three run by former Massachusetts congressman William Delahunt.

Only 11 dispensaries will be given provisional certificates allowing them to set up their operations and undergo inspections in advance of opening, Karen van Unen, executive director of the state’s medical marijuana program said during a news conference.

She said some dispensaries could open by November, but most wouldn’t do so until February 2015, much later than this summer, when state officials originally envisioned most would open. She said 97 percent of the state’s population would live within 30 miles of a dispensary.

In a letter to Delahunt’s company, Medical Marijuana of Massachusetts, van Unen said the company was denied dispensary licenses because it planned to divert 25 percent of its gross revenues to a management company, and had falsely claimed on its application that it had support from state Senate President Therese Murray.

A marijuana dispensary “must operate on a non-profit basis for the benefit of registered qualifying patients,” Van Unen wrote.

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She said Delahunt admitted during an interview with state officials that his meeting with Murray “was simply informative and no request was made for her support. The only explanation Mr. Delahunt offered was that he should have read the application more carefully.”

Delahunt could not immediately be reached for comment.

The contentious, high-stakes selection process had been delayed for months after the news media and losing applicants raised a number of concerns about misrepresentations and conflicts of interest involving several of the 16 companies approved in January for 20 provisional dispensary licenses, as well as the backgrounds of some of their principals.

The newly rejected companies will be barred from going forward based on issues discovered during expanded background checks, misrepresentations that were identified, detailed review of their financial and corporate statements and face-to-face meetings with applicants.

Those rejected are: Medical Marijuana of Massachusetts, which had proposed locations in Plymouth, Mashpee, and Taunton; Green Heart Holistic Health & Pharmaceuticals in Boston; Good Chemistry of Massachusetts, with locations in Boston and Worcester; Brighton Health Advocates, Fairhaven; Debilitating Medical Condition Treatment Centers, Holyoke; and Greeneway Wellness Foundation, Cambridge.

These companies can reapply again next year, when a new round of applications will likely be considered, van Unen said.

State officials have acknowledged they hadn’t checked the veracity of applicants’ claims before the January announcement, despite spending more than $600,000 on two contractors who were hired to scour the backgrounds and evaluate their proposals. State regulators said they have since dug extensively into company executives’ backgrounds, finances, and business plans.

The selection process has been shrouded in secrecy, with state health officials refusing to release the documents showing in detail how they evaluated and scored each of the 100 applicants that vied for the first batch of licenses awarded by the state. A state health official said they would be released Friday afternoon.

Several lawsuits have been filed, and state lawmakers launched an investigation into the fairness of the licensing process.

Voters in 2012 approved a referendum that directed the state health department to award up to 35 licenses in the first round.

Amid the delays, leaders from several of the companies that were earlier tapped for a provisional license said they were reluctant to spend money building dispensaries and cultivation facilities without knowing if they would ultimately get the green light to proceed.

Delahunt has ties to head of the state Department of Public Health, which is overseeing the licensing process. Public Health Commissioner Cheryl Bartlett, a long-time friend of Delahunt’s, hosted two political fund-raisers for the congressman in 2005 and 2006, and donated to him in 2007, but she failed to file the disclosure of the potential conflict until her agency was in the final weeks of reviewing the dispensary applications.

Bartlett filed the disclosure form with the state on Dec. 31, indicating she would be selecting the license winners, but two weeks later, after questions were raised about potential conflicts with Delahunt, Bartlett’s deputy, Karen van Unen, filed a disclosure form indicating she would choose the winners.

Bartlett and Delahunt denied any conflicts.

In Boston, confusion swirled and tempers flared this spring regarding both of the companies initially selected for provisional licenses, one in the South End, the other in Back Bay.

Good Chemistry of Massachusetts, the company that had proposed a dispensary on busy Boylston Street, later switched its site to 57 Stuart St., in the city’s theater district, after facing a barrage of criticism from city officials and nearby residents and businesses about its proposed Back Bay location.

Similarly, neighbors and city officials complained about the location of Green Heart Holistic Health & Pharmaceuticals’ proposed dispensary on Southampton Street, saying there are already several methadone clinics in the area.

Both companies were chided by city councilors for claiming in their license applications that they had officials’ support, with Councilor Tito Jackson denying he backed Green Heart, as the company had claimed, and Councilor Stephen J. Murphy alleging that he was manipulated by Good Chemistry’s consultant into writing a letter of support.

Andrew DeAngelo, chief executive officer of Green Heart Holistic, said Friday he was disappointed that the state had denied the company’s application.

“Our only regret is that we will not have the opportunity to bring our pioneering best practices, gold standard industry model to the patients and greater community of Boston,” DeAngelo said. “We deeply thank the many people who have supported our efforts in Boston and we wish for the good health and wellness of all its citizens.”

Good Chemistry’s chief operating officer, Jaime Lewis, has acknowledged the misstatements about its local support in an interview with the Globe, and said that while rushing to file the company’s application, she inadvertently placed references to Worcester-area state legislators and city councilors supporting the company’s proposed Worcester cultivation site in the portion of the application that was supposed to describe the local support the company received for its Boston dispensary.

Among the companies allowed to go forward are several that were criticized earlier.

Haverhill officials were unhappy about claims of their support from Healthy Pharms, a marijuana company chosen for a preliminary dispensary license in that city.

Patriot Care Corp, another Merrimack Valley applicant that earlier received the nod for a preliminary license in Lowell, was criticized by a competitor for omitting from its license application mention of a lawsuit alleging fraud, a judgement for failure to pay taxes, and a bankruptcy, all involving Patriot Care’s director and treasurer, Nicholas Vita.

CAS Foundation, which lost out to Patriot Care by two points in the state’s scoring system, filed a lawsuit seeking a state review of Patriot Care’s selection. CAS contended that Patriot Care improperly downplayed in its license application the roles of several key executives, who may have evaded background checks as a result.

The CAS lawsuit was one of several filed by losing applicants, who alleged the state’s licensing process was arbitrary and problem-plagued.

Companies tapped in Janary for preliminary licenses on Boston’s South Shore also faced criticism for apparent omissions in their license applications. In Good Health, which was selected for a Brockton dispensary site, fielded questions about Douglas Noble, a prominent South Shore businessman who was initially listed as the chief executive on the company’s application. Noble was replaced by his son on the final application and instead listed as an adviser for compliance with government regulations. That change exempted Noble from an initial state background check that probably would have turned up his substantial financial difficulties, including lawsuits by creditors for hundreds of thousands of dollars in debts run up by health facilities he co-owned.

Kay Lazar can be reached at [email protected] Follow her on Twitter @GlobeKayLazar. Shelley Murphy can be reached at [email protected] Follow her on Twitter @Shelleymurph

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