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Opinion | Medical cannabis applications reveal hidden problems, missing info

A secretive process, numerous lawsuits, applicants hiding troubling info — the AMCC’s medical marijuana licensing process continues to disappoint.

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Two applicants for a medical marijuana license are facing a racketeering lawsuits. Another had a 2021 default judgment for skipping out on a $270,000 bill for goods. Multiple applicants’ facilities plans show they’ve yet to begin constructing a facility despite claiming in their applications that they will be able to begin production of medical marijuana within 60 days of receiving a license. Multiple applicants have failed to secure required bonds. At least half of the remaining applicants appear to have violated state laws regarding over-redacting what should be public information in applications. And more than half of the minority applicants have failed to provide documentation proving their minority ownership. 

These are just some of the more serious problems APR uncovered during an exhaustive examination of integrated license applications before the Alabama Medical Cannabis Commission. 

In October, an agreement reached by attorneys for the AMCC and attorneys for several companies that filed suit over the licensing process led to a rule change that forced applications – most of which were almost entirely redacted – to limit redactions to only personal information and proprietary business information. That change opened up more information to the public, and it also exposed a number of issues among the applicants. 

“There’s a reason a lot of this stuff was redacted, and it wasn’t because it was business secrets,” said an attorney who has been involved with the ongoing litigation surrounding the licensing process. “What’s really troubling is that a lot of the problems involve companies that the (AMCC) scored very highly. So, did they simply miss that these companies were violating the laws that they’re supposed to be upholding? Did they not care? Was the fix in?

“A lot of the people who filed lawsuits over this process simply wanted one thing – an open process that was fair. Let the people see who is applying for these licenses. Make the information public, and let the best company win. Amazingly, that still isn’t happening.”

At least three attorneys told APR over the weekend that there likely will be more litigation filed in the coming days over the way the AMCC is still conducting its public hearings. 

The licensing process has been a mess from the start, and litigation over the many problems has stalled the process in a stage that was supposed to be over in June. The AMCC has twice awarded licenses only to have a court stop the process, forcing the Commission to start over.

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While the issues have been numerous and complex, one major problem touched on again and again in the lawsuits – and in arguments in open court – has been the secretive nature of the process. From the heavily redacted applications that masked just who was vying for licenses to the AMCC attempting to hide its deliberations from public view, the entire process has seemed determined to keep average citizens and media in the dark. 

For example, throughout the process, APR has attempted to ascertain simply the proposed locations where many integrated companies plan to do business. Alabama’s medical cannabis laws require disclosure of the proposed site, its GPS coordinates, a site photo and proof that it has obtained local authorization to operate at the location. 

While some applicants put the location information in the un-redacted portions of their applications, most hid it. Even after the rule change in October that should have required its disclosure, 14 of the remaining 28 applicants (nine original applicants have bailed on the process) still have it redacted. 

Throughout the ongoing licensing process there have been numerous rumors that some companies were holding off on securing a facility location, and were instead relying on the commissioners to award the licenses without confirming the facility locations and/or progress of construction/renovations. Yet, on their applications, those companies maintained that they could meet the 60-day production deadline. 

Natural Relief Cultivation, for example, ranked 16th in the last round of scoring by the AMCC and it claimed that it could be ready to cultivate in 45 days. But on its application filed with the AMCC, the company wrote that it “will construct a new cultivation facility” and that it would also need to construct new dispensary sites as well. 

Samson Growth also identified a vacant lot as its proposed cultivation site. The property is located on Highway 52, the company said, but it doesn’t yet have an address. After receiving a license, Samson planned to begin construction. It told the AMCC it would be ready to cultivate in 60 days. 

Other applicants, like Artemis Agricultural Industries and Aspire Medical, didn’t provide any information at all about their proposed cultivation sites. 

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“These companies think they can get away with this because the commissioners have no intention of visiting these sites prior to handing out a license,” said a state elected official who has been involved in the licensing process. “Why wouldn’t you take a site visit before awarding the license? It’s not like we’re talking about that many places.”

There are also other requirements under the medical cannabis laws that seemingly aren’t being met by many applicants, including some previous top scorers for an integrated license. The law requires applicants to provide proof that they can obtain a $2 million performance bond and that any applicant seeking a minority vendor status provide certain documentation. 

Only two companies – Alabama Always and Sustainable Alabama – seeking an integrated license have obtained a performance bond. While several others claim they have demonstrated the ability to obtain a performance bond – which is the requirement up to the point the license is issued – that alleged proof in some cases is no more than the applicants citing the steps for applying for a bond.  

Also, of the 13 companies claiming minority ownership status, three – 3 Notch Roots, Southeast Cannabis Company and TheraTrue Alabama – either provide no evidence to support the minority claim or have that information redacted. 

And then there are the lawsuits. According to a lengthy description outlining what AMCC commissioners can consider when evaluating licenses, a considerable amount of time is spent covering the impact that ongoing or recent litigation – particularly litigation regarding the business practices of applicants – would have on the process. 

Specifically, the AMCC’s guide for integrated license applicants says the Commission will consider: “g. Whether the Applicant has been served with a complaint or other notice filed with any court or public agency regarding payment of any tax required under federal, state, or local law that has been delinquent for one or more years. 

“h. Whether the Applicant has a history of noncompliance with any regulatory requirements in this state or any other jurisdiction. 

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“i. Whether at the time of application the Applicant is, or in the past 10 years has been, a defendant in litigation involving its business practices.”

Those considerations would seem to be particularly problematic for Verano, Trulieve, Southeast Cannabis Company and 3 Notch Root. 

Trulieve is being sued by the mother of an employee who died as a result of “occupational asthma,” according to the Centers for Disease Control. The lawsuit claims the company’s HVAC system didn’t work properly, causing mold, and the continued inhalation of the mold caused the employee’s death.  

In another lawsuit, in which Trulieve filed claiming Harvest Ohio owed more than $23 million in unpaid loans, the owners of Harvest counterclaimed alleging that Trulieve conspired to take over Harvest by issuing predatory loans and misleading Harvest’s owners. 

Trulieve has also filed suit against several former employees claiming that they participated in a kickback scheme with certain vendors, selling shelf space to the vendors for certain products. 

Verano, which was rated the top scorer in the AMCC licensing process, has faced its own legal challenges. In 2019, it faced a $135 million lawsuit for allegedly cutting its Nevada business partners out new licenses. In 2020, it faced wild allegations of a former employee transporting marijuana illegally to Arkansas in Whole Foods salad containers. In 2021, Verano settled racial discrimination claims that included allegations it illegally transported marijuana onto military bases. And earlier this year, a female employee in New Jersey filed suit claiming sexual harassment, gender discrimination and retaliation by the company. 

According to Verano all lawsuits have been dismissed. The RICO suit all dismissed with prejudice and Verano was awarded nearly $100,000 in attorney’s fees in the arbitration. The Nevada suit was also dismissed.

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APR has previously reported on the various issues regarding 3 Notch Roots, a subsidiary of Curaleaf. Numerous media outlets have noted Curaleaf’s ties to a Russian billionaire who was sanctioned by the U.S. government. 

Curaleaf was sued in November by Reef Dispensaries, which Curaleaf – the country’s largest legal weed company – bought last year for $181 million. That lawsuit claims Curaleaf is trying to short Reef more than $13 million. 

In March, the company was sued by a former employee claiming whistleblower status who said he was fired after participating in an investigation into employees drinking on the job. 

In August 2022, the company settled a class action lawsuit for $100,000, which claimed its CBD oil products were mislabeled. An associated wrongful death lawsuit was settled privately and the company paid out $130,000 to 10 people in Oregon over the mishap. 

In October 2022, NY Cannabis Insider reported that Curaleaf had mislabeled products in that state, causing two recalls within the year. 

The majority owner of Southeast Cannabis, Shore Acres Plant Farm in Theodore, was hit with a default judgment in a 2019 lawsuit alleging it skipped out on a $275,000 bill from a vendor. The court ordered Shore Acres to pay nearly $300,000

It’s unclear what, if any, impact the lawsuits and settlements and various mishaps, along with the multitude of application issues, might have on the integrated licensing process, which is scheduled to begin on Tuesday. However, through two previous rounds, the problems have made little to no difference. 

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Why that is remains unclear, since the AMCC commissioners rarely hold any public discussions regarding the applicants or the applications. To date, through two heavily scrutinized rounds of awarding licenses, there has been no public debate among commissioners over the applicants. In fact, the commissioners held almost all meaningful discussions, and even took votes, during an executive session. 

Attorneys closely following the process told APR that if the licensing process remains secretive, expect more legal action. 

“It is my understanding that a temporary restraining order is ready to be filed, just based on what we’ve witnessed from the other hearings (for other types of licenses),” said an attorney representing one of the applicants. “I don’t know why they insist on doing it in secret. Even if you have no bad intentions, it makes it look like you do. Just be fair and open. Why is that so hard?”

Correction: According to Verano all lawsuits have been dismissed.

Josh Moon is an investigative reporter and featured columnist at the Alabama Political Reporter with years of political reporting experience in Alabama. You can email him at [email protected] or follow him on Twitter.

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