Complaints Plague Medical Marijuana Dispensary Licensing

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If Michael Stirling can prove the evaluation committee that selected the winning bidders for four medical marijuana dispensary licenses made a mathematical error, he expects the state to snatch a license away from the lowest-scoring bidder and award it to him.

Stirling, whose company White Mountain Treatment Center lost to Sanctuary ATC for the license to dispense in the North Country by 4.5 points out of a possible 1,500, is one of three losing bidders appealing the state’s decision.

“I think the process in terms of scoring was very flawed,” Stirling said. “If I was 600 points behind and in seventh place, I don’t know that I would have made an argument. But I think they missed some serious things.”

Stirling has Republican Executive Councilor Joseph Kenney in his corner.

Executive Councilor Joseph Kenney

Executive Councilor Joseph Kenney

Kenney was so concerned about Stirling’s complaint and the selection process in general that he arranged a meeting with Democratic Gov. Maggie Hassan’s staff, himself, Stirling and state Sen. Jeff Woodburn, D-Dalton.

Kenney said Stirling had told him the overwhelming support he had from the community of Groveton wasn’t factored into White Mountain’s score.

“If that had been included, (White Mountain) would have scored higher than the company that was awarded the permit,” Kenney said.

Stirling’s lawyer had complained in a letter to Kenney that White Mountain was improperly scored and should be awarded the points it was shorted.

“I avoided (opinion) sections and focused my appeal on sections that were yes or no questions,” Stirling said. “You either had them or you don’t as opposed to areas that were more subjective.”

The result, in Stirling’s estimate, was 81 points White Mountain should have received. Chief among his complaints is that White Mountain, unlike any of the other applicants, had secured a building and written support from community leaders in Groveton, yet wasn’t awarded full points for it.

“We were the only applicant that had town approval and support of law enforcement,” Stirling said. “For some applicants to get any points for zoning or location (when they didn’t have those things) is a mistake.”

Stirling said the appeal’s hearing officer should be able to say that a mathematical error was made in scoring and the actual recipient should be White Mountain.

“My hope is that they could correct the mathematics without jarring loose the whole process,” Stirling said.

Secret appeals

The state has not released the names of the companies or documents related to the appeals.  But InDepthNH has confirmed that Stirling, the CEO of White Mountain and Paul Morrissette, CEO of Regal Compassionate Center, Inc., of Franklin, are among the three companies that are appealing.

Photos by News21

Photos by News21

It’s not clear exactly what would happen if Stirling is successful in his appeal, said John Martin, manager of the Bureau of Licensing and Certification. The bureau oversees the licensing for the Therapeutic Use of Cannabis Program.

“I guess that would be up to whoever hears the case,” Martin said. “It’s hard to know. It’s nothing I’ve ever actually done in the context of an RFA like this.”

He then referred the question to the department’s chief legal counsel, Frank Nachman.

Under state law, Nachman explained, appeals of any DHHS decision go to the Administrative Appeals Unit where individual hearing officers consider the cases, such as whether someone was shorted food stamps or is concerned about their state benefit. This process also now includes considering appeals from disgruntled applicants seeking licenses for medical marijuana dispensaries.

“They have decision-making authority and are an independent body,” Nachman said. “But yes, they are also DHHS employees.”

Nachman said he couldn’t speak specifically about any pending appeal.

“I will say that I am confident that the selection process was fair, impartial and conducted in accordance with RSA 126-X and will withstand review,” Nachman said.

He said he wouldn’t speculate on what relief the hearings examiner could potentially grant “in the unlikely event that an appellant prevailed.”

It’s a good question, Nachman added, “given that the entities that were selected are moving forward to stand up their operations.”

Point system rules

The winners were determined by a point system with each organization scored for each of the geographic zones for which it was applying.

According to the committee’s evaluation score sheets provided by the state, of the 1,500 points possible – 1,200 for the proposal itself, 300 for financial stability – White Mountain earned 565 points for its proposal and 300 points for its financials for a total of 865 points for Zone 4, the North Country. Its overall score was also 865.

Sanctuary earned 719.5 points for its proposal and 150 points for its financials for a total of 869.5 points for the North Country.  Its overall score was 871.5.
Depending on which score is being considered – the overall score or the score given to each company based on zone – White Mountain lost the North Country bid by either 6.5 points (overall) or 4.5 points (by zone), respectively.

White Mountain’s letter to Kenney, whose districts include Coos and Grafton counties, states that although White Mountain included in its application the fact that it had an existing lease on a building in Groveton that could house both a grow facility and a dispensary, written preliminary approvals for the site from the town’s selectmen and planning board as well as its chief of police, and had chosen a location that was central to North Country hospitals, towns and nearby highways, the company only received partial credit for these items in the evaluation process.

However, the letter goes on to say Sanctuary ATC,  which won the license for the area, had no buildings, no written approvals and no potential building sites, and yet they still scored partial credit in some of these areas.

Winning licensees

On June 9, the state Department of Health and Human Services released the names of the three companies chosen for licensing by a state evaluation committee out of a total of 14 applicants.

The companies will open four dispensaries in separate regions of the state along with three marijuana grow operations that will be located separately from the dispensaries.

The selected businesses, which will operate as nonprofits, are Temescal Wellness, Inc., of Ft. Lauderdale, Fla.; Prime Alternative Treatment, of Shrewsbury, Mass. (which lists the Concord Law Firm Shaheen and Gordon as its local address); and Sanctuary ATC.

Temescal CEO Ted Rebholz initially agreed to an interview, but then was not available for the interview and did not respond to a request to reschedule. Prime Alternative CEO John Glowik declined all comment until the licensing process is complete.

Temescal was awarded geographic area 1, which includes the Seacoast, and geographic area 3, which covers the Monadnock Region and Upper Valley. Prime Alternative Treatment Centers of NH Inc. was awarded geographic location 2, which includes Hillsborough and Merrimack counties. Sanctuary ATC was awarded area 4, which covers Grafton, Carroll and Coos counties.

Stirling only wanted the North Country.

“Our sole interest in going after one of the permits was …We thought this would be a great opportunity to create some economic opportunity in a town and county desperate for new jobs,” Stirling said.

Stirling cited a high unemployment rate in Groveton and its need for jobs as a reason for choosing the area for a dispensary.

Stirling said he also applied for Zone 3, but still planned to have the operation in Groveton, which is near Berlin and located at the intersection of U.S. Route 3 and New Hampshire Route 110.

According to the notes from the evaluation committee that rated each company during the application process, White Mountain was given positive marks for having assurances and a letter of intent for Groveton (which falls in Zone 4 coverage) but received negative marks for not mentioning having these things for Lebanon or Claremont (which would have been covered by Zone 3).

For the sections of the application dealing with evidence of zoning approval and having a letter of intent for the building, according to the state’s score sheets for the company, White Mountain earned a score of 2.5 for each section.

While the North Country was White Mountain’s first choice, it was Sanctuary’s fourth, according to Sanctuary’s application.

In DepthNH requested all of the applications submitted to the state.

Applications withheld

To date, only the applications for Prime ATC, Sanctuary and 603 Wellness, one of the losing applicants, have been released. Stirling did not respond to a request for a copy of his application.

Not knowing the zone it would be awarded ahead of time, according to its application, Sanctuary pitched North Conway as a possible location, but had not secured a building, talked to any officials or garnered permissions to operate there.

In reference to zoning approvals, Sanctuary replied in the application that zoning approval was unavailable however, but that they found out who they needed to talk to in order to get the approvals for Zones 2 and 1, not 4.

According to the evaluation committee notes, Sanctuary received a favorable note for having “talked to Mayor.”

However, Sanctuary never said they spoke with the mayor in that section of the application.

Instead, Sanctuary wrote it was in talks with the Manchester and Epping zoning boards and listed links to city websites. For these sections, Sanctuary received 2 out of 5 points for zoning approvals and 0 points for possession of a building.

It is interesting to note that Prime Alternative in the same categories does mention speaking to Manchester Mayor Ted Gatsas about zoning approvals in its application.

According to the evaluation committee’s notes, Prime received positive marks for demonstrating efforts to get zoning approval and meeting with municipalities, but a negative mark for not having identified a cultivation site.

However, unlike White Mountain, Prime received a 4 out of 5 for zoning and 0 out of 5 points possessing a building.

Furthermore, Temescal, according to the evaluation notes, was given positive marks for its “strong efforts in Manchester,” when it came to zoning although the notes indicate it was “weak on Hanover.” Yet, Temescal received a score of 4 out of 5 for the zoning category.

Scoring inconsitencies

Moreover, unlike White Mountain, Temescal received positive marks for its mention of a lease in Manchester and Letter of Intent in Hanover. Again, unlike White Mountain, Temescal earned a perfect score in this category.

It’s these sorts of scoring and criteria inconsistencies that have some stymied and questioning the process as a whole.

According to White Mountain’s appeal letter, for having local approvals, it wants the hearing officer to award it an additional 2.5 points and said Sanctuary should lose two points for not having any of those things in zone 4.

If the hearing officer agreed, it would still leave White Mountain 2 points shy of Sanctuary’s score. So, White Mountain is also requesting an additional 2.5 points for having a building.

If all of these adjustments were made, White Mountain would have a .5 higher score than Sanctuary.

When reached via email for comment, Sanctuary CEO Jason Sidman declined comment on the details of the appeal but said, “We are confident in the state application process, and our ability to deliver high-quality medicine to patients in Zone 3.”

Photos by News21

Photos by News21

Geographic convenience

Among other complaints, the letter to Kenney goes on to say that White Mountain was only awarded 5 out of a possible 20 points for its geographic convenience to patients and caregivers.

According to the appeal letter, the site’s location half-way between the I-93 corridor, the west side of the state and Route 16 to the east, makes it central to all corners of Zone 4.

Further, the letter states, its location on Routes 3 and 110 makes it easy access from the north and east; it is equidistant to northern communities like Colebrook and Pittsburg and towns like Conway and Lincoln. The center is also between 10 and 40 minutes to the major hospitals in the North Country.

The North Conway site proposed by Sanctuary, according to its application, was chosen because of its large population, ability to attract tourists, potential for real estate expansion and its proximity to the norther tip of Zone 1.

Sanctuary makes no mention in the application of what the center’s proximity would be to the rest of the North Country or attempts to obtain approvals or letters of intent in North Conway.

The application reads in part, “I believe an area in North Conway, located in Carroll County, is a vibrant community and tourist destination due to the awesome skiing nearby and fall foliage. A dispensary here would be convenient for those in this zone and for those on [the] northern boundaries of Zone 1.”

The evaluation committee gave Sanctuary 3 out of 20 points for geographic convenience.

Since getting its preliminary licensing, Sanctuary abandoned the idea of North Conway as a potential location and instead is looking to Plymouth to set up its dispensary and Portsmouth for a grow operation.

Plymouth is 60 miles away from Lancaster Hospital, 73 miles to Berlin, 44 miles to Littleton, 109 miles from Pittsburg and 51 miles from North Conway.

“I think it would be real tough to argue that Plymouth is centrally located to the North Country,” Stirling said.

“Now if you’re hoping it goes recreational here, and you want to be right next to a college, then Plymouth is a great place, but I don’t think that was the intent of the legislation.”

Sidman responded to that statement in an email saying, “We have extensively analyzed our zone utilizing both 60- and 90-minute drive time studies with a software similar to Buxton analytics.  This is precisely why we determined Plymouth to be the best possible location to serve the greatest population of our zone via the shortest travel time.”

He adds that the dispensary is two miles from exit 26 on I-93, which he describes as a well-maintained road in the winter – and “in close proximity to Walmart, which is a destination for many patients within our zone.”

Timetables vary

Photos by News21

Photo by Nick Swyter/News21 / News 21

Photos by News21

White Mountain further took issue with the score it received for its startup timetable, according to its appeal letter.

Stirling said since his company had the building ready to go and the approvals, it could start growing upon licensure. The company estimated from that point to retail sales was 3 to 6 months if they used saplings and closer to 7 to 10 months if they grew from seed.

For this, it received 10 out of 30 points.

According to the evaluation notes, White Mountain was given negative marks for an “unrealistic,” and “short“ cultivation timeline, unspecified missing steps and for having “no details on financing. “

According to its application, Sanctuary said it would need 6 to 7 ½ months to manufacture and cultivate the cannabis and at least seven months to before retail sales would be ready. It also said Sanctuary could begin construction upon licensure, despite not having approvals at that time.

“Sanctuary has been assured by local leadership that permitting and construction process will be fully supported by municipality and fast tracked through the inspection and occupancy stages.”

But there is some confusion. Sanctuary said it would get its engineering plans by month 10, but then also says, construction would begin upon award of the licensure and building occupancy could happen before month four.

“Final inspections by the DHHS can be requested in early month 4,” the application states.

For this, the evaluation committee gave them positive marks for having a detailed timeline, a plan, and hitting all the points. They received 20 out of 30 points.

Sanctuary was awarded the license in June and is currently in the process of getting local approvals.

.Prime Alternative by way of comparison in this section, earned positive marks for having a realistic timeline, which was within seven months of final licensure for delivery of all therapeutic cannabis products. But here, it was given negative marks for not having a firm site for cultivation, and that its buildout didn’t take into account the approvals process.

The company earned a score of 20 out of 30 points for that category.

Stirling said the primary goal of the legislation was to get these dispensaries up and running as quickly as possible so they could serve the people that needed to be served.

Serving the sick

“I think they missed the opportunity to do that,” Stirling said. “And with this, if you are literally a month late or six months late getting this program going, you have missed the opportunity to serve some very sick people who needed that comfort six months ago, but now are no longer with us.

“I think that is the real tragedy of this whole process.”

That said, Stirling does intend to file for an injunction to stop the process if his appeal is unsuccessful. However, he said, he hopes it doesn’t come to that.

Stirling’s appeal hearing is scheduled for later this fall

Economic concerns

Executive Councilor Kenney said besides flaws in the scoring, the process doesn’t allow for local control. It also bypasses governor and council contract approval, he said.

“In reality, they could put these four permits in any community in New Hampshire and local control could not push back. That to me is very concerning,” Kenney said.

Economic development was also not factored in. “That’s something we determined was a flaw in the licensing process as well,” Kenney said.

“Like any roll out, there’s always going to be flaws in the process, but hopefully in the next go-round the process will be strengthened.”

In the meantime, Kenney is waiting to hear from Gov. Hassan’s office as promised after the meeting with Stirling and Woodburn. Hassan didn’t return phone calls seeking comment.

“The governor’s office really needs to step in and say: Are we happy with this process? Can we live with the permits that have been issued and have they been done in a fair manner.”

“I think the buck ultimately stops with governor’s office,” Kenney said.

Nancy West contributed to this report.

 

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