August 15, 2011

Marijuana group's deal to be delivered to state

Northeast Patients scales back income expectations but says its first dispensary is just a few weeks away.

By MICHAEL SHEPHERD Kennebec Journal

AUGUSTA - An attorney for Maine's largest medical marijuana nonprofit group says it will formally deliver to state officials today its deal securing $1.6 million in financing.

If approved, the deal will enable Northeast Patients Group to open its first dispensary within a month, according to Daniel Walker, a Portland lawyer who represents the struggling dispensary group.

Walker filed documents Aug. 4 with the Maine Department of Health and Human Services naming the Farmacy Institute for Wellness and retired NBA basketball player Cuttino Mobley as partners in the Wellness and Pain Management Connection LLC.

The Wellness and Pain Management Connection -- which formed Aug. 3 in Delaware -- will lend Northeast $1.6 million over eight years at 8.5 percent annual interest.

Walker said the Wellness and Pain Management Connection was not formed at the last minute, but had been in the works for "months and months."

"It wasn't this mashed together, last-minute thing," he said.

The Farmacy Institute for Wellness is an offshoot of the Farmacy, which operates three dispensaries in California, Walker said.

Joanna LaForce, director of clinical operations for those dispensaries, will "oversee and support delivery of certain consulting and related services" for Northeast, according to the term sheet detailing the loan.

Walker said Northeast's first dispensary, in Thomaston, will be open in the first half of September, thanks in part to the new capital. State officials have said they inspected a Northeast cultivation operation there, where two people now work, in June.

Northeast's deal with the Wellness and Pain Management Connection has been questioned by several interests, including Berkeley Patients Group, Northeast's former backer, which sued Northeast in Cumberland County Superior Court in July for repayment of more than $632,000 in loans.

Berkeley also alleges Northeast Patients Group CEO Rebecca DeKeuster used proprietary information to negotiate the deal with Mobley while still employed as Berkeley's New England expansion director.

She quit that job days after signing the deal with the Farmacy Institute for Wellness.

Berkeley is also asking the court to remove DeKeuster from her job with Northeast.

An attorney for the Farmacy also questioned whether a deal had been reached. William Kroger, a Beverly Hills, Calif., attorney who said he represented the Farmacy, said on Aug. 5 there was no deal between Northeast and the Farmacy.

"Your facts are incorrect," Kroger wrote in an email. "I am the attorney for the Farmacy and there has not been any such agreement or business arrangement."

"I think it was a misstatement," Walker said of Kroger's statement. "(He thought LaForce) had given the money, or that it was a collective. No one's denying there was an agreement."

DeKeuster did not return calls seeking comment last week.

DHHS spokesman John Martins said Friday that the department's licensing staff will receive signed copies of the agreement this week; Walker said those documents will be delivered to the state today.

Martins wrote that department representatives have "seen signed documentation regarding the agreement."

"We have full confidence that the agreement is in place," Martins wrote.

Northeast Patients Group owns the exclusive right to run half the state's licensed marijuana dispensaries, including the state's largest potential markets: Portland, Bangor and Augusta.

But the organization has struggled to open a single dispensary, and it has dialed back the financial expectations it envisioned in its initial applications.

In its 2010 application, Northeast projected a net gain of more than $426,000 while serving 691 patients in its first full year.

On July 20, Northeast projected a net loss of more than $1.75 million while serving 540 patients in its first full year.

Meanwhile, the number of patients in the state's medical marijuana program has multiplied.

In March, the state said there were 773 patients. By mid-June, 1,800 patients were approved, according to John Thiele, medical marijuana program manager for the DHHS Division of Licensing and Regulatory Services.

Kennebec Journal Staff Writer Michael Shepherd can be contacted at 621-5662 or at:

mshepherd@mainetoday.com

 

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