Thirty businesses have won approval to grow and process Maryland medical marijuana, regulators announced Monday, putting life into the industry more than three years after lawmakers legalized the drug for medical use.
Several of the winning applicants have political ties — with major donors or high-ranking officials on their teams — including a company that hired the Maryland lawmaker who was the driving force behind the tightly regulated program.
State officials received an unexpectedly large number of applications from entrepreneurs who want to jump into the legal marijuana business. Maryland, which along with 24 states and the District has legalized the medical use of the drug, is considered a lucrative area of opportunity because it has few restrictions on who can buy the drug and limits how many businesses can participate. Patients probably will not be able to obtain medical marijuana until summer 2017 because dispensaries have not yet been approved.
Some of the cultivation and processing winners have high-ranking law enforcement officials on their teams, including two previous heads of the state Natural Resources Police, which is tasked with eradicating illegal marijuana cultivation in state forests. The head of the state police union also is involved with one of the approved applicants.
The Maryland Medical Cannabis Commission chose 15 growers from nearly 150 applicants, and it chose 15 of 124 processors who applied to turn the marijuana plants into pills, oils and other medical products. Seven organizations received approval to both grow and process the drug.
The businesses must pass another round of background checks and a facility inspection before they are formally licensed to operate. Regulators have not yet awarded licenses to dispensaries where patients could get marijuana, and state officials are considering more than 800 applications for as many as 94 licenses, limited at two per state Senate district.
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The field of applicants to grow and process marijuana included companies that recruited former law enforcement officials to guard their operations, growers from other states, and some with political ties. The identities of individuals involved with the companies were redacted from application materials in an effort to avoid the appearance of favoritism.
Of the 15 companies cleared for cultivation, at least eight have ties to marijuana industries in other states, including Colorado, New York and Illinois.
One of the politically connected companies is Doctor’s Orders. The group hired Del. Dan K. Morhaim (D-Baltimore County), the legislature’s top sponsor of medical marijuana legislation, to serve as clinical director of an affiliated dispensary.
Morhaim drew scrutiny from good-government advocates and rival medical marijuana companies for his involvement with an applicant, which he did not publicly disclose as he addressed regulators about the program and shepherded legislation to expand who can recommend marijuana for medical use.
Morhaim has said he followed the law throughout the process and cleared his dual roles with the General Assembly’s ethics adviser.
Prominent developer and restaurant operator Jeff Black runs Doctor’s Orders, with involvement from Brian Vicente and Christian Sederberg, partners at a Colorado law firm that advises marijuana-related businesses. Glenn Weinberg, a former executive from the Cordish Companies and the prominent developer that owns Maryland Live Casino, also is part of the group.
Other companies that won approval to grow or process marijuana include:
● Forward Gro LLC, which was approved to grow marijuana in Anne Arundel County, has the county’s former sheriff George F. Johnson IV as its security director and includes Gary Mangum, chief executive of Bell Nursery and a prominent Republican donor close to Gov. Larry Hogan (R).
● Holistic Industries, which includes a former top state health regulator and the current head of the state police union on its team, won approval to operate a growing and processing facility In Prince George’s County. The company is run by Josh Genderson, the fourth-generation owner of D.C. liquor store Schneider’s of Capitol Hill, and former University of Maryland Medical School dean Donald Wilson. Also participating is Nelson Sabatini, the former head of the state Department of Health and Mental Hygiene who currently chairs a state regulatory commission.
● Sunmed Growers, which was approved to operate in Cecil County, is led by Jacob J. Van Wingerden, president of a production company that sells wholesale potted plants to large retailers.
● MaryMed LLC, which won approval to grow in Dorchester County, is run by Minnesota grower Kyle Kingsley. Kingsley’s company, Vireo Health, is one of just two businesses licensed to grow in Minnesota, and also won a coveted license to grow in New York’s competitive market. State regulators in New York and Minnesota have investigated the company based on allegations from a former employee that it transported marijuana across state lines.
● Michael Bronfein, a health-care executive and major donor to Democratic candidates, leads companies that won approval to grow and process marijuana in Baltimore County.
The Regional Economic Studies Institute at Towson University managed the evaluation of applications, recruiting subject-matter experts to review and score materials. State-appointed members of the cannabis commission had the final say in approving businesses for involvement in marijuana production.
The commission initially agreed to award the planned 15 cultivation licenses to the applicants with the highest scores, regardless of their location in the state. But a last-minute motion from commissioner Harry Robshaw moved two applicants out of the top 15 and moved up two lower-scoring applications to ensure that the companies approved to grow marijuana were more evenly distributed across the state.
The commission has not said how the winning applicants were ranked. Companies that did not win approval are not permanently shut out of the market, and the commission can award more licenses if supply falls short of demand. Some winners may choose to merge with other companies with state approval, giving them the option to, in effect, sell their rights to grow. The commission must approve mergers and could veto them if a prospective team member is found to have a criminal background or history of financial troubles.
Some of the most notable losing applications include: GTI Maryland, which had former U.S. Capitol Police chief and Senate sergeant-at-arms Terrance W. Gainer as its security director and former Baltimore Ravens tackle Eugene Monroe as an investor, and CBH Ventures, a team of former state troopers turned activists against drug laws.
Some well-financed companies with out-of-state ties also faltered in their bids, including Peak Harvest Health, which is run by a Minnesota marijuana grower, and New York health-care company Alternative Medicine Maryland.