State selects growers for cannabis program
CHARLESTON — After years of delay, West Virginia took a big step recently by selecting the first growers for its medical cannabis program, but West Virginia-based companies were largely left out in favor of out-of-state companies including a political donor.
The Office of Medical Cannabis (OMC) within the Department of Health and Human Resources announced Oct. 2 the selection of 10 applicants for medical cannabis grower permits.
The medical cannabis program was capped by the West Virginia Legislature at 10 growers permits, 10 processor permits, and up to 100 dispensaries. While a person or a business can hold permits for all three permitting processes, no person/business can have more than 10 dispensary permits.
OMC is now scoring applications for processor and dispensary permits, with the goal of issuing patient cards by the spring of 2021. The office is also accepting physician registrations who would issue certifications to patients to use medical cannabis. Jason Frame, director for OMC, said the selection of growers was an important step for moving the medical cannabis program forward.
“It is a big step,” Frame said. “We at the Office of Medical Cannabis are very proud of that accomplishment. It’s major stuff and publicly viewable, where most of our work has been behind the scenes up to this point. Now the public will start seeing these facilities come to life.”
The 10 companies selected as growers are: Armory Pharmaceutical Inc.; Blue Ridge Botanicals Ltd.; Buckhannon Grow LLC; Columbia Care WV LLC; Harvest Care Medical LLC; Holistic WV Farms I LLC; Mountaineer Holding LLC; Mountaineer Integrated Care Inc,; Tariff Labs LLC; and Verano LLC.
According to a list of grower applicants released by OMC, the 10 selected growers were chosen from a total of 42 applicants who applied between December 2019 and February 2020. Of the 10 companies selected as grower, only two appear to be exclusively West Virginia companies according to a search of business filings on the West Virginia Secretary of State’s Office.
Mountaineer Holding is Kanawha County-based, with a farm in Belle, offices in Charleston, and managers all based in Charleston. Tariff Labs is based in Roane County, with a farm in Left Hand, offices in Spencer, and managers all based in Roane County.
While the remaining eight companies all have grow operations in West Virginia, the companies either have principal offices in other states or include company officers based in other states. Armory Pharmaceuticals has a farm and offices in Buckhannon, but the company president and a director are listed in Baltimore. Blue Ridge Botanicals has a farm in Mason County and offices in Kanawha County, but its leaders are based in Houston, Texas.
Buckhannon Grow has a farm in Upshur County, but its principal offices are in Columbus, Ohio. Columbia Care has a farm in Berkeley County, but its principal offices are in Chelmsford, Mass. Columbia Care does business in 10 states and Washington, D.C., and lists its corporate headquarters in New York City.
Both Holistic Farms and Verano have grow operations in Beaver in Raleigh County. Holistic Farms’ principal offices are in Washington, D.C., as is its manager. Verano’s principal offices and managers are based in Chicago, Ill. Mountaineer Integrated Care has a farm in Mineral County, but its principal offices are in Gibsonia, Pa.
According to the OMC’s Review Process for Medical Cannabis Organization Applicants, grower applicants were chosen by a Scoring Review Team. Categories the team considered for scoring included organizational experience, security, employee qualifications, transportation plans and storage, for medical cannabis, inventory management, plans to discourage diversion of the product, and timetables.
The companies were graded on a score of 1-5, with 5 meaning outstanding and 1 meaning unacceptable. A separate Awards Team was presented with the Scoring Review Team’s recommendations and awarded the permits. Companies that were denied permits can have the decisions reviewed.
“We brought in an outside group of folks from various backgrounds,” Frame said. “We thought we had a well-rounded scoring team based again on their backgrounds. They were very diverse in that group. They looked at things, like the operational plans that the facility submitted, their security plans, plans to prevent diversion, which of course is our primary mission with the Office Medical Cannabis, and also the background and education on the folks that will be working there also.”
Frame said the scoring team was not required to show preference to companies owned by West Virginians, saying that the business filings don’t show the full picture.
“West Virginia citizenship was not a requirement to apply,” Frame said. “I can point out that actually four of the 10 selected growers are majority owned by West Virginians.”
One company, Harvest Care Medical, has a farm in Jefferson County and its principal offices in Mineral County. Dustin Freas of Cumberland, Md., is listed as the company’s manager. According to campaign finance reports from the Secretary of State’s Office, Freas donated the maximum amount to the election campaign for Republican Gov. Jim Justice: $2,800 last October for the Republican primary and another $2,800 in August for the general election.
According to the West Virginia Ethics Commission, Harvest Care Medical’s lobbyist is Larry Puccio, who also lobbies for the Justice-owned Greenbrier Resort and Justice-owned Southern Coal Corp. Puccio, the former chief of staff to former governor Joe Manchin and former chairman of the state Democratic Party, was an advisor to Justice’s 2016 Democratic campaign for governor and also advises Justice’s 2020 reelection campaign as a Republican.
Looking at the list of grower applicants that were denied permits, 13 of the 32 companies included principal offices in West Virginia with West Virginians as managers or directors. Another five companies included a mixture of West Virginians and out-of-state interests.
One of the companies rejected – Redbud Hill Naturals LLC – is based in Pendleton County. Owner Mike Weaver spent 19 years in the poultry business, switching to industrial hemp farming a few years ago. Weaver wanted to add medical cannabis to his growing portfolio and employ up to 40 young people to help him cultivate the crop – jobs that won’t be created now.
“I’m surely disappointed on many levels,” Weaver said. “My whole motivation was to create a bunch of new jobs up here in our area. I intended to concentrate on young people and hire as many young people as I could to give them jobs here, so they don’t have to go to another county or another state to get employment. We were going to do a tremendous amount of good with this.”
As part of the permit process, grower applicants had to pay a nonrefundable application fee of $5,000. The grower applicants had to pay a $50,000 permit fee. Growers were also required to have a minimum of $2 million in assets, with $500,000 in cash in deposit at a bank to be considered.
Weaver applied for a grower permit, a processor permit, and two dispensary permits which all required application and permit fees. That’s not counting the law firm Weaver hired to help him set up the companies and navigate the paperwork, as well as the costs of hiring experts, purchasing equipment, setting up security, and the time spent doing research. Weaver also paid out-of-pocket for the criminal background checks required for his employees.
When it was all said and done, Weaver spent more than $250,000, wiping out his retirement savings.
“It’s cost me a tremendous amount of money,” Weaver said. “If I can use what I had to try to help other folks – not only with the medical cannabis itself, but to create all these jobs here in our area – I was willing to stick my neck out and do that. And this is what I get out of it?”
Weaver said changes need to be made to the selection process by the Office of Medical Cannabis to give preference to West Virginia-based businesses.
“It’s obvious the Office Medical Cannabis didn’t do that, and my first question would be to them, ‘why,'” asked Weaver. “I’m a farmer and I think they should have went to farmers. They should have been given a priority for that.”
Signed into law in 2017, the Medical Cannabis Act legalizes marijuana for medical use. Marijuana can be prescribed by pill, oil, topical forms and vaporization or nebulization. It specifically excludes smokable marijuana. It could be used for several ailments, including cancer treatment, post-traumatic stress disorder, seizures, chronic pain and terminal illnesses.