Don't Bogart That License: How state lawmakers ruin pot in battle over money

We're from the government and we're here to ruin legal weed too.

We're from the government and we're here to ruin pot.

Let's listen to a guy who was awarded a Maryland state license to dispense marijuana last summer but filed a lawsuit against the state, because he missed out on a grower's license—apparently because of a single typo in his application.

"What they did to us is bullshit," said the man, who at the end of the conversation asked that his name not appear in the paper (even though it's easily findable in the court record) and who, because he seems like a nice guy and is not politically connected, City Paper granted this rare courtesy. "I don't want to be the person getting the finger pointed out for trying to hold the process up," he explained. "I see a civil war going on in Maryland between the winners and the losers."

Maryland's medical cannabis program has not yet reached the cannons-on-Federal-Hill stage, but a toxic mix of politicians, lobbyists, ex-cops, big money political donors, and well-meaning (always well-meaning!) volunteer regulators has turned an easy-growing, mostly enjoyable plant into a racially contentious, politically fraught Annapolis grudge match. And it's not over yet.

As the clock neared midnight on April 10—the last day of the legislative session—legislators sought to pass a bill that would have expanded the number of approved pot-growers to include African-American-owned companies. But they ran out of time as Republican lawmakers gave speeches to close out the session.

On April 12 members of the Legislative Black Caucus held a press conference to demand a "special session" to pass the bill, saying it would take only 15 minutes and that if they don't get it, fellow Democrats should not expect "business as usual" in next year's session. "The Legislative Black Caucus has 50 members," said Del. Cheryl Glenn, who heads the caucus. "How can the Democrats pass anything without us?"

The Black Caucus has a point. As City Paper noted in its Weed Issue last year, "legal weed skips potential black growers and distributors" frequently. Tied to this is the ongoing problem that as weed inches closer to legalization, many people still go to jail over it. As Kaitlyn Boecker, a policy associate at the Drug Policy Alliance's Office of National Affairs in Washington, D.C., told City Paper, "biased enforcement" of weed laws means a disproportionate number of the people put in jail for weed are black.

If the bill had passed, a couple of aggrieved would-be pot-growers would probably have dropped their lawsuit. As things stand now, it's probably cannons-on-Federal-Hill time. To understand why this is so, it is necessary to rewind the tape about eight months.

The state's regulatory apparatus burst into dysfunction last summer when the Natalie M. LaPrade Maryland Medical Cannabis Commission, a 15-member volunteer state board, voted preliminary approval of 15 prospective pot growers. Working for the commission, the Regional Economic Studies Institute of Towson University (RESI) conducted a double-blind study (i.e., names of applicants hidden) to rank the applicants. On July 27, the grower's subcommittee of the commission voted unanimously to grant preliminary licenses to those top 15 applicants, but two days later, the subcommittee's chairman, Cheverly Police Chief Harry "Buddy" Robshaw, asked for a new meeting and a re-vote. He and other members, this time not unanimously, whacked two applicants from the top 15 and replaced them with the companies ranked 20th and 21st, all in the name of "geographic diversity."

Given that the commission had, until then, told applicants that "geographic diversity" considerations were "not relevant," the decision led to lawsuits, and the cry from the Legislative Black Caucus that the commission forgot to include racial balance—which is true. (The commissioners said they did not include racial diversity in their scoring because the office of Attorney General Brian Frosh had advised them that they could not legally do so unless or until a "disparity study" had been conducted showing that racial or ethnic minorities were under-represented in the legal marijuana industry.)

Perhaps ironically (perhaps not!), one of the companies substituted at the last minute to create "geographic diversity"—Holistic Industries—just happened to be about the most politically wired company in the whole process, with Annapolis' most highly-paid lobbyist, Gerard Evans, and the head of the state's Fraternal Order of Police, and the former Secretary of Health and Mental Hygiene advising it. One of its investors is Evans' son-in-law. Another is a relative of Senate President Mike Miller.

Perhaps ironically (but probably not), one of the two companies bumped from the top 15 is (maybe) minority controlled. "Our company is 84 percent African-American owned," says former state senator John Pica, a lobbyist for GTI Maryland, a Bethesda-based company that was planning to grow pot in Washington County before it got bumped off the list (it was reportedly ranked 12th). "In fact, if you include women [as] minorities it's probably close to 90 percent minority-owned." (Another lawyer for the company will later deny this, saying only that GTI has "significant minority ownership").

GTI is also extremely well-wired, with former U.S. Capitol Police Chief Terrance W. Gainer serving as its director of security, a former NFL football player (former Ravens tackle Eugene Monroe) among its investors, and the former counsel for President Bill Clinton (Lanny Davis! Ask him about his friendship with Hillary! Never mind, he'll tell you anyway!) on its legal roster.

So you can see how this is a problem.

In all, members of the Maryland House of Delegates and Senate dropped at least 15 bills into the hopper, all trying to head-off further legal skirmishing.

The first "emergency bill" aiming to rectify the commission's supposed injustices, sponsored by Sen. Joan Carter Conway of Baltimore and the liquor board (her husband, Vernon, infamously lingered on the payroll for years after he stopped actually inspecting bars), would have scrapped the entire commission and demanded it hire a consultant to help "rescore the top 75" license applicants, giving a 7 percent boost to any applicants owned primarily by African-Americans. The bill gives a helpful tip to other applicants facing this rescoring regime: "They may add up to two additional African-American investors."

And why not? The ante for prospective growers is a $3 million letter of credit, something available only through state-chartered financial institutions, as all the federally chartered ones are prohibited by federal law from financing pot ventures.

You can see the scale of this. Someone estimated the state's medical weed business would be worth $129 million a year, which seems low (Colorado, with a smaller population than Maryland, topped $400 million in medical weed sales last year). "We're not talking about millions of dollars," Senator Conway said at the presser. "We're talking about a billion-dollars."

The weed industry is hilariously profitable overall, with even startups usually at least breaking even in the first couple of years. And government policy is in no small way responsible. Of the 28 states (plus D.C.) that allow medical cannabis, 14 states do not prohibit personal, D.I.Y. growers, preferring to allow patients to grow their own in limited quantities. Maryland has gone a more industrial route, choosing to limit (legal) supply by licensing only an initial 15 grow operations statewide, thus making each one the equivalent of a license to cultivate cash.

When the government proposes to license private mints, the lobbyists and players pile-in. A Washington Post survey of the 144 initial applications to grow legal weed found roughly 45 percent were either politically connected, had law enforcement connections, or were related to existing out-of-state pot businesses. Seven companies were all of these.

Of the 19 companies preliminarily chosen last summer for either grow, process, or dispensary licenses, 16 had at least one of these connections.

Hence the lawsuits and the "emergency bills." Del. Cheryl Glenn is the godmother of legal pot in Maryland. The Commission is named for her late mother. Her bill, which passed the House of Delegates and reportedly had enough votes to pass the Senate, was the one that failed at the buzzer last week.

Among the original provisions: "a Small, Minority, and Women-Owned Medical Cannabis Business Account . . . capitalized by 2% of the gross annual sales of each grower, processor, and dispensary licensed by the division."

The idea is to funnel money to small minority and women-owned businesses via "eligible fund managers," which will take the money and invest or loan it as directed (taking their cut, of course). In Maryland, much of this work is done by Meridian Management Group, a private Baltimore company that advertises on its website its special relationship to the Legislative Black Caucus, which Glenn leads and which has for more than two decades made it the sole-source, no-bid owner of a $1.3 million state contract to operate a $7 million state-funded revolving loan fund that loses about $200,000 a year to bad debt. Thus the legal weed industry was reconceived as a jobs program for underserved communities with connections to the right politicians.

At their April 12 press conference, caucus members insisted that none of the chosen companies had any African-American ownership, despite a spreadsheet released by the Medical Cannabis Commission showing that companies chosen for licenses did have some minority investors. "That chart the commission showed is not worth the paper it's written on," Glenn shouted. "It's unconfirmed!"

Commission spokeswoman Vanessa Lyon says the numbers come from 11 of the 15 companies that the commission chose. The chart shows five African-American men and one African-American woman among the ownership on the responding growers—out of 78. That's 7.7 percent. Counting other minorities, the commission comes up with 15.3 percent, and with women included it's almost 36 percent. It's impossible to argue that this level of diversity is reflective of the state's population, which according to the U.S. Census is 30.5 percent African-American.

Before final passage, Glenn's bill was amended three times, and the entire preamble (and the equity investment provision) was struck out and replaced with an even more detailed, Byzantine set of rules and provisions, one of which was a guarantee of free medicinal weed to low-income folks.

Legally speaking, this is a Berkeley, California innovation. That city mandated a 2-percent set-aside by its (then) strictly nonprofit dispensaries in 2015. Practically, though, it's standard weed culture behavior. The New York Times reported that Berkeley Patients Group (a large dispensary) had been giving weed to the poor on its own for a decade. One recipient, 78-year-old poet and activist Arnie Passman, told the Times he couldn't remember exactly how long he had been given medical marijuana or why. "It could be for my allergies, or my arthritis—you know what happens to us folks: We forget," Passman told the Times. "I can give it a blanket 'I feel better.' It helps me get going in the morning."

The right-wingers had a field day with this (some dubbed it "Obama Weed"). But pot is now, by state law, medicine. And as such it's pricey. But because it's a "controlled dangerous substance" according to federal law, medical insurance doesn't cover it. The logical case for "compassionate use" is impeccable.

And the industry can spare it.

Medicalizing pot has two major effects. First, it creates the need for a superstructure of officialdom: licenses, prescriptions, testing labs—all expensive things that are in no way necessary for the normal cultivation or enjoyment of the product and its salutary effects. Secondly, it functionally diminishes respect for all that authority. By now, anyone who is not a child or a former Reagan Administration official understands the reality that pot is relatively safe as an under-the-counter chemical amusement aid. Most also know (though partisans are loathe to admit) that it is not yet proven effective for many of the supposed medical conditions it's recommended for. It's no good for insomnia, for example. The peer-reviewed efficacy studies the FDA requires for the licensing of actual pharmaceutical drugs just haven't been done. And while it's well-known as an appetite enhancer, that's not a thing most Americans actually require.

So it's a sure bet that, as in Colorado, California, and elsewhere, when the legislative dust settles, many or even most Marylanders who get their medical cannabis card will be doing so to facilitate getting high—which is a perfectly reasonable thing to do. Everyone knows this, and yet now the state is bent on creating a whole parallel quasi-legal market marked by scarcity, massive profits for favored companies, litigation, and endless bureaucracy, all on the foundational lie that your podiatrist can and should "recommend" (not prescribe) this substance to alleviate your PTSD, wink-wink.

Glenn's bill had most everything a reformer might want in a medical-weed-reform bill, except two things: It pointedly did not specify restoration of the grow approvals GTI and Maryland Cultivating and Processing missed out on.

The Senate bill would have done that. No less a personage than Senate President Mike Miller, in his own bill, specified that. Much of the battle during the session was in how to reconcile this, but it got done—only to go down in flames as Republican opponents ran out the clock with speeches.

"Even if these bills do go through I don't think it will change anything," said our anonymous dispensary operator-to-be, a few days before the end. "What they did was wrong. But what's done is done. I don't want to be against the wheel any more. I want to be with the wheel."

See? That's the spirit.

He said he doesn't intend to pursue his case against the commission.

In court, meanwhile, Holistic Industries has intervened in GTI's case against the commission, moving that it should be dismissed. The other plaintiff, Maryland Cultivation and Processing, LLC, countered with new evidence, in the form of internal emails that it says show that Robshaw's subcommittee knew which companies were going to grow where when they first voted.

Holistic basically argues that the commission's decision to exclude GTI and include Holistic is quasi-judicial and not reviewable in the court unless the plaintiff can show some extraordinary shenanigans. It also argues that the plaintiff's attempts to get information—discovery—are out of bounds, and that the commissioners don't legally have to put up with this sort of abuse.

Claiming that you can't get judicial review without bringing evidence of chicanery, and also that you also can't get evidence of chicanery because discovery is too burdensome, would appear to be a catch-22. But there's a good reason to make the legal barrier high.

The argument can be summed up: If every time a government commission made a decision someone didn't like, the aggrieved party could go on a crazy fishing trip in search of chicanery, nothing could ever get decided. Think "Benghazi."

The motion was filed by Attorney Gary R. Jones, who told City Paper he needs to check with his client and co-counsel before commenting, and then never called back.

Now it's up to Judge Barry Williams—yes, he's the same judge who presided over the trials of the police officers accused of killing Freddie Gray—to rule on whether the case can proceed.

Leave it to politicians to make a good and simple thing complicated and absurd.

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