State health officials announced Friday that, after a further review, they have eliminated 9 of the 20 applicants given initial approval for medical marijuana dispensaries, including both in Boston and all three run by former Massachusetts congressman William Delahunt.
Only 11 dispensaries will be given provisional certificates allowing them to set up their operations and undergo inspections in advance of opening, Karen van Unen, executive director of the state’s medical marijuana program said during a news conference.
She said some dispensaries could open by November, but most wouldn’t do so until February 2015, much later than this summer, when state officials originally envisioned most would open. She said 97 percent of the state’s population would live within 30 miles of a dispensary.
In a letter to Delahunt’s company, Medical Marijuana of Massachusetts, van Unen said the company was denied dispensary licenses because it planned to divert 25 percent of its gross revenues to a management company, and had falsely claimed on its application that it had support from state Senate President Therese Murray.
A marijuana dispensary “must operate on a non-profit basis for the benefit of registered qualifying patients,” Van Unen wrote.
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She said Delahunt admitted during an interview with state officials that his meeting with Murray “was simply informative and no request was made for her support. The only explanation Mr. Delahunt offered was that he should have read the application more carefully.”
Delahunt issued a statement, saying, “We worked very hard to get this right at every turn, legally and ethically, so we’re obviously surprised and disappointed. But frankly, I’m also perplexed, because the corporate structure cited as the main reason for our denial is the same one that was in place when we were rated #1 among applicants in the last round and received the Department’s green light to proceed.”
He added that his team would review the decision, “with the intention of providing clarifications of any findings that warrant them and to weigh our options going forward.”
The contentious, high-stakes selection process had been delayed for months after the news media and losing applicants raised a number of concerns about misrepresentations and conflicts of interest involving several of the 16 companies approved in January for 20 provisional dispensary licenses, as well as the backgrounds of some of their principals.
The newly rejected companies will be barred from going forward based on issues discovered during expanded background checks, misrepresentations that were identified, detailed review of their financial and corporate statements and face-to-face meetings with applicants.
Those rejected are: Medical Marijuana of Massachusetts, which had proposed locations in Plymouth, Mashpee, and Taunton; Green Heart Holistic Health & Pharmaceuticals in Boston; Good Chemistry of Massachusetts, with locations in Boston and Worcester; Brighton Health Advocates, Fairhaven; Debilitating Medical Condition Treatment Centers, Holyoke; and Greeneway Wellness Foundation, Cambridge.
These companies can reapply again next year, when a new round of applications will likely be considered, van Unen said.
State officials have acknowledged they hadn’t checked the veracity of applicants’ claims before the January announcement, despite spending more than $600,000 on two contractors who were hired to scour the backgrounds and evaluate their proposals. State regulators said they have since dug extensively into company executives’ backgrounds, finances, and business plans.
The selection process has been shrouded in secrecy, with state health officials refusing to release the documents showing in detail how they evaluated and scored each of the 100 applicants that vied for the first batch of licenses awarded by the state. A state health official said they would be released Friday afternoon.
Several lawsuits have been filed, and state lawmakers launched an investigation into the fairness of the licensing process.
Voters in 2012 approved a referendum that directed the state health department to award up to 35 licenses in the first round.
Amid the delays, leaders from several of the companies that were earlier tapped for a provisional license said they were reluctant to spend money building dispensaries and cultivation facilities without knowing if they would ultimately get the green light to proceed.
Delahunt has ties to the head of the state Department of Public Health, which is overseeing the licensing process. Public Health Commissioner Cheryl Bartlett, a long-time friend of Delahunt’s, hosted two political fund-raisers for the congressman in 2005 and 2006, and donated to him in 2007, but she failed to file the disclosure of the potential conflict until her agency was in the final weeks of reviewing the dispensary applications.
Bartlett filed the disclosure form with the state on Dec. 31, indicating she would be selecting the license winners, but two weeks later, after questions were raised about potential conflicts with Delahunt, Bartlett’s deputy, Karen van Unen, filed a disclosure form indicating she would choose the winners.
Bartlett and Delahunt denied any conflicts.
In Boston, confusion swirled and tempers flared this spring regarding both of the companies initially selected for provisional licenses, one in the South End, the other in Back Bay.
Good Chemistry of Massachusetts, the company that had proposed a dispensary on busy Boylston Street, later switched its site to 57 Stuart St., in the city’s theater district, after facing a barrage of criticism from city officials and nearby residents and businesses about its proposed Back Bay location.
Similarly, neighbors and city officials complained about the location of Green Heart Holistic Health & Pharmaceuticals’ proposed dispensary on Southampton Street, saying there are already several methadone clinics in the area.
Both companies were chided by city councilors for claiming in their license applications that they had officials’ support, with Councilor Tito Jackson denying he backed Green Heart, as the company had claimed, and Councilor Stephen J. Murphy alleging that he was manipulated by Good Chemistry’s consultant into writing a letter of support.
Jackson said on Friday that he was pleased state regulators knocked Green Heart out of the running.
“I believe in particular, Green Heart Holistic … was not an optimal location,” Jackson said. “It was a bad location, where over 2,000 people a day receive methadone treatment and it would have added to an area that already has its fair share of medical treatment.”
In a letter to Andrew DeAngelo, chief executive officer of Green Heart Holistic, van Unen said the company was deemed unsuitable because it provided misleading and incorrect information on its application by omitting the fact that DeAngelo’s brother and business partner, Stephen DeAngelo, a “strategic advisor” to Green Heart, had pled guilty in 2001 to a felony marijuana charge.
Andrew DeAngelo said Friday he was disappointed that the state had denied the company’s application.
“Our only regret is that we will not have the opportunity to bring our pioneering best practices, gold standard industry model to the patients and greater community of Boston,” he said.
In a letter to Good Chemistry, the other applicant knocked out of Boston, van Unen said the company was denied licenses for dispensaries in Boston and Worcester and was no longer allowed to apply for one in Salem that it also sought because it had provided misleading information about its support from local officials in all three communities.
Good Chemistry’s chief operating officer, Jaime Lewis, had acknowledged the misstatements about its local support in an earlier interview with the Globe, and said that while rushing to file the company’s application, she inadvertently placed references to Worcester-area state legislators and city councilors supporting the company’s proposed Worcester site in the portion of the application that was supposed to describe the local support the company received for its Boston dispensary.
The company released a statement Friday saying it was extremely disappointed with state regulators’ decision.
“Throughout this entire process, Good Chemistry has done everything possible to demonstrate to the Department of Public Health that we are a company of high standards, professionalism and integrity,” it said. “To the extent that we made any mis-statements in any of our application materials, we disclosed them as soon as we were aware of them.”
Patients who have been waiting for months for dispensaries to open said they were frustrated at the slow pace of the selection process.
“We acknowledge this is an important step forward, but safe access to the medicine is still very far away,” said Matthew J. Allen, director of the Massachusetts Patient Advocacy Alliance. “Not having a location in Boston is a huge gap in patient service. DPH said they’ll start a new round of registration in the fall, but that’s not soon enough for patients suffering now.”
Globe correspondent Yasmeen Abutaleb contributed to this story. Kay Lazar can be reached at [email protected] Follow her on Twitter @GlobeKayLazar. Shelley Murphy can be reached at [email protected] Follow her on Twitter @Shelleymurph
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