Rigging The $75 Billion Legal Marijuana Industry

October 2018
Rigging
the $75 Billion
Legal Marijuana
Industry
Inside the US Marijuana Money Grab Happening Now

TABLE OF CONTENTS
ExecuSve Summary: 1
Condensed Reports: 7
Florida 7
Maryland 12
Arkansas 18
Virginia 24
Louisiana 30
Detailed Reports: 36
Florida 36
Maryland 53
Arkansas 67
Virginia 106
Louisiana 122
Exhibits: 153

MARIJUANA INDUSTRY INVESTIGATIVE REPORTING (22 JURISDICTIONS COVERED)
The incomplete list of marijuana industry investigative reporters
Dec-18
Number of reporters
101
Investigative Reporter Co-Author (if applic) Headlines Jurisdiction Covered Publisher Publish Date Journalist Contact Info Co-Author Contact Info
Hindenburg Research QCM Aphria: A Shell Game with a Cannabis Business on the Side International Hindenburg Research 12/3/18 Info@hindenburgresearch.com glevy@qcmfunds.com
N/A (Editorial) Medical marijuana saga shows it's who you know that counts New York Syracuse New Times 12/2/18 N/A
Celene Adams Challenges -- and controversy -- swirl around marijuana social equity programs in California California MjBizDaily 11/29/18 sceleneadams@gmail.com
Amy Biolchini Billion-dollar company stakes claim on Michigan's marijuana industry Michigan MLive 11/29/18 abiolch1@mlive.com
Nick Corasaniti How a Push to Legalize Pot in N.J. Became a Debate on Race and Fairness New Jersey New York Times 11/28/18 corasan@nytimes.com
Lydia DePillis Louisiana is trying to keep medical marijuana medical. It's harder than it sounds. Louisiana CNN Health 11/27/18 lydia.depillis@turner.com
Tim Knauss Politically connected Syracuse group flips NY marijuana license for pot of gold New York Syracuse New Times 11/26/18 tknauss@syracuse.com
Bill Alpert One of America's Richest Marijuana Companies (Curaleaf) Has Deep Russian Roots National Barron's 11/21/18 william.alpert@barrons.com
Maria Clark What to know about Louisiana's medical marijuana program heading into 2019 Louisiana Times Picayune 11/20/18 maria_clark@nola.com
James Higdon Racial Justice and Pot are Colliding in Congress National Politico 11/18/18 ?
Doug Donovan National companies moving to take over Maryland marijuana businesses, despite state law Maryland Baltimore Sun 11/17/18 ddonovan@baltsun.com
Sam Karlin Why Southern University's medical marijuana program is making little progress Louisiana The Advocate 10/30/18 skarlin@theadvocate.com
Liam Stack Marijuana Legalization Has Gone Mainstream. Rick Steves Has Helped. National New York Times 10/27/18 liam.stack@nytimes.com
Graham Moomaw Virginia picked five companies… Officials won't explain why some bidders won and some lost Virginia Richmond Times-Dispatch 10/21/18 gmoomaw@timesdispatch.com
Alyse Horn The Exclusive Industry That's Supplying Pennsylvania's Medical Cannabis Pennsylvania West Virginia Public Broadcasting 10/15/18 alysehorn@gmail.com
Hunter Field Applicant for Arkansas medical-marijuana growing license secretly videotaped meeting Arkansas Arkansas Democrat-Gazette 10/13/18 hfield@arkansasonline.com
David Robinson Marijuana legalization in New York: Here's the money behind politically charged pot war New York LoHud 10/9/18 drobinson@lohud.com
Jackie DeFusco Investigation reveals city leaders privately supported Bristol casino before plan was made public Virginia WJHL 9/18/18 jdefusco@wjhl.com
Lici Beveridge Clinton pharmacist (Marco Moran, OTC:DEWM) will head to prison in compound pharmacy scheme Mississippi Hattiesburg American 9/17/18 lbeveridge@hattiesburgamerican.com
N/A Investor Alert: Marijuana Investments and Fraud National Securities Exchange Commission 9/5/18 N/A
Max Brantley The underbelly of Arkansas politics revealed in unsealed text messages Arkansas Arkansas Times 9/3/18 maxbrantley@arktimes.com
Andrew Left Cronos: The Dark Side of the Cannabis Space Canada Citron Research 8/30/18 Contact form
Dominc Holden Inside the Trump Administration's Secret War on Weed National BuzzFeed News 8/29/18 dominic.holden@buzzfeed.com
Ryan Briggs Hidden testimonials show attempts to influence marijuana licensing Pennsylvania City & State Pennsylvania 8/27/18 rbriggs@cityandstatepa.com
Dan Adams Payments for marijuana licenses appear to skirt state law Massachusetts Boston Globe 8/22/18 daniel.adams@globe.com
Laura Vozzella Dozens of companies compete for a piece of Va.'s limited medical marijuana market Virginia Washington Post 8/20/18 laura.vozzella@washpost.com
Jennifer Maloney Saabira Chadhuri Corona Brewer Bets $4 Billion on Cannabis Startup Canada Wall Street Journal 8/15/18 Jennifer.Maloney@wsj.com Saabira.Chaudhuri@wsj.com
Ben Lockhart The money behind Utah's contentious medical marijuana initiative Utah Deseret News 8/12/18 blockhart@deseretnews.com
Matt Campbell Let's Be Blunt: (State Rep) Bob Ballinger's Suspicious Ties to Medical Marijuana Licensing Arkansas Blue Hog Report 8/6/18 tips@bluehogreport.com
Jim Roscia More money flowing into Florida's medical marijuana market Florida Florida Politics 7/30/18 jim@floridapolitics.com
Kathleen Gray Police to investigate if marijuana bribes offered to state employees Michigan Detroit Free Press 7/27/18 kgray99@freepress.com
Samantha Vincent OSBI confirms inquiry into allegation of bribery by Board of Pharmacy Executive Director over medical marijuana Oklahoma Tulsa World 7/20/18 Samantha.Vicent@tulsaworld.com
Sophie Quinton Marijuana Bills Increasingly Focus on Social Justice National Stateline 7/19/18 squinton@pewtrusts.org
Brian Hews Corruption and Bribery Alleged in Lawsuit Filed Over Marijuana Permit Process California Los Ceritos Community Newspaper 7/9/18 editor@cerritosnews.net
John Schroyer Local corruption becoming hurdle for mariuana license seekers in California California MjBizDaily 6/29/18 Editorial@MJBizDaily.com
Ryan Poppe Regulators Seek To Ban All Non-State Approved CBD Products Texas Texas Public Radio 5/22/18 rpoppe@tpr.org
Jessica Boehm Tactics scrutinized in Phoenix medical-marijuana dispensary cases Arizona The Republic 5/11/18 jessica.boehm@gannett.com
James Quealy Paloma Esquivel Federal agents search Adelanto's mayor's home, City Hall amid corruption probe California Los Angeles Times 5/8/18 james.queally@latimes.com paloma.esquivel@latimes.com
Richard Deatley Joe Nelson FBI agents serve search warrants at home of Adelanto mayor, City Hall and elsewhere California The San Bernandino Sun 5/8/18 rdeatley@scng.com jnelson@scng.com
Greg Hilburn House keeps medical marijuana monopolies intact Louisiana News Star 5/4/18 ghilburn@thenewsstar.com
Duane Pohlman Calls come for Ohio's medical marijuana licensing process to be redone Ohio WKRC 5/3/18 dspohlman@sbgtv.com
N/A (Editorial) Medical pot mishandled Arkansas Pine Bluff Commercial 5/1/18 N/A
Doug Thompson Woods trial: Marijuana money proposed for Christian school Arkansas NW Arkansas Democrat-Gazette 4/20/18 dthompson@nwaonline.com
Christopher Yee Allegations of corruption fly as Baldwin Park approves development agreements for all its marijuana businesses California San Gabriel Valley Tribune 4/19/18 cyee@scng.com
Jack Cullen Stern still fighting Iowa for CBD dispensary license Iowa Quad-City Times 4/15/18 jcullen@qctimes.com
N/A Marijuana Entrepreneurs Film Documentaries of Corruption in Las Vegas Marijuana Industry Amidst Legal Battle Nevada HeadlinePlus 4/13/18 N/A
Richard Fausset A Dying Southern Town Needed a Miracle. Marijuana Came Calling. Arkansas New York Times 3/24/18 ?
Eric Sandy Melissa Schiller Canada Cannabis Producers Receive Millions From Offshare Tax Havens Canada Cannabis Busintess Times 3/16/18 esandy@gie.net mschiller@gie.net
Dan Mihalopoulous Rachel Hinton Pot exects show the green for ex-regulator's bid for Cook County Board seat Illinois Chicago Sun Times 3/16/18 dmihalopoulos@suntimes.com rhinton@suntimes.com
Erin Cox Plan to diversify Maryland medical marijuana market might boost white firms instead Maryland Baltimore Sun 3/12/18 ecox@baltsun.com
Lisa Bernard-Kuhn Will Ohio's medical pot program go up in smoke? Ohio WCPO Cincinatti 3/5/18 lisa.bernard-kuhn@wcpo.com
Blake Sifton Who is cashing in on Canada's marijuana 'Green Rush'? Canada Al Jazeera 2/14/18 ?
Jackie Borchardt Ohio auditor finds flaw in medical marijuana business license scoring process Ohio The Plain Dealer (Cleveland.com) 2/12/18 jborchardt@cleveland.com
Enzo Dimatteo The ex cops, politicans and friends of Bill Blaire cashing in on legal weed Canada Now Toronto 1/29/18 Contact form
Claire Hughes Rejected companies cry foul in N.Y. medical marijuana selection process New York Times Union 1/10/18 chughes@timesunion.com
John Futty Lawsuit challenges Ohio's racial quota for medical-marijuana growing licenses Ohio The Columbus Dispatch 1/8/18 jfutty@dispatch.com
Ashifa Kassam Canadian marijuana advocate blasts 'hypocricy' of ex-police cashing in on cannabis Canada The Guardian 12/1/17 ashifa.kassam@theguardian.com
Lisa Scheid State agency ordered to open up about marijuana applicants Pennsylvania Reading Eagle 9/11/17 lscheid@readingeagle.com
Fransisco Alvarado Florida Pot Growers May Soon Get Rich Florida Miami New Times 8/29/17 Contact form
Jeffrey Schweers Mike Sweets brings medical marijuana link into FBI probe Florida Tallahasee Democrat 8/12/17 jschweers@tallahassee.com
Jordan Ferrell Canadian Connection: how an equity firm bought its way into the FL marijuana industry Florida First Coast News 8/3/17 Contact form
Fenit Nirrapali Marijuana experts scored prospective Md. pot businesses. Some had ties to them Maryland Washington Post 7/30/17 fenit.nirappil@washpost.com
Sam Wood Medical marijuana permits leave losers fuming in Pa. Pennsylvania Philadelphia Inquirer 6/29/17 samwood@phillynews.com
Kristen Wyatt Budding pot industry ripe for corruption National Associated Press 6/22/17 kwyatt@ap.org
Rose Hackman A billion-dollar industry, a racist legacy: being black and growing pot in America National The Guardian 6/15/17 rose.hackman.el@gmail.com
David Smiley Michael Auslen How profitable will medical-marijuana shops be? Very, says confidential pitch for investors Florida Miami Herald 5/16/17 dsmiley@miamiherald.com mauslen@tampabay.com
Justine Griffin Meet Florida's Legal Drug Cartels Florida Tampa Bay Times 4/14/17 jgriffin@tampabay.com
Meagan Campbell How public officials got into the weed game Canada Maclean's 4/13/17 Contact form
Sam Levin Big Pharma's anti-marijuana stance aims to squash the competition, activists say National The Guardian 4/3/17 sam.levin@theguardian.com
Nader Issa Marijuana organizations given green light on political donations Illinois Chicago Sun Times 3/26/17 nissa@suntimes.com
Bob Norman Did Florida's Pot Czar pad his resume? Florida WPLG 2/17/17 bnorman@wplg.com
Bruce Barcott GW Pharma is moving CBD bills on the down low Louisiana Leafly 2/17/17 brucebarcott@yahoo.com
Tom Scheck Charges: Minn. medical marijuana execs illegaly distributed oils Minnesota Minnesota Public Radio News 2/6/17 tscheck@mpr.org
Bobby Ampezzan Medical Marijuana Commission itself may still be grappling with the merits of medical marijuana Arkansas Arkansas Public Media 12/12/16 Contact form
Naomi LaChance Sheldon Adelson fights marijuana legalization while funding pro-marijuana research National The Intercept 11/2/16 naomi.lachance@theintercept.com
Angela Bacca How Rick Scott Rigged Florida's Medical Marijuana Program for Profiteers Florida Huffington Post 10/18/16 angelabacca@gmail.com
Ellen Holland Colorado-owned Florida Cannabis Company Opposes 'Colorado-Style' Legalization National Alternet 9/26/16 Contact form
Dan Goldberg State-approved medical marijuana company falters amid 'financial constraints' New York Politico 9/20/16 ?
Dara Kam Judge refuses to let Florida House of Representatives intervene in fight over medical marijuana license process Florida News Service of Florida 9/16/16 d.kam@newsserviceflorida.com
Mitchell Colbert How the Trump Campaign Got its 'Golden Ticket' to Big Marijuana National Alternet 8/31/16 Contact form
Jeremy Daw Why Florida's Medical Marijuana System is Ripe for Corporate Takeoever Florida Alternet 8/4/16 Contact form
Kay Lazar Marijuana dispensary licenses to the highest bidder? Massachusetts Boston Globe 7/24/16 kay.lazar@globe.com
Aaron Gregg Lawmaker who pushed medical pot in Md. is part of team applying to sell the drug Maryland Washington Post 7/16/16 aaron.gregg@washpost.com
Daniel Ducassi Judge keeps tight lid on names in medical marijuana dispute Florida Politico 7/7/16 dducassi@politico.com
N/A Assessing New York's Medical Marijuana Program: Problems of Patient Access and Affordability New York Drug Policy Alliance 6/20/16 N/A
John Hudak Worry about bad marijuana -- not Big Marijuana National Brookings Institute 6/16/16 Contact form
Amanda Chicago Lewis How Black People Are Being Shut Out of America's Weed Boom National BuzzFeed News 3/16/16 amanda.chicago.lewis@gmail.com
Tess Owen How New York Totally Screwed Up Legalizing Medical Marijuana New York Vice News 1/11/16 tess.owen@vice.com
Tracey Lindeman The business of marijuana: as legalization looms, who is poised to profit? The chosen few Canada Montreal Gazette 12/19/15 tracey.lindeman@gmail
Associated Press (unknown) Cost of medical marijuana in Minnesota leads some to return to illegal sources Minnesota The Guardian 9/20/15 N/A
Anne Saker What you need to know about marijuana initiative Ohio The Cincinnati Enquirer 6/17/15 asaker@enquirer.com
Brian Slodysko Some lawmakers worry medical marijuana could spur corruption Louisiana Associated Press 6/9/15 bslodysko@ap.org
Scott Powers State pot committee heavy with commercial interests Florida Orlando Sentinel 1/29/15 scott@floridapolitics.com
Laura Nahmias Lobbyists prepare for medical marijuana boomlet New York Politico 1/6/15 LNahmias@Politico.com
Shelley Murphy Marijuana licensing went awry early on, records show Massachusetts Boston Globe 12/28/14 shelley.murphy@globe.com
John Leland Mosi Secret For Pot Inc., the Rush for Cash is Underway New York New York Times 10/31/14 john.leland@nytimes.com mosi.secret@nytimes.com
Victoria Bekiempis Is New York Too Corrupt For Medical Marijuana? New York Newsweek 8/8/14 victoriabekiempis@gmail.com
N/A (Staff) Former Politicans Square Off for Delaware Dispensary License Delaware MJBizDaily 6/30/14 N/A
Hilary Gowins State, Insiders Stand To Benefit From Illinois' Medical Marijuana Law Illinois Huffington Post 6/20/14 hilary.gowins@gmail.com
N/A (Staff) Court Upholds Initial Cap on New Jersey Marijuana Dispensaries, Nonprofit Requirement New Jersey MJBizDaily 10/5/12 N/A
2-Page Overview (December 2018 update)
● Marijuana is transitioning from the underground to legal markets globally at an

accelerated rate. The total global market is around $150 billion in annual sales.
● Cowen Group projects $75 billion in annual legal marijuana sales in the US by 2030
(link).
● 34 states in the US currently have legalized cannabis production and sales (link).
● Most of these states (24 out of 34) have created oligopolies with limited licenses to
produce and sell cannabis.
(Note: Only refers to state-level licensing, does not include municipality-level licensing limits)
● This report goes into 150-page depth into how five of these states -- FL, MD, AR, VA, LA
-- have developed their legal marijuana markets.
● The takeaway: the industry is transitioning to legal markets through discriminatory and
potentially criminal “bid-rigging” in terms of license applications and awards.
○ The current license value given out by these states to a handful of wealthy and
politically-connected owners is ~$1.8 billion.
● To cover up the fact that these applications are rigged, the state creates the appearance
of merit-based applications that attract substantial public participation and costs.
○ By doing this, the state collects millions in application fees and causes tens of
millions in losses from its citizens typically to out of state consultants and law
firms (to develop competitive applications/business plans).
● It's discriminatory because those harmed most by illegal marijuana, disproportionately
people of color and the poor, are being shut out from this industry and not
disproportionately benefitting from industry taxes.
○ This population has been targeted, arrested and incarcerated for marijuana
crimes (most often small possession) over the last century.
○ This population is often legally barred from entering the industry. In cases like
Virginia, people convicted of marijuana and paraphernalia misdemeanors
aren't allowed to be owners and employers in the industry.
● It's potentially criminal because in AR, possibly in FL and probably other states, the FBI
is looking into corruption in the licensing process.
○ Investors should understand the risk of investing in companies that have
acquired licenses in limited-license states.
● It's also concerning on a patient advocacy front -- there is inflated pricing because of
oligopoly structures, concerns about price fixing, and concerns with patients being forced
to make the compromising decision to buy legally or remain in the criminalized market to
purchase uninsurable medicine more affordably.
○ Legalization advocates have largely overlooked the role of market structure
and who owns this industry as patient access issues also.
○ The oligarchs often side with patient access advocates to push their business
interests -- dissuading legal action that causes delays and
liberalizing/expanding the market.
● 16 states are yet to legalize cannabis production and sales.
○ Many of the states yet to legalize do not have ballot initiative rights, and the
likelihood of oligopolies is high. Many of these states are in the South.
● Marijuana legalization has popularized the government-contract economy and is helping
to expose it.
○ States have looked to suppress competition to avoid legal action and greater
backlash, however this has done little to limit media interest.
○ States have then legalized marijuana in ways that don’t appear like marijuana
(like Virginia and THC-A) as a way to limit interest and then incrementally
legalize moving forward. This is working.
In short: Those whose lives have been derailed because of marijuana crimes, disproportionately
the poor and people of color, are being shut out from benefitting from the mega-billion legal
industry. Meanwhile, the rich and politically-connected are cornering the industry and enriching
themselves with help from the state and getting away with it, so far. By winning these oligopoly
business licenses, these rich and politically-connected individuals are raising hundreds of
millions giving them an advantage in consolidating the industry (accelerated by US tax code
280E) and in lobbying for maintaining oligopolies and shaping future legalization at the state-
level and federally.
Adding: concern also about money laundering boosting public and private company valuations.
US Legal Marijuana Executive Summary
EXECUTIVE SUMMARY
In the US, states legalize marijuana through ballot initiative or the legislature. Ballot initiatives
typically allow for an unlimited number of licenses to produce and sell marijuana. Legislatures
allow “highly-regulated” or “controlled” marijuana markets by creating a small number of
licenses. 20 out of 31 legalized markets in the US operate as state-sanctioned oligopolies.
This 150-page whistleblower report (excluding exhibits) is an in-depth and behind-the-scenes

look into who is cornering this industry, how the industry is being cornered and how much
money is being made as a result. This report focuses on five oligopolies in which we have the
most industry experience – FL, MD, AR, VA and LA.
v Marijuana licensing is blatantly rigged: This is how a handful of politically-connected and ultra-
high net worth individuals are cornering the industry:
ü Pay lobbyists and fund political campaigns: FL, MD, AR, VA

ü Write the market’s laws and regulations: FL, MD, LA
ü Access the license awarding process: FL, MD, AR, VA, LA
ü Coordinate with other winners: FL, MD, AR, LA
ü Delay or prevent new licenses: FL, MD, AR
In Florida, the legislature created five licenses and restricted marijuana applicant eligibility
to the state’s largest plant nursery owners. Five of these nurseries were selected to a
“negotiated rulemaking” committee to write the industry’s rules and the application
evaluation process. Four of these nurseries were chosen out of twenty-four applicants,
including Costa Farms (Curaleaf) which sells $500 million in ornamental plants annually.
Applications were ranked without being scored. The fifth nursery eventually won too.
Through legal marijuana, these five states have handed out $1.8 billion in current value to
pharmaceutical, nursery, banking and media executives, political mega-donors and governor
appointees, real estate and casino moguls, coal barons and a former state Attorney General.
In Maryland, Michael Bronfein (Curio Wellness), a top Democratic donor nationally,

partnered with lead investor David D. Smith, the executive chairman of conservative media
conglomerate Sinclair Broadcast Group who is personally worth over $300 million. Curio
was one of seven companies awarded licenses to grow, process, retail and deliver
marijuana throughout the state.
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v The rich sue the state and then settle for profit: In these five states, 350 unsuccessful groups
have lost $5 million in fees and $70 million developing applications. These include many
disadvantaged groups who pooled resources. These also include a handful of groups who could
afford to litigate, who later gained new licenses legislatively (Maryland, Florida) or settled in
other ways (Arkansas, Louisiana) – arrangements that conceal and perpetuate political
corruption.
In Arkansas, a circuit court judge ruled marijuana license awarding unconstitutional, later
reversed by the Supreme Court. The state then obstructed the appeal process by not
issuing denial letters to losing applicants. The FBI is investigating bribery involving one of
five marijuana commissioners, Dr. Carlos Roman. Unsealed court records from another
federal investigation show text messages in which an FBI special agent “laughed out loud”
at the appointment of attorney Travis Story to the marijuana commission.
v The underlying injustice: The way that marijuana is transitioning to legal markets is just
another example of politics as usual in public procurement-like processes. But there’s more in
this case. Historically and to this day people of color and the poor are disproportionately
targeted, arrested and incarcerated because of illegal marijuana. The ACLU has found that
despite roughly equal use in the US, blacks are nearly 4x more likely than whites to be arrested
for marijuana. Marijuana arrests account for over half of all drugs arrests in the US. Millions of
careers, families and lives have been derailed and ruined because of illegal marijuana, most
often for petty possession.
Now, legal marijuana continues to discriminate as those derailed by illegal marijuana are
barred from entering the legal industry or otherwise incapable of competing for opportunity in
this rigged system. Billions of tax dollars collected from marijuana nationally – including billions
in federal taxes – are not disproportionately benefitting this affected population.
Virginia, the 30th state to legalize marijuana, disregarded incentives for disadvantaged
business participation and barred ownership and employment for anyone who has been
convicted of marijuana possession and paraphernalia misdemeanors – while exempting
owners of winning groups and their criminal history questionnaires from FOIA law. One of
five medical marijuana winners is part of a proposed $150 million resort casino in Bristol
backed by coal barons with ties to Ukrainian billionaire Rinat Akhmetov.
v Blowing the whistle. Most states yet to legalize marijuana, including most of the South, do not
allow ballot initiatives. In existing marijuana oligopolies, license winners are now going public
and raising hundreds of millions through the Canadian Securities Exchange (CSE) – in some
cases amid FBI investigations. IRS code section 280-E squeezes profits for marijuana businesses
resulting in early exits and accelerated consolidation. Cowen Group projects $75 billion in legal
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US marijuana sales by 2030. Effects of the “legal cartel” legalization and business model on the
affordability of uninsurable medical marijuana should also be looked into further.
In Louisiana, GB Sciences has become an effective monopoly and is preparing to charge

pharmaceutical-level pricing this November, forcing most patients to decide between
debilitating costs or remaining in the cheaper yet criminalized market with some of the
harshest possession laws in the US.
Lastly, to make an effort against the politicizing of this information, Democratic and Republican
governments alike continue to reward billions to the already rich and powerful through legal
marijuana.
Florida Summary
Projected marijuana market: $5 billion
The legislature legalized marijuana in 2014, creating 5 vertically-integrated businesses that

could retail across the state. As the law was being developed, applicant eligibility was restricted
to the largest plant nurseries in Florida with 30 consecutive years in operation. Black and small
farmers protested. 5 eligible nurseries, including Costa Farms with annual sales of $500 million,
were selected to an exclusive rulemaking committee and then wrote the market’s rules and
license award process while evading legislative oversight. 24 nurseries applied. Applications
were ranked without being scored. 4 out of the 5 nurseries on the rulemaking committee were
awarded licenses, including Costa Farms (Curaleaf). Chestnut Hill Tree Farm (CSE:LHS) owner
Jay Odom, a prominent real estate developer, had been sentenced to 6 months in jail for
federal campaign finance violations a couple of years earlier. Trulieve (CSE:TRUL) Chair, CEO
and owner Kim Rivers is tied to an FBI grand jury probe into public corruption in Tallahassee.
New laws in 2016 and 2017 expanded the market size and enabled previously unsuccessful
applicants in pending litigation to win licenses, including GrowHealthy which had already
purchased a facility for $2 million. The 2017 law also created new licenses to be issued through
new applications, including one for Black farmers discriminated against by the USDA. A circuit
court judge found that the Black farmer licensing provision actually discriminated against Black
farmers, and a Native American group is now suing the state over this allotment. Requests for
application for new licenses are yet to be released a full year after the law’s required licensing
deadline. The original 5 winners control 47 out of 51 total marijuana retail outlets in the state.
Florida marijuana sold $100 million at retail over the past 6 months despite high prices, and
sales are growing exponentially. At least 3 out of the 14 current licenses have already exited,
including a recent winner who sold for $50 million pre-revenue in September 2018. Meanwhile,
a circuit court judge in Florida just ruled that limiting marijuana licenses is unconstitutional per
Amendment 2, a successful ballot initiative led by attorney John Morgan.
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Maryland Summary
Projected marijuana market: $1.5 billion
7 companies won vertically-integrated marijuana licenses – growing, processing and retail with
delivery – in Maryland in 2016, led by Curio Wellness and Doctor’s Orders. Curio Wellness, led
by Michael Bronfein who is one of largest Democratic donors in the US, raised $30 million at a
$50 million pre-money valuation with lead investor David D. Smith, chairman of the
conservative Sinclair Broadcast Group who is personally worth over $300 million. License
winners celebrated at Bronfein’s home after winning. Doctor’s Orders, led by Glenn Weinberg
(Live! Casino) and other wealthy businessmen, raised money at a $40 million pre-money
valuation. They partnered with Vicente Sederberg and former legislator Dan Morhaim, who
worked on rulemaking as the architect of legal marijuana in Maryland without disclosing his
financial arrangement with Doctor’s Orders. The Washington Post uncovered conflicts of
interest during the evaluation process; a founder of winner Temescal Wellness, for example,
scored applications as part of the evaluation committee. Several former law enforcement
heads, including county sheriffs and a state police chief, were on teams that won licenses.
Winner Vireo Health, suspended by Maryland regulators for smuggling $500,000 worth of
marijuana from Minnesota to meet a compliance requirement for its New York operations, was
recently reinstated after transferring ownership into a different LLC. After nearly 2 years of legal
action from unsuccessful applicants and protest from the Legislative Black Caucus, Maryland
passed overhaul legislation in May 2018 creating a few new valuable licenses for existing
politically-connected license holders, one for litigant Green Thumb Industries (CSE:GTII), and a
few through new applications that are not yet available. After 200 groups submitted 1,000
applications the first time, prospective applicants are dissuaded this time around. Meanwhile,
$50 million worth of marijuana was sold at retail in the market’s first 8 months.
Arkansas Summary
Projected marijuana market: $600 million
Marijuana in Arkansas was first legalized by ballot initiative in 2016. 5 production license
winners were announced in February 2018 and include the LaFrance family which sold its
pharmacy chain to Walgreens for $550 million, Oklahoman Warren Ross – whose construction
company secured $725 million in federal contracts over the last decade – partnered with
former Attorney General Dustin McDaniel and the Chairman of both HomeBanc and the
Arkansas State Police who is personally worth $125 million, and wealthy appointees to the
Arkansas Economic Development Commission who partnered with Democratic Party
leadership. Commissioner Travis Story is the attorney for the owners of winner Osage Creek.
Prominent Black farmer Abraham Carpenter, partnered with Baltimore-based civil rights
attorney Billy Murphy, was disqualified while other winners who failed to meet minimum
qualifications were not. Unsuccessful applicants sued the state. A circuit court judge ruled the
marijuana license awarding process unconstitutional, a ruling later reversed by the Supreme
Court. An unsealed court filing indicated that the FBI was investigating bribery involving
Commissioner Carlos Roman. An ongoing FBI investigation into a massive kickback scheme in
Arkansas implicates at least 24 current and former bipartisan legislators, including the
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Governor’s family and Commissioner Travis Story’s law firm partner. Former legislator Hank
Wilkins VI, owner of a marijuana license through his son, pled guilty to taking $100,000 in
bribes from a Preferred Family Healthcare lobbyist accused of plotting to kill another co-
conspirator. An Arkansas Democrat-Gazette investigation found that winner Delta Medical
Cannabis Company plagiarized large and important sections of its application through a former
head of the Alcohol Beverage Control Division Michael Langley. The Commission officially
awarded licenses as soon as the circuit court’s injunction was lifted, then blocked legal recourse
for unsuccessful applicants. The selection process for the 32 dispensaries, with over 200
applicants, was outsourced following public backlash. A government spokesperson informed
local media that many dispensaries have already begun construction ahead of the post-
elections November 2018 license announcements.
Virginia Summary
Projected marijuana market: $1.5 billion
In August 2015, an eventual winner of 1 out of 5 licenses in Florida named Surterra retained
lobbying firm McGuireWoods to legalize marijuana production and sales in Virginia. The
ensuing 2016 law legalized 5 vertically-integrated regional monopoly licenses. The Board of
Pharmacy selected a 14-member panel consisting of Surterra and local business interests to
develop emergency rules. An administrative judge then found that Surterra failed eligibility
requirements for its license in Florida. In 2017, application owners and scoring results were
exempted from Virginia’s FOIA law. The 2018 “Let Doctors Decide” bills, backed by leading
marijuana advocacy group NORML, expanded patient access and the future market size. The
Board released its request for applications in April 2018 while amending emergency rules and
before proposing and finalizing these rules, delaying public feedback until after applications
were submitted. The Board received 54 applications – many more than it expected – then
delayed license awards. The Board assembled an anonymous ad hoc committee to evaluate
applications; the evaluation took place in secret at the recommendation of the AG’s office. The
Board separately discussed “actual or probable” litigation. NORML called for transparency to
know if winners had failed compliance in other markets; Surterra had missed an inspection
deadline in Florida a couple of months earlier. In August 2018, Surterra raised $65 million from
billionaire Beau Wrigley. It has contributed $50,000 to Governors McAuliffe and Northam,
spent at least $120,000 on lobbying in Virginia, and closed job postings for the Northern
Virginia and Richmond regions. The Washington Post reported in August 2018 that PharmaCann
also applied. PharmaCann is backed by mega-millionaire Dan Tierney who, through MedMen,
acquired his 2nd license in New York from a group with FBI-alleged ties to the Gambino crime
family. On September 25, the Board announced 5 winners, including PharmaCann, Columbia
Care worth $1 billion privately and Green Leaf Medical, a winner in Maryland. Dharma
Pharmaceuticals is part of a proposed $150 million resort casino in Bristol backed by coal
barons Jim McGlothlin and Clyde Stacy, who are tied to Ukraine’s richest man Rinat Akhmetov
through MetInvest Group. Dalitso LLC, the winner in most valuable region Northern Virginia, is
tied to billionaire Suzanne Hillman and mega-millionaire David Smith (Sinclair Broadcast Group),
and partnered with NORML’s business consulting arm Virginia Cannabis Group.
5
Louisiana Summary
Projected marijuana market: $1 billion
After attempts in 1978, 1991, 2014 and 2015 to legalize medical marijuana in Louisiana, the
legislature ultimately did so in 2016, giving LSU exclusive production rights with 9 licensed
pharmacies. After protest from the Legislative Black Caucus, HBCU Southern University was
added, forming a producer duopoly. As a result of pharmaceutical lobbying, Louisiana’s
marijuana law requires that certain patients either exclusively use FDA-approved marijuana and
cannabinoid medication – GW Pharmaceutical’s (NASDAQ:GWPH) Epidiolex and a couple of
others – or at least go through fail first protocols before accessing state-produced marijuana. 7
groups applied to partner with LSU; the requirement of a $1 million bid bond that could easily
be kept by LSU suppressed applicant turnout. LSU contracted with GB Sciences (OTCQB:GBLX)
despite $28 million in accumulated deficit and failed minimum qualifications that were
disqualifying in the case of 3 other applicants. GB Sciences struggled to raise capital, then paid
$1.7 million for the build-out of LSU’s production and research facility to its CEO’s son’s
museum exhibit company. 7 groups also applied to Southern University, which heralded
marijuana as a financial savior and the most important development in the university’s history.
Southern selected Advanced Biomedics in September 2017 for a 5-year term with two optional
5-year renewals. Advanced Biomedics’ founder and mega-millionaire investor sued each other
in April, then this investor threatened to sue Southern for financial damages if it proceeded to
contract with a different group. Southern finalized a full 15-year contract with this investor in
May 2018 guaranteeing $18 million to the university, almost twice the size of its endowment.
Southern is yet to receive a penny, and Advanced Biomedics has made no progress developing
its marijuana operations. Consequently, LSU / GB Sciences is an effective monopoly and now
plans to charge Epidiolex-level prices: $32,000 / patient annually, which is 25x the price that
LSU projected in 2016. Most patients will soon have to choose between debilitating costs or
staying in the criminalized market. Rx Greenhouse, which finished ranked 1st in the New
Orleans pharmacy region, is suing the Louisiana Board of Pharmacy for selecting 4th ranked
H&W Drugs Store instead as the winner in New Orleans. H&W Drugs Store is 100% Black-
owned.
FORMATTING
Condensed Reports organize key developments into 5-6 pages per market. These start on the
next page.
Detailed Reports include 400 footnotes with media references and personal commentary, and
refer to attached exhibits.
6
US Legal Marijuana Florida Condensed Report
FLORIDA MARIJUANA
A) Market Statistics:
➢ Adult-use marijuana projected annual retail market: $5 billion

➢ Business legalization date: June 16, 2014
➢ Eligible applicants: 21-99 (Florida Department of Agriculture)
➢ Number of applications submitted: 24
➢ First winners announced: November 23, 2015
➢ First retail sales: July 26, 2016
➢ Patients registered to date: 115,000
➢ Retail sales to date: $100 million ($85 million since February 2018)
➢ Legal businesses: 14 vertically-integrated (including 7 since August 2017)
➢ Liquidations to date: 3
1. $26 million – Aphria (TSX:APH), though US subsidiary Liberty Health Sciences
(CSE:LHS), acquires CHT Medical in May 2017
2. $48 million – iAnthus Capital (CSE:IAN) acquires GrowHealthy in January 2018
3. $53 million – MedMen (CSE:MMEN) acquires Remeny Wellness in September
2018
➢ Current marijuana license value distributed by state: $600 million
B) Market Developments:
A handful of the largest plant nursery owners in Florida wrote the rules and secured the
state’s marijuana market. Several of these winners have already exited the market by selling
to publicly-traded Canadian companies. The state passed a special session law in 2017 to
award additional licenses, but nearly a year past the deadline, new groups have yet been able
to apply. All eyes are on a recent circuit court ruling finding the state’s limited licensing
regime unconstitutional, as well as plans for a 2020 adult-use ballot initiative.
Marijuana business applicant eligibility limited to largest nurseries in Florida: On June 16,
2014, the Florida legislature legalized low-THC medical marijuana limited to patients with
cancer, chronic seizures or severe and persistent muscle spasms. The law allowed for 5
vertically-integrated businesses to grow, process, retail and deliver marijuana in Florida across
the state. The eligibility of applicants for these businesses was restricted to plant nurseries
registered to cultivate more than 400,000 plants – the Department of Agriculture’s largest
category of nursery stock inventory – that have also operated for at least 30 continuous years.
The Department of Agriculture estimated that 99 nurseries were eligible to apply, after initially
estimating 21 and then 39 nurseries were eligible. Successful applicants would have to post a
$5 million performance bond held by the Department of Health for two years.
7
Outside of the legislature, attorney John Morgan led a ballot initiative campaign called
Amendment 2 that aimed to expand qualifying medical conditions and the percentage of THC
allowed. The opposition, financed largely by Sheldon Adelson who contributed $5 million,
outspent the initiative 3 to 1 in the final months. In November 2014, Amendment 2 fell just
short of the 60% required supermajority needed to pass in Florida.
During public comments for the Department of Health’s proposed rules, several participants
opposed the lottery method to select winners, preferring a merit-based approach. In
September, Costa Farms sued the Department of Health over its proposed lottery-style method
and later won. The Department of Health chose to withdraw its rules entirely and start over. On
December 16, 2014, it issued a notice for a rulemaking session open to the public, then
withdrew this notice the following day.
Exclusive rulemaking committee filled with business interests: On January 5, 2015, the
Department published a notice for a selective “Negotiated Rulemaking Committee.” Florida law
recommends that agencies use negotiated rulemaking when strong opposition to rules is
anticipated. The Department of Health was also delayed in implementing the medical
marijuana program by then. Per its notice, the negotiated rulemaking committee members
would be selected from representative groups including “1. A nursery that meets the (business
eligibility) criteria in the Florida Statutes.” The Office of Compassionate Use (OCU) within the
Department of Health selected 12 members to the rulemaking committee, 5 of which were
nursery owners and future applicants. 2 other members had ties to future nursery applicants,
including the head grower for McCrory’s Nursery (GrowHealthy) which had already spent $2
million buying a 200,000-square foot production facility.
The rulemaking committee also developed the evaluation process: there would be 3 evaluators
– the director of the OCU along with 2 appointments made by the Secretary of the Department
of Health. Secretary of Health John Armstrong appointed Ellyn Huston and Christian Bax. The
rulemaking committee and the OCU avoided legislative ratification by under-projecting and
omitting regulatory costs – projecting there would a total of 15 applicants paying a one-time
application fee of $60,063, along with an “unknown renewal fee” that required no statement of
regulatory costs, per the OCU.
Black and small farmers protest: In March 2015, members of the Florida chapter of the Black
Farms and Agriculturalists Association protested the racial and economic injustice of the
medical marijuana law at a senate committee hearing. They claimed that none of the state’s
Black farmers would be eligible for the businesses, at least in part due to discriminatory lending
practices by the USDA, the legal recourse for which – culminating in class action suit Pigford v.
Glickman – took precedence over running businesses for 30 consecutive years. The law as
written “carved out… not just the black farmers but the small farmers,” said Howard Gunn, the
president of the Florida chapter of the association. Republican Senator Rob Bradley, co-sponsor
of the original legislation, said the law had a “disproportionately negative impact on minority
farms.”
8
Application windows were open for 3 weeks between June 17 and July 8, 2015. 24 nurseries
applied. Officials planned to notify winners by August 8. On July 20, two weeks into the
evaluation period, Director of OCU Patricia Nelson left her position to rejoin the Governor’s
Office, renewing public concerns for even more delays in the program’s implementation. On
July 22, Christian Bax was announced as the office’s new director, an appointment later
investigated by Politico – Bax’s résumé touted experience in the marijuana industry that
remains unsubstantiated, and his father is a long-time Republican donor appointed to the
Public Employees Relations Commission by Governor Rick Scott. Applications were ranked
without being scored.
4 out of 5 winners were on the rulemaking committee: On November 23, 2015, the winners
were announced: Costa Farms (Curaleaf), Knox Nursery (Cansortium), Chestnut Hill Tree Farm
(Liberty Health Sciences) and Hackney Nursery (Trulieve) had each been selected to the
rulemaking committee. Miami-based Costa Farms, owned by the Costa family, is the largest
ornamental plant producer in the US generating $500 million in annual revenue. Chestnut Hill
co-owner Jay Odom, a politically-connected real estate developer, had been sentenced to 6
months in jail for federal campaign finance violations in 2013. The fifth winner, Alpha Foliage
(Surterra Florida), does not appear to have had representation on the rulemaking committee.
Surterra Florida is managed by the Havenicks, who own several casinos in Florida, and Robert
“Jake” Bergman and Wesley Van Dyk of Atlanta-based Valkyrie Capital. Surterra issued an RFP
to find a processing partner for Florida in the Spring of 2015. It selected a company that had
responded in detailed fashion. This company presented Surterra with an LOI, but did not hear
back again. It is unclear whether Surterra used this content in its applications in Florida and
other states.
12 unsuccessful applicants petitioned for administrative hearings within two weeks.
In March 2016, Secretary of Health John Armstrong lost his job after the Senate refused to
reconfirm him in what the Miami Herald called “a rebuke to a governor-appointed agency head
not seen in more than 20 years.” Also in March, HB 307 was signed into law, expanding the
market through the legislature including no limit-THC for experimental treatments. This
legislation also required the Department of Health to grant cultivation authorization to the 5
winners – notwithstanding any prior determination that the applicant failed to meet statutory
requirements. An administrative judge found months later that Alpha Foliage had not met the
statutory requirement for nursery eligibility. HB 307 also paved the way for up to 5 new
businesses, if the Department of Health, Division of Administrative Hearings or other relevant
court determined that unsuccessful applicants were entitled to authorization. In April 2016, San
Felasco Nurseries (The Green Solution) became the 6th authorized business, and in December,
the Department of Health settled with McCrory’s Nursery (GrowHealthy), which became the
7th.
Ballot initiative triggers big valuations: The relaunched Amendment 2 ballot initiative passed
on November 8, 2016, boosting patient registry projections from 7,000 to 500,000. At least 2 of
the 7 authorized businesses secured investments that same day, with San Felasco raising $6.5
9
million and Surterra raising $10 million. The winners raised money at large valuations – with
one unnamed group at least pitching a valuation of over $100 million – on the premise of an
advantageous head start in this emerging billion-dollar market. Following Amendment 2,
lawmakers were expected to add more operators to Florida’s market.
Substantial lobbying to keep number of operators at 7: In April 2017, the Tampa Bay Times
published “Meet Florida’s Legal Drug Cartels,” revealing the 7 winners employed leading
lobbyists at the capital and contributed over $500,000 to campaigns during the 2016 and 2018
election cycles. The Tampa Bay Times received a leaked May 2017 pitch deck for Surterra, in
which private equity firm The Costera Group, founded by former Goldman Sachs partner
Richard Kimball, was brokering the purchase of $10 million in Surterra shares being unloaded by
existing shareholders at a $42.5 million valuation. In this deck, Surterra projected $138 million
in gross revenue by 2021 through 55 retail outlets and with expectations that the state would
limit the number of competitors in the near future. Both Kimball and Surterra’s chief
development officer pitched this deal to prospective investors.
New special session legislation SB 8-A was passed in June 2017, granting 10 new licenses. The
first group of new licenses – to be licensed first and by August 1, 2017 – were former applicants
that had one or more administrative or judicial challenges pending as of January 1, 2017, or
who had a ranking within one point of the highest ranking in its region.
The second group would be new applications to be licensed by October 2017, including one
recognized class member of Pigford v. Glickman that was also a member of the Florida chapter
of the Black Farmers and Agriculturalists Association. The law also gave preference to 2 new or
original applicants “that own one or more facilities that are, or were, used for canning,
concentrating or otherwise processing of citrus fruit or citrus molasses and would use or
convert the facilities or facilities for the processing of marijuana.” The law capped the number
of dispensaries at 25 per license holder, and required 4 additional licenses with each increment
of 100,000 patients registered.
Remedial measure is itself discriminatory: On September 22, 2017, 80-year old Black farmer
Columbus Smith sued the Department of Health over discrimination in the Pigford v. Glickman
provision in SB 8-A. Columbus Smith tried to join the Florida chapter of the Black Farmers and
Agriculturalists Association and was turned down. The National Black Farmers Association
assisted in this lawsuit with Columbus Smith. On December 28, a temporary injunction was
granted to Columbus Smith. Governor Rick Scott signed a law in April 2018 eliminating the
association membership requirement, at which point Mr. Smith dropped his suit.
C) Outlook:
As of the end of August 2018 – approaching a year past the state’s deadline for new
applications – groups have yet had the opportunity to apply for new licenses including the
single license reserved for a class member of Pigford v. Glickman. Meanwhile, in the last year, 7
additional original nursery applicants have been approved including Treadwell Nursery
10
(Remeny Wellness), which sold to MedMen for $53 million in September 2018. The winners
have 51 retail locations among them, 47 of which are held by the original 5 winners. The more
recent winners are not pursuing a brick and mortar retail strategy, focusing instead on
wholesale delivery. State-wide delivery is now available through Curaleaf (Costa Farms). The
state does not track the number of marijuana deliveries.
Regarding the grouping required to have been licensed by October 2017, the Department of
Health proposed rules that require that applicants be a registered nursery (of any size now),
post a $60,830 application fee and, in the event of a notification of award, post a $5 million
performance bond. Per SB 8-A, because these are emergency rules, these rules do not require
legislative ratification. Meanwhile, Florida surpassed 100,000 active registered patients in April,
triggering 4 new licenses. The Department of Health projects 400 applications for these 4
licenses. It is unclear when applications for either of these two new license groupings will be
available.
There are currently 11 active administrative and judicial cases against the Department of Health
and the renamed Office of Medical Marijuana Use (OMMU). These include Joe Redner’s case
against limitations and special classes of licenses, John Morgan and People United’s case
against the smoking ban, and a Native American farmer seeking qualification for the Pigford v.
Glickman allocation. On August 2, a Florida circuit court ruled in Redner’s favor finding that
limited licensing is unconstitutional – Amendment 2 placed no caps on the number of licensed
marijuana businesses in Florida. The judge also found that granting special classes was
unconstitutional, referring to the 7 previously-unsuccessful applicants that were given licenses
through SB 8-A. The judge determined that the legislature and health department “have simply
chosen to restrict access to this (licensing) framework.”
To cover application review costs ($7.3 million with 400 projected new applications), ongoing
litigation ($1.5 million) and other expenses, the OMMU was granted $13.3 million in additional
funding. The Joint Legislative Budget Commission unanimously approved the budget request
while rebuking it; Rep. Janet Cruz described what the OMMU had to done to medical marijuana
in Florida as “sabotage” with “intentional ineptitude.” Days later in late July, OMMU Executive
Director Christian Bax resigned.
Outside of Florida, Knox Medical (Cansortium) and Surterra won 2 out of 3 CBD licenses in the
TX medical cannabis market, issued in September and December 2017 respectively. Cansortium
also operates in Puerto Rico. Costa Farms sold to or merged with Curaleaf (PalliaTech) in March
2018, with undisclosed terms. Curaleaf owns and operates other operations in CT, MD, MA, NJ,
NY, ME, PA, AZ, OR and NV, and according to a term sheet reviewed by Bloomberg, is currently
seeking a pre-IPO valuation between $3 and $4 billion on the Canadian Securities Exchange
(CSE). Trulieve’s (Hackney Nurseries) current CEO and co-owner Kim Rivers is tied to an FBI
grand jury probe into public corruption in Tallahassee. Rivers resigned from the Downtown
Improvement Authority board, which she had formerly chaired. Indictments are expected soon.
Trulieve (CSE:TRUL) will list publicly in Canada on September 25, 2018. Kim Rivers owns 18.75%.
11
US Legal Marijuana Maryland Condensed Report
MARYLAND MARIJUANA
➢ Adult-use marijuana projected annual retail market: $1.5 billion

➢ Business legalization date: April 14, 2014
➢ Number of applications submitted: 1,046
➢ First winners announced: August 15, 2016
➢ First retail sales: December 1, 2017
➢ Patients certified to date: 37,500
➢ Retail sales to date: $46 million
➢ Legal businesses: 7 vertically-integrated (out of 15 grower, 15 processor and 102
dispensaries)
➢ Pre-investment valuations: $40 and $50 million (for 2 known vertically-integrated
businesses)
In 2016, a handful of wealthy, politically-influential and out-of-state interests won the rights
to grow, process and dispense marijuana with delivery in Maryland. The Washington Post
uncovered major conflicts of interest in rulemaking and licensing, and the Legislative Black
Caucus protested the lack of minority ownership. This led to a disparity study and overhaul
legislation in 2018, conceding little in the way of new ownership opportunity… All in the
context of a Governor’s race and the push to become the first adult-use and billion-dollar
market in the Mid-Atlantic.
Governor Martin O’Malley signed HB 881 and SB 923 into law on April 14, 2014, tasking the
Natalie M. LaPrade Medical Cannabis Commission (MMCC) and the Department of Health with
developing regulations including a process for business licensure. The Commission is named
after house bill sponsor and member of the Legislative Black Caucus Baltimore City Delegate
Cheryl Glenn’s mother, whom Del. Glenn believed would have benefited from medical
marijuana in the last months of her struggle with kidney cancer.
Maryland received a whopping 1,046 applications from 223 applicants by the due date of
November 6, 2015. This was 3x the number of applications that MMCC expected to receive, and
MMCC delayed its licensing decisions indefinitely. The state collected $1.3 million in non-
refundable application fees. MMCC planned to license up to 15 growers, 15 processors and 109
dispensaries.
12
Washington Post reveals applicant political ties before announcements: On June 26, 2016,
following a FOIA request with the MMCC, the Washington Post identified the owners and
officers of the applying entities. 56 applicants had local political and law enforcement ties, with
teams comprising former sheriffs, state lawmakers, DEA officials, wealthy business executives
and well-connected political donors to both parties. Featured in the Washington Post article
was Democratic mega-donor Michael Bronfein, CEO of applicant group Curio Wellness, who
previously co-founded Remedi SeniorCare that landed a $300 million equity investment from
Centerbridge Partners in 2011. The Baltimore Sun later identified that David D. Smith, executive
chairman of conservative TV station conglomerate Sinclair Broadcast Group and personally
worth $325 million is a leading investor in Curio Wellness.
On July 16, the Washington Post published “Lawmaker who pushed medical pot in Maryland is
part of team applying to sell the drug,” referring to Del. Dan Morhaim who had hundreds of
communications with the MMCC in his capacity as an influential legislator without disclosing his
financial incentives with applicant Doctor’s Orders. Doctor’s Orders, partnered with marijuana
law firm Vicente Sederberg, is backed by CEO Glen Weinberg, Principal Emeritus at real estate
developer The Cordish Companies (Live! Casino), COO and DC restauranteur Jeff Black and
prominent Black venture capitalist Herb Wilkins Jr. (BET, Radio One).
Big money, politics and out-of-state interests win exclusive production rights: On August 15,
2016, the MMCC announced pre-approvals for grower and processor licenses. 7 companies
won the most sought-after combination of grower and processor licenses. These 7 include
Curio Wellness and Doctor’s Orders, mentioned above. Holistic Industries features the former
head of the Department of Health and the current President of the state’s Fraternal Order of
Police, and is backed by Richard Cohen, Chairman of real estate developer Willco (20 million
square feet in metro DC). Holistic Industries was endorsed by Democratic Senate President
Thomas Miller, who wrote letters to regulators praising Cohen and recommending Holistic’s
applications be approved.
Three other winners had won multiple competitive license applications in other states. They
include Temescal Wellness of Maryland backed by Baltimore attorney investors Paul Bekman,
Eric Radz and Craig Schulman and managed by the Rebholz family, with other operations in
Massachusetts and Rhode Island; MaryMed (Vireo Health) with operations in Minnesota and
New York led by CEO Kyle Kingsley; and Maryland Compassionate Care and Wellness (Windy
City Cannabis) led by Chicago-based CEO Steven Weisman. The seventh winner Kind
Therapeutics (MariMed) is led by Annapolis physician CEO Susan Zimmerman and includes
former Baltimore County Police captain Richard Howard.
Money raised at big valuations and winners celebrate together: Michael Bronfein of Curio
Wellness raised $25 million from friends at a $50 million pre-money valuation, completing this
fundraise ahead of license announcements in August. The Baltimore Sun later reported that
Curio raised $30 million. Doctor’s Orders raised less money at a $40 million pre-money
valuation. Several of the winning groups celebrated at Bronfein’s home after winning. The
13
prime objective among winners was to protect the current number of licenses ahead of an
adult-use legalization targeted for 2018.
In the weeks following license pre-approvals, numerous processor winners made calls to
experienced operators looking for know-how and partnerships. These processor winners had
little to no knowledge despite succeeding in a supposed merit-based selection process.
Lawsuits and legislative protest ensue: In September 2016, unsuccessful applicants filed suit.
Green Thumb Industries, joined by Maryland Cultivation and Processing, filed suit after the
state had awarded 2 lower-scoring applicants grower licenses for geographical diversity reasons
– Holistic Industries and Shore Natural Rx. MMCC had selected 15 growers from a pool of 25
that were the highest ranked by a sub-contracted evaluating organization. Another lawsuit was
then filed by Alternative Medicine Maryland, 80% Black-owned and led by New York-based
Black physician and businessman CEO Greg Daniel, accusing the state of failing to consider
racial diversity in awarding licenses. Only one Black-controlled group, Seven Points Agro with
100% Black-ownership, won a processor license, known to be significantly less valuable than a
grower license.
The Legislative Black Caucus planned to use any means necessary to stop the MMCC from
issuing final approvals until more grower licenses were awarded to minority-owned businesses.
“We will not be accepting crumbs,” said Del. Cheryl Glenn, now Chair of the Legislative Black
Caucus. Del. Glenn later said: “It’s a billion-dollar industry (in Maryland) and we’re not going to
allow that to start up and flourish with no African-American participation. Especially given the
history of incarceration of African-Americans over the past years because of marijuana. And so
now that it’s legal for medicinal purposes we can’t have any part of that business? That’s
ludicrous, and it’s unacceptable.”
The 7 grower-processor winners all win dispensaries too: In December 2016, 102 dispensaries
were awarded. All of the 10 pre-approved growers that submitted applications for dispensaries
were awarded dispensaries, including the 7 grower-processor winners. With legal delivery,
these 7 companies were given the competitive advantage to offer the lowest-cost products
statewide. The other 3 grower-dispensary license holders share this advantage specifically with
non-processed forms of marijuana. They include Freestate Wellness, led by Cary Millstein and
the Fischell family (biotechnology patents and Johns Hopkins University). HMS Health is owned
by Shakil Siddiqui, who founded Haris Design and Construction that helped renovate the DC
Metro system, and includes Mr. Siddiqui’s son and Islam Siddiqui, a former high-level appointee
in the Obama administration and former ag-tech lobbyist. Harvest of Maryland (Harvest Inc.) is
owned by Arizona-based CEO Steve White and set up a 5% profit-sharing program with the
Western Maryland town of Hancock, building a facility in a vacated publicly-owned warehouse.
“David D. Smith” is also listed as an owner of Harvest of Maryland LLC.
During the 2017 legislative session, legislation that would have increased minority ownership
failed in the last minutes of the session. The Legislative Black Caucus demanded a special
session from Democratic leadership, issuing an ultimatum on future legislative and electoral
14
cooperation with the Democratic Party. In late April 2017, Republican Governor Larry Hogan
commissioned a disparity study to be completed as expeditiously as possible. In July 2017, the
Governor overhauled the MMCC, making 10 appointments and doubling the commission’s
minority representation.
Washington Post uncovers conflicts of interest in the evaluation process: After another public
records request, the Washington Post in July 2017 uncovered a conflicts of interest scandal in
which several of the independent experts hired to review applications had ties to the
companies whose applications they reviewed. MMCC had contracted with the Regional
Economic Studies Institute (RESI) at Towson University, which selected 20 industry experts and
then oversaw these experts as they evaluated applications. This RESI contracting arrangement
was the subject of a “blistering” legislative audit, which found that MMCC skirted state
contracting rules and allowed costs to balloon. RESI cited the use of a double-blind process,
however the Washington Post found that it was possible in certain cases to identify which
companies were behind which applications.
Temescal Wellness – whose Massachusetts operation was founded by RESI-appointed industry

expert Julia Germaine whose husband was an owner/officer in Temescal at the time it applied
in Maryland – as well as Doctor’s Orders (Del. Dan Morhaim) were suspended and probed by
MMCC in August 2017 for conflicts of interest. Both were reinstated in October 2017 after
MMCC found no evidence of corruption. It is unclear whether Doctor’s Orders had failed to
meet an operational deadline compliance in August before or after its suspension by MMCC.
MaryMed (Vireo Health) was initially denied approval in June 2017 after the MMCC concluded –
based on information obtained from the Minnesota Bureau of Criminal Apprehension in its
criminal investigation of Vireo for diversion of marijuana from Minnesota to New York – that
Vireo had likely diverted marijuana across state lines. Vireo Health transferred its 90%
ownership in MaryMed into a new LLC and had its licenses reinstated in July 2018 after an
administrative law judge ruled that there was no reasonable likelihood that MaryMed
participated in interstate smuggling.
The Washington Post Editorial Board published “Maryland is mired in a medical-marijuana

morass” on August 8, concluding that “Any hint that the selection is somehow unfair, or tainted
by personal connections, subverts faith in the process and the government… Any further
revelations could derail the whole procedure; here’s hoping it doesn’t come to that.”
Baltimore Sun reports on lobbying and campaign contributions: In September, the Baltimore
Sun published “Meet the companies launching Maryland’s cannabis industry,” reporting that
executives of three of the winning companies – Holistic Industries, Curio Wellness and
ForwardGro – donated over $400,000 to both parties in recent years. As a corporation, Holistic
donated nearly $50,000 to local officials in 2016. Holistic worked with the highest paid lobbyist
in Maryland, Gerry Evans, bringing onto the team his son-in-law Richard Polansky. ForwardGro,
the grower-only license led by Gary Mangum – co-founder and CEO of Bell Nursery generating
15
$125 million in annual sales, donor to Governor Larry Hogan and appointee to the executive
board of the Maryland Stadium Authority – was the first grower approved by MMCC.
In November, the Executive Director of MMCC Patrick Jameson resigned for undisclosed
reasons. The first and preceding director Hannah Bryon had stepped down in January 2016.
Marijuana law gets overhauled: On January 17, 2018, the disparity analysis was released at the
onset of the legislative session. It concluded that the state’s industry-wide 2017 Disparity Study
provided strong evidence to use race and gender-based remedial measures in industries
relevant to medical marijuana. It did not specifically look at the marijuana industry in the
context of disproportionate targeting, arrests and incarceration of racial and economic
demographics. The study gave lawmakers legal grounds to create new licenses designated for
women and minority-led businesses. Currently, MMCC diversity statistics show “35% racial and
ethnic diversity participation” and “57% minority participation including females.”
“Participation” refers to number of owners, not ownership percentage.
The Natalie M. LaPrade Medical Cannabis Commission Reform Act was pre-filed in the house in
September 2017 and first read on January 10, 2018. On March 12, the Baltimore Sun published
“Plan to diversify Maryland marijuana market might boost white firms instead,” writing “a new
round of licensing was supposed to give Black-owned firms that were all but shut out of the first
round another chance to gain a foothold in the lucrative industry. But the legislation lawmakers
have now come up with favors companies that already hold licenses to grow and process
marijuana.”
3 new processor licenses were set aside for companies that already held grower licenses. These
companies are ForwardGro, HMS Health and Harvest of Maryland (Harvest Inc.), mentioned
earlier. Harvest of Maryland (Harvest Inc.) became the 8th vertically-integrated operator in
Maryland, with growing, processing and retail with delivery. Black-controlled processor Seven
Points Agro received 1 new grower license. This allocation was supported by Del. Cheryl Glenn
during legislative negotiations because it was possible that other Black-controlled groups would
remain without grower licenses. In February 2018, Alternative Medicine Maryland settled its
lawsuit, indicating it would apply for new licenses. In April, plaintiff Green Thumb Industries
announced that it would receive pre-approval for a grower license.
The Natalie M. LaPrade Medical Cannabis Commission Reform Act was signed into law on May
15, 2018 by Governor Larry Hogan. 4 new grower and 11 new processor licenses will be up for
competitive application scheduled for October 2018 (no new developments as of October 1).
Compared to original operators, new licenses will have a two-year delay in entering the existing
market and earning market share. The state will not issue new dispensary licenses.
Consolidation begins: Despite rules implemented to limit ownership to 1 grower, 1 processor

and 1 dispensary, at least 2 companies are operating multiple dispensaries in Maryland, as
reported by the Baltimore Sun in July 2018. In public filings, Green Thumbs Industries (CSE:GTII)
now publicly traded in Canada and on the US OTC, disclosed it had controlling ownership in 5
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dispensaries in Maryland. MPX Bioceutical Corp (CSE:MPX has an option to buy 3 dispensaries
for a total of $2.5 million mostly in cash.
MMCC Policy Director William Tilburg in a policy committee meeting pointed out that several
entities are gaining control through management agreements involving no ownership transfers.
These entities “now manage three, four, five, six, seven dispensaries, where the management
gets 99% of the revenue.” Green Thumb Industries has also disclosed management
arrangements with Maryland dispensaries. Harvest Inc. has approached Maryland dispensaries,
with the email message “if you have any interest in selling your license in Maryland, then call
me… Also, if you know of any groups that are considering selling, I’d like to discuss this as well.”
Independent dispensary owners are concerned about their ability to compete with vertically-
integrated pricing. Del. Cheryl Glenn said: “It looks like we’ll be going into session with another
emergency bill” and supports forcing consolidator divestiture.
C) Outlook:
Prospective applicants are dissuaded to spend time and money to apply for the new licenses
because of what happened in the first round. Groups that applied for grower licenses in 2015,
for example, spent around $200,000 per application on average. Many applicants secured real
estate by paying lease months before submissions; these fixed costs with licensure delays also
caused substantial financial loss.
It’s important to note that the state increases capital expense requirements for growers by
creating an oligopoly and having preference for “controlled” and “highly-regulated” indoor-
warehouse cultivation and artificial growing environments. Nonetheless, you do not need to
already be a multi-millionaire to raise capital for your startup enterprise. Will MMCC’s
emergency regulations for new licenses take into account economics in prioritizing
disadvantaged enterprises? Maryland’s Disadvantaged and Minority Business Enterprise
programs have net worth-based eligibility requirements.
Outside of Maryland, Holistic Industries currently operates in DC, CA, MA, and PA. Vireo Health
(MaryMed) is in MN, NY and PA. Temescal Wellness is in MA and NH. Windy City Cannabis
(Maryland Compassionate Care and Wellness) is in IL. Harvest Inc. claims to hold marijuana
licenses in 7 states including OH, IL, PA, NV and AZ, and manages one of the winning groups in
AR. Green Thumbs Industries also owns licenses in PA, IL, OH, MA and NV. Doctor’s Orders may
have expanded in two other states under a different name, per its national consulting
arrangement with Delegate Dan Morhaim.
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US Legal Marijuana Arkansas Condensed Report
ARKANSAS MARIJUANA
➢ Adult-use marijuana projected annual retail market: $600 million

➢ Business legalization date: November 8, 2016
➢ First licenses issued: July 10, 2018 (cultivation facilities)
➢ Sales to date: N/A
➢ Patients certified to date: 5,800
➢ Retail sales to date: N/A
➢ Legal businesses: 5 cultivation facilities and 32 dispensaries
➢ Cultivation facility pre-investment valuations: $20 million avg.
➢ Dispensary pre-investment valuations: $8 million avg.
Legalized by ballot initiative in 2016, medical marijuana in Arkansas has been mired in high-
profile controversy since license winners were announced in February 2018. The licensing
process was ruled unconstitutional in Circuit Court and reversed in the Supreme Court on a
technicality. An FBI probe into corruption and kickbacks looms over a substantial and
bipartisan portion of the general assembly. Now, the FBI is also investigating marijuana
licensing over commissioner bribery and potentially more. Governor Asa Hutchinson and
Attorney General Leslie Rutledge are seeking reelection this November.
Ahead of November 8, 2016, Issue 6 (Amendment 98) outraised grassroots campaign Issue 7
tenfold, backed by three financiers including a member of the billionaire Stephens Inc. family
($625,000), the Polk family ($500,000), and William “Cheney” Pruett ($640,000) behind payday
lender CashMax who had earlier invested in a failed 2015 ballot initiative in Ohio that would
have given 10 investor groups exclusive production rights in the medical market. In October
2016, the Arkansas Supreme Court invalidated 12,000 signatures from Issue 7, disqualifying it
from the ballot. On November 8, Amendment 98 was approved by voters 53% to 47%, making
Arkansas the first state in the bible belt to legalize marijuana.
Amendment 98 instructed the Governor, the senate president and the speaker of the house to
select 5 members to the Arkansas Medical Marijuana Commission (AMMC) to develop rules
along with the Alcohol Beverage Control Division and the Department of Health. Amendment
98 allowed the General Assembly to make amendments by two-thirds vote, except to the
sections legalizing marijuana and the number of licenses allowed – between 4 and 8 cultivation
facilities with processing, and between 20 and 40 dispensaries with processing, limited
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cultivation and delivery. 60% of owners had to be Arkansan, and the Commission in its rules
later added that 60% of ownership had to be Arkansan.
The rulemaking process moved ahead relatively smoothly. The selection process for
dispensaries was initially proposed as lottery-style, but after public comments in March 2017,
the Commission made the entire selection process merit-based. Requests for applications were
released on June 19, 2017 and due on September 18, 2017.
95 cultivation facility applications and 224 dispensary applications were turned into the ABC by
September 18, totaling 319. Applications averaged 1,000 pages each, with the merit-based
portion limited to 25 pages with unlimited exhibits. The average application cost was reported
between $150,000 and $200,000. The state collected $3 million in gross fees from marijuana
applications.
Troubling signs early on: Commission meetings were filled with lobbyists from the start, and
associates of cultivation facility applicants known at the time had donated over $90,000 to
Governor Asa Hutchinson’s re-election campaign. There were grumblings among applicants that
certain applicants had personal meetings with a governor staffer, including hosting this staffer
at their prospective facility sites. This staffer was present at Commission meetings and was seen
walking into meetings with the Commissioners from a private room.
Two FOIA requests were privately obtained, analyzed and distributed to top media outlets in
Arkansas. 1,600 individual owners and officers had applied, 75% of which were Arkansan. One
day before cultivation winners were announced, the Arkansas Times wrote “Chaos and
conspiracy theories? Consider that a shadowy group has been working for weeks… to compile a
detailed analysis of all of the interlocking relationships, political allies and big money that you
can find throughout the applicants and regulatory process for marijuana in Arkansas.” The
Arkansas Times included a prediction from this analysis about who would win, which predicted
2 out of 5 correctly.
Big money and politics win the 5 cultivation licenses: On February 27, 2018, the Commission
announced #1 Natural State Medicinals Cultivation (NSMC), #2 Bold Team, #3 Natural State
Wellness Enterprises (NSWE), #4 Osage Creek Cultivation, and #5 Delta Medical Cannabis
Company (DMCC) as the cultivation facility winners.
#1 NSMC owners include the current CEO and President of USA Drug Stores and its previous
owners Wendy and Stephen LaFrance Jr., who sold USA Drug to Walmart for $550 million in
2012. NSMC owners also include prominent Black doctor Alonzo Williams and wife Susan
Williams, who hold considerable sway with the state’s Legislative Black Caucus. 51% woman-
owned and 25% minority-owned, NSMC is 60% minority-owned under the state’s new Arkansas
Minority Business Enterprise Certification Program and received full points for diversity in the
application.
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#3 NSWE was founded and is managed by Oklahoman Warren Ross of the Ross Group, which
has secured $725 million in federal construction contracts since 2007. Former AG and current
lobbyist Dustin McDaniel and family are also owners. Dustin McDaniel lobbied against the
Arkansan ownership requirement; Warren Ross’ broader financial position in his company is not
reflected by his 0.31% ownership in the applicant entity. Owners also include John Allison,
Chairman of the Arkansas State Police with a net worth estimated at $120 million, and the son
of former legislator and Jefferson County Judge Hank Wilkins IV. NSWE, submitting 2
applications that tied for 3rd with identical scores, was competing for economic development
incentives in two regions – in Jefferson County and Jackson County. Harvest Inc. is the
company’s management partner.
#5 DMCC is owned by CEO Doug Falls, a Commissioner with the Arkansas Economic
Development Commission (AEDC) who owns and operates a $30 million annual revenue lamp
manufacturing facility with factories in Arkansas and China. The husband of another AEDC
Commissioner is also an owner in DMCC, as is the mother of Democratic Party of Arkansas Chair
Rep. Michael John Gray. The previous head of the party, Jason Willett, was listed as the owner
of the original entity and is listed as the incorporator/organizer for the newest LLC with the
same name.
#2 Bold Team and #4 Osage Creek Cultivation (the latter partnered with Johns Hopkins
Medicine’s Jeffery Young) had not yet surfaced as having significant wealth or strong political
connections.
Back to the February 27 AMMC meeting, the Commission agreed to reconvene on March 14 to
officially award licenses so long as the winners posted their licensing fee and performance bond
within 7 days of receiving notice. The application belonging to wealthy and politically-active
Black farmer Abraham Carpenter, partnered with prominent Baltimore-based civil rights
attorney Billy Murphy, had surprisingly been disqualified.
Quickly building a legal case against the Commission and ABC: The most glaring scoring
discrepancy, the focus of early media reaction to the licensing decision, was by Commissioner
Carlos Roman who gave two groups scores in the 90’s out of 100 – #1 NSMC and #51 Natural
State Agronomics led by AEDC Commissioner Ken Shollmier (who planned to invest $45 million
into his company) – with the next highest score in the 70’s and a median score of 57 overall.
With 21 points out of 500 separating the 5th place winner with the 20th ranked group, every
point mattered. News broke revealing that Commissioner Travis Story is an attorney for the
owners of #4 Osage Creek, to which he gave his second highest score. #38 Naturalis Health,
backed by Jackson T. Stephens III who co-financed the ballot initiative and spent $3 million on
its proposed facility, filed suit in circuit court. #9 Delta Cannabinoid Corporation also sued,
finding that all 5 winners failed to meet minimum requirements after reviewing redacted
applications released via another FOIA request. Among the findings was that #3 NSWE received
full points for racial diversity through majority owner William Ryan Young despite Mr. Young
listing his race as White in his Arkansas State Police criminal background check.
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Circuit Court Judge rules awarding process unconstitutional: Judge Wendell Griffin – who had
sued the Supreme Court for removing him from cases involving the death penalty (which he
had protested famously) – initially granted a temporary restraining order to plaintiff Naturalis
the morning of March 14, 2018, hours before the Commission was scheduled to officially award
licenses. At the preliminary injunction, the state raised a “sovereign immunity” defense, a
precedent set two months earlier by the Supreme Court; Gov. Hutchinson had instructed
agencies to not use this defense without his permission. On March 21, Judge Griffen declared
Arkansas’ licensing process “null and void” while lamenting delays in medical marijuana
availability for patients; over 4,000 patients had already registered for medical marijuana.
Regarding the conflicts of interest between Commissioners Roman and Story and #1 NSMC and
#4 Osage Creek respectively, Judge Griffen wrote “it is certainly enough to create a reasonable
suspicion of unfairness, even if it does not establish actual bias… Consequently, the cultivation
facility licensing decision in which they participated cannot stand.” The state appealed, and the
case headed expeditiously to the Supreme Court.
The Pine Bluff Commercial in a May 1 editorial called the marijuana license selection process a
“circus sideshow,” determining after much research that “the process may have indeed been
flawed.” On June 19, the Arkansas Times published “Marijuana applications need a recount.”
The backdrop of a deep-reaching FBI political corruption crisis: The FBI’s investigation into
kickbacks and illegal political activity in Arkansas, has, so far, led to 6 former legislators pleading
guilty or being convicted of federal corruption charges, including Jefferson County Judge Hank
Wilkins IV, the father of an owner in #3 NSWE, who pled guilty to taking $100,000 in bribes
from Preferred Family Healthcare while serving in the state legislature. Former state senator
Jon Woods, found guilty and sentenced to 18 years in prison for directing $400,000 to Ecclesia
College and Preferred Family Healthcare for kickbacks, had also tried to direct medical
marijuana tax revenues to Ecclesia College through Amendment 98. This scandal began
unraveling in January 2017, after which 80 FOIA-related bills were passed during the legislative
session. At least 24 current and former Arkansas legislators are implicated in the Ecclesia
College and Preferred Family Healthcare schemes alone, including Commissioner Travis Story’s
law firm partner Rep. Bob Ballinger, former senate president and Gov. Hutchinson chief of staff
Michael Lamoureux, and the Governor’s nephew Rep. Jeremy Hutchinson, recently revealed as
a co-conspirator for allegedly taking $500,000 in bribes and indicted on wire and tax fraud
charges.
FBI investigating marijuana licensing bribery: Days before the June 7, 2018 Supreme Court
hearing, the state filed a letter under seal with the court. This letter was unsealed hours after
the Supreme Court hearing, revealing that an unnamed Commissioner had said he was offered
a bribe by applicant Natural State Agronomics. The letter continued that the commissioner gave
Natural State Agronomics his second highest score, significantly higher than scores awarded to
that entity by other commissioners, while noting that “there is no specific law or regulation
requiring a commissioner to report a bribe attempt.”
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The letter revealed that this matter was subject of an ongoing law enforcement investigation, in
which the Arkansas State Police denied involvement and for which the FBI had no comment. A
secret video recording of a conversation between Commissioner Roman and Ken Shollmier,
now in the hands of two state legislators as an audio file, indicates Commissioner Roman was
himself soliciting bribes. Also in June, Speaker of the House Jeremy Gillam resigned from the
legislature.
Supreme Court reversal: On June 21, the Supreme Court ruled that the Circuit Court did not
have the jurisdiction to take up the Naturalis case because unsuccessful applicants had not
formally been denied licenses. Chief Justice Dan Kemp concurred with the majority opinion, but
noted that “the court may, however, reverse an agency decision if the substantial rights of the
petitioner have been prejudiced.”
#5 DMCC plagiarized and submitted application from #48 Courageous Ann via a former
director of ABC: On June 27, the Arkansas Democrat Gazette broke news that #5 Delta Medical
Cannabis Company had copied large and important sections of its application from applicant
#48 Courageous Ann. Courageous Ann is led by the Polks who co-financed Issue 6. Electronic
fingerprints on DMCC’s internal documents and company emails showed how contents from
Courageous Ann funneled into DMCC through accounts linked to its previous attorney, former
director of the Alcohol Beverage Control Division (2007-2013) Michael Langley.
Commission formally awards cultivation licenses and blocks legal recourse: The Circuit Court’s
injunction was formally lifted on July 10, at which point the Commission, without holding a
meeting, formally awarded licenses to the top 5 cultivation facilities the same day. At a meeting
two days later, the Commission amended its rules to keep all unsuccessful applicants “active”
for two years. By not formally issuing denials, the Commission prevented unsuccessful
applicants from appealing a denial in circuit court, limiting the appeal process to filing protest
letters with ABC Enforcement headed by Boyce Hamlet, a Governor Hutchinson appointee. The
Commission’s rule change was later approved by the Arkansas Legislative Council. Twelve
protest letters are currently with ABC Enforcement. The only way for unsuccessful applicants to
receive their $7,500 reimbursement now is to formally withdraw from future consideration for
licenses. On July 16, in an editorial titled “Forward Motion,” Arkansas Business congratulated
the top 5 winners.
State senate campaign contributions hint at a winners network: The senate campaign of Rep.
Bob Ballinger, the law firm partner of Commissioner Travis Story, was financed nearly 50%
($13,000) by marijuana applicants in its first month. Rep. Bob Ballinger was running against
incumbent Sen. Bryan King, a vocal opponent of Governor Hutchison who had helped unravel
the political corruption scandal in Arkansas. The 6-known marijuana-applicants that have
donated to Bob Ballinger’s 2018 campaign are owners of #4 Osage Creek, owners of #3 NSWE, a
business partner with owners of #2 Bold Team and #5 DMCC who also applied for marijuana in
Arkansas, and the 3 financiers of Issue 6. John “Chase” Dugger of JCD Consulting – a lobbyist for
Preferred Family Healthcare and #4 Osage Creek, and neighbor to #2 Bold Team associates in
the hometown of senate president Jonathan Dismang – is the largest payee of both the Bob
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Ballinger and Rick Hill senate campaigns with over $80,000 in combined payments. The 3-
known marijuana-applicants to donate to Rick Hill’s senate campaign is a director at #2 Bold
Team, owners of #8 2600 Holdings, as well as an associate of Naturalis Health and Jackson T.
Stevens III. Ballinger won his primary and Hill won his special election, with Hill outraising his
opponent 20-fold and wining 81% of the vote. A local blogger report from August 2018
correlated Commissioner Story’s top scores with applicants that contributed to Ballinger’s
senate campaign.
Dispensary selection process outsourced: With mounting public pressure, 4 out of 5

Commissioners voted to hire an independent contractor to evaluate the 203 qualifying
dispensary applications. 2 bidders responded to a “scope of work” issued to 30 pre-approved
healthcare-related contractors, and Public Consulting Group (PCG) out of Boston won with the
low bid of $99,472, just under $100,000 that would have triggered approval from the legislative
council. The other bidder submitted a price of over $350,000. PCG has secured a dozen state
contracts in Arkansas since 2012, totaling $5.6 million, and as of 2017, was represented by two
lobbyists in Arkansas, Capital Advisors Group and Michael Shannon. State procurement officials
expected to complete the contract with PCG the week of August 20, 2018. By September 14,
this contract had not been finalized. The contract gives PCG 30 days to complete dispensary
evaluations. David Couch, spearheading a 2020 adult-use ballot initiative and partnered with
Arkansas applicant Boll Weevil that sued the state in March, said “It’s a such a good deal it
makes you ask: ‘So what’s the catch?’ But you look at the PCG and they look legitimate.”
Compared to Florida’s projected cost of $18,400 per application evaluation – via the Office of
Medical Marijuana Use’s approved budget request for an additional $13 million – PCG would be
earning $490 per application evaluation in Arkansas, or 1/38th the cost.
As reported by THV11 and Talk Business in mid and late September, dispensary license
announcements are expected in November around Thanksgiving, post elections. DFA
spokesperson Scott Hardin explained that many dispensary applicants have already begun
construction and are just waiting on the piece of paper to open, and that “Arkansans could
really see a dispensary open and selling product by January.”
C) Outlook:
Recently, 500 pages of information were unsealed by a federal judge in the trial convicting
former Sen. Jon Woods of kickbacks. Text messages from December 2016 between FBI Special
Agent Robert Cessario and Shane Wilkinson, the defense lawyer for cooperator (guilty plea) and
former Rep. Micah Neal, show that both men “laughed at loud” at Travis Story’s appointment
to the Commission. Wilkinson conveyed that “it sounds like they all believe they (licenses) are
automatic money machines… rumored to be worth 5 million a year profit.”
There are no updates with potential ABC Enforcement investigations of the 12 protest letters.
Naturalis Health (Jackson Stephens III) has unexpectedly withdrawn its interest in continued
legal action.
Note: Bold Team first cultivator to be approved (several-month head start). Then Doctors RX first dispensary approved.
Both are part of same network involving Dismang and Gilliam.
Note: Chairman of Democratic Party of Arkansas an owner of DMCC through his mother. He was appointed a
member by proxy in March 2018 by his mother. See context in Arkansas Democratic Gazette “Medical marijuana
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regulators question if firm’s tie to state party chief violates rules”
US Legal Marijuana Virginia Condensed Report
VIRGINIA MARIJUANA
➢ Adult-use marijuana projected annual retail market: $1.5 billion

➢ Business legalization date: March 29, 2016
➢ First conditional permits approved: September 25, 2018
➢ Retail sales to date: N/A
➢ Patients certified to date: Treated as confidential by the Board of Pharmacy (136
physicians have signed up to issue written certifications)
➢ Legal businesses: 5 vertically-integrated regional monopolies
➢ Pre-investment valuations: Est. $25 million avg. for each
Virginia legalized 5 vertically-integrated regional monopoly businesses in March 2016. The

Board of Pharmacy selected members to a regulatory advisory panel to develop the market’s
emergency regulations. By not moving toward a proposed regulations stage before releasing
its request for applications, the Board avoided public comments until after applications were
submitted in June 2018. Application owners and scores were exempted from FOIA law in
2017, and the application evaluation committee and process was kept anonymous and
conducted behind closed doors.
On February 26, 2015, Governor Terry McAuliffe signed SB 1235 into law, providing an
affirmative defense for intractable epilepsy patients possessing a physician-issued written
certification for CBD and THC-A oil. This law did not legalize production or sales in the state. On
August 7, 2015, Surterra Holdings, an applicant in Florida at the time, retained 4 Richmond-
based lobbyists with McGuireWoods on the matter of “Formation of task force to study
enacted legislation in health care sector.”
In 2016, on March 29, SB 701 authorized the creation of 5 “pharmaceutical processor” permits
for vertically-integrated businesses to produce and sell CBD and THC-A oil. By law, no person
convicted of a marijuana or marijuana paraphernalia misdemeanor in Virginia could be
employed or act as an agent of a pharmaceutical processor. The law authorized the Virginia
Board of Pharmacy (VBOP) to develop temporary “emergency regulations” that would become
effective once the provisions of this law were reenacted during the 2017 legislative session.
Surterra also part of rulemaking: In May 2016, the VBOP Regulation Committee voted to form
a Regulatory Advisory Panel to develop emergency regulations for pharmaceutical processors
24
and for the VBOP Chairman Ryan Logan to select members to the panel. Surterra Holdings was
the only marijuana operator selected to the 14-member panel. Other prospective business
interests on the panel included Alexander Pytlarz with The Compounding Center who also
chairs the Compounding Committee of the Virginia Pharmacists Association, R. Baylor Rice who
owns South River Compounding Pharmacy, and neurologist Paul Lyons, MD.
Between July 1 and July 26, 2016, an ownership rule was added to the VBOP regulations such
that no person convicted of a marijuana or marijuana paraphernalia misdemeanor in Virginia
“shall have any form of ownership,” be employed or act as an agent of a marijuana business.
On September 7, 2016, the VBOP Full Board voted 8-0 (with 2 abstentions) to adopt the
emergency regulations, making minor amendments. These emergency regulations were then
published to the Regulatory Town Hall on October 19, 2016, with 3 subsequent amended
versions uploaded to the site: one in November 2016 and two in April 2017. It is unclear
whether these subsequent versions were also approved by the VBOP Board. SB 1027 on March
16, 2017 reenacted the provisions of the 2016 law, enabling the emergency regulations to
advance through the regulatory process, starting with stage 1 known as the Notice of Intended
Regulatory Action (NOIRA).
In developing a NOIRA background document used to begin promulgating permanent rules,

VBOP was asked whether a Regulatory Advisory Panel or Negotiated Panel would be used in the
development of permanent regulations. VBOP did not address this question.
Application process and scores exempted from FOIA law: Pre-filed on December 27, 2016 and
introduced by Sen. John “Chap” Petersen during the 2017 session, SB 922 amended § 54.1-108
(Disclosure of official records) with the effect of exempting Board of Pharmacy marijuana
applications and scoring records from FOIA law. Of note, in a June 2018 FOIA request for a non-
sensitive portion of submitted applications to identify owners, VBOP rejected the FOIA request
citing § 54.1-108. Additionally, members of the Virginia FOIA Council (a state agency) did not
read the ensuing dispute letter or vote on the formal written opinion issued by council staff, per
the council’s standard procedures.
On August 7, 2017, the VBOP emergency regulations were published to the Virginia Register.
These emergency regulations expire on February 6, 2019. Emergency regulations are not
subject to public commenting. This August 7 publication triggered a 30-day public comment
period because of the NOIRA. No comments were submitted – at least through the Regulatory
Town Hall – which is very unusual for marijuana-related regulatory processes. VBOP did not
move to adopt proposed regulations at this time. It is unknown whether VBOP received and
reviewed comments; I do not believe they are required to until they go through the process of
adopting proposed regulations.
In a September 8, 2017 presentation delivered to the Virginia Pharmacists Association, VBOP

Executive Director Caroline Juran and Deputy Executive Director Beth O’Halloran disclosed that
VBOP was currently implementing infrastructure for the oversight of the medical marijuana
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program, which included reporting to the Prescription Monitoring Program and forming a
committee to review applications and award permits.
Into 2018, during the VBOP Full Board meeting on March 29, the Board voted unanimously to
form an ad hoc committee to review marijuana applications. The pharmaceutical processor ad
hoc committee was not mentioned in prior VBOP meeting agendas, nor were any other
marijuana-related endeavors from 2017 to that point in 2018. At this meeting, Ms. Juran
informed that a procurement officer insisted the names of the ad hoc committee members
remain confidential during the review process. Assistant Attorney General James Rutkowski
advised on procurement ethics rules, which included prohibitions on providing non-public
information to a bidder and accepting gifts from a bidder. This permitting process was not
actually governed by procurement law because VBOP would not technically be contracting for
goods or services.
New laws expand future marijuana market size: Known as the “Let Doctors Decide” bills
advocated by the National Organization for the Reform of Marijuana Laws (NORML) and signed
into law by Governor Ralph Northam, SB 726 and HB 1251 expanded patient access by enabling
physicians to recommend marijuana for any diagnosed condition, so long as the physician
determines the treatment of this condition would benefit from medical marijuana use. Business
interests and the state had disagreed over allowing marijuana delivery or not; these bills
reintroduced legal delivery.
SB 330, introduced by Sen. Siobhan Dunnavant, required marijuana dispensing be reported to

the Prescription Monitoring Program and that “applicants” for marijuana businesses submit
fingerprinting to the FBI through the Virginia State Police.
RFA released despite emergency regulations and rule changing: On April 16, VBOP released its
Request for Applications (RFA). It included a non-refundable application fee of $10,000. The
RFA granted VBOP the right to disqualify any applicant that failed to comply with all
requirements for a marijuana business and for whom there was evidence of a disqualifying
criminal conviction per the emergency regulations. The application was due by June 8, giving an
application window of 7 weeks. VBOP typically gives between 3-6 months (12-24 weeks) for
other application types.
These “temporary” emergency regulations had a “permanent” effect on who was eligible to
apply. These emergency regulations also suppressed competition:
1. “Temperature and Humidity” definition requires standardized production methods that

would give a competitive advantage to Surterra – who added these methods to the
regulations while a member of the regulatory advisory panel – and would be a
disadvantage to other operators with different production methods.
2. “No person who has been convicted of a felony or of any offense in violation of Article 1
(18.2-247 et seq.) or Article 1.1 (18.2-265.1) of Chapter 7 of Title 18.2 shall have any
form of ownership, be employed by or act as an agent of a pharmaceutical processor.”
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As mentioned earlier, this includes marijuana and marijuana paraphernalia

misdemeanors.
3. “The board shall consider… in evaluating pharmaceutical processor permit applications
the extent to which the applicant or any of the applicant’s pharmaceutical owners have
a financial interest in another license, permit, registrant or applicant.” The word
“consider” is unusually flexible language relative to other legal marijuana markets.
4. Two rules that facilitate ownership change, which is in itself unusual relative to other
markets that use merit-based processes to select the most qualified operators to
produce medicine. This is extra problematic without prohibitions on ownership in more
than one pharmaceutical processor.
5. There is also what was not included in the regulations: No minimum ownership
requirements for residents of Virginia. No minimum ownership requirements for
disadvantaged populations. No economic or community development incentives.
With the passing of the new marijuana bills in 2018, the VBOP Regulation Committee made
changes to the emergency rules on April 24, 2018, during the open application window. These
included, among other changes, replacing references to owners, employees and agents with
“applicant” in the context of VBOP conducting background checks. There is no definition of
“applicant” in the RFA, the emergency rules or the law.
53 applications submitted: The state collected between $510,000 and $530,000 in non-
refundable application fees with four applications disqualified for unknown reasons, two of
which were later reinstated by the Attorney General’s office. Surterra’s CEO’s was quoted by
the Richmond-Times Dispatch saying: “I’m surprised that many people were able to organize in
that period of time.” Applicants could apply in up to five health service areas. The Washington
Post reports that 32 companies applied. Two days before applications were due, on June 6,
2018, NORML published "Virginia: Crime Data Shows Surge in Marijuana Arrests” referring to a
Virginia Commonwealth University report in which African-Americans in Virginia are arrested
for marijuana at a rate that is more than 3x the rate of Whites.
At the June 21, 2018 VBOP Full Board meeting, the Board adopted the revised emergency
regulations presented by the Regulation Committee. Executive Director Caroline Juran asked
the Board about having a one-day retreat in the Fall to receive education on production and use
of CBD and THC-A oil and pharmaceutical processor oversight, noting that Governor Ralph
Northam would potentially appoint 5-6 new Board members prior to the September 25, 2018
Full Board meeting.
Public comment period occurs after applications already submitted: These revised emergency
regulations were posted to the Regulatory Town Hall on July 9, 2018, beginning another NOIRA
regulatory process stage. The 30-day public comment period, starting on July 23 and ending on
August 22, received 20 comments through the Regulatory Town Hall plus others shown in the
September 25 Full Board agenda.
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On August 8, 2018, WBYC reported that VBOP pushed back the timeline for pharmaceutical
processor permitting to the Fall of 2018. Per the Washington Post, the 32 companies that
applied with 54 applications far exceeded VBOP’s expected response to the RFA.
Applications evaluated behind closed doors: The agenda for the September 4, 2018 VBOP ad
hoc committee meeting noted that the committee would determine near the beginning of the
meeting whether evaluations would occur in open or closed session, and showed a motion to
convene a closed session to consult with legal counsel pertaining to actual or probable
litigation. As reported by the Richmond-Times Dispatch, the evaluation of applications did take
place in closed session. VBOP Executive Director Juran added that the Board received legal
advice from the Office of the Attorney General before deciding whether the review should be
public or private. The agenda for the meeting the next day noted that the committee intended
to cancel this meeting if work was completed on September 4. The September 5 meeting was
indeed cancelled.
The September 4 VBOP ad hoc committee draft/unapproved minutes show that the evaluation
of applicants lasted less than 7 hours. It is unclear whether applicants were evaluated before
and outside of this meeting. The members of the ad hoc committee were also revealed. They
are 1) Rafael Saenz, the Chairman of VBOP 2) Cynthia Warriner, the Vice Chairman of the Board
of VBOP 3) Scott Parsons, who appears to be the Executive Director at the Virginia Small
Business Financing Authority (there are 2 other Scott Parsons with Virginia state jobs) 4)
(Michael) Scott Maye, who appears to be the Chemistry Program Manager at the Virginia
Department of Forensic Science and 5) Emily Wingfield, Deputy Clerk at the State Corporation
Commission.
Also shown are staff present at the closed-doors meeting, including VBOP Executive Director
Caroline Juran, VBOP Deputy Director James Johnson, Sr. Assistant Attorney General Allyson
Tysinger, Assistant Attorney General James Rutkowski, Senior Policy Analyst Elaine Yeatts,
Licensing Specialist Sean Nealon, and Executive Assistant Sheralee Copeland.
C) Outlook:
Surterra, now in Florida and Texas, has given $50,000 to Governor McAuliffe and Northam
campaigns. The Center for Responsive Politics shows that between 2017 and 2018, Surterra
spent $120,000 with McGuireWoods. As early as April 2018, it had posted several management
jobs for its pharmaceutical processor operations in Northern Virginia and Richmond, in Health
Service Areas (HSA) 2 and 4 respectively. Some of these job posts had closed by July 2018.
Surterra has done extensive PR in Virginia. On August 6, 2018, Bloomberg reported that
billionaire William “Beau” Wrigley of the Chicago-based Wrigley Company led Surterra’s recent
$65 million investment round. Based in West Palm Beach, Wrigley is now Chairman of Surterra
Holdings.
On August 20, 2018, the Washington Post published “Dozens of companies compete for a piece
of Virginia’s limited medical marijuana market,” reporting that Andrew Smith, who was
28
Governor McAuliffe’s campaign finance director and later a McGuireWoods vice president, is
now a Surterra senior vice president. Surterra plans to invest $10 to $20 million in the first year
in Virginia. On August 7, 2018, Delaware-registered Surterra Holdings registered in Virginia.
The Washington Post also reported that Chicago-based PharmaCann, which operates in IL, NY,
MA, MD, PA, OH and MI is one of the 32 applicants in Virginia. Wicklow Capital, the Chicago-
based family office of mega-millionaire Dan Tierney who founded high-frequency trading
company GETCO, is the lead-investor in PharmaCann. Wicklow Capital holds majority positions
in two out of ten (initially two out of five) New York medical marijuana licenses, PharmaCann
and Bloomfield Industries, the latter acquired through MedMen. Bloomfield was acquired from
a Staten Island-based group reported by Politico in 2016 to have FBI-alleged ties to the
Gambino crime family. PharmaCann retained Richmond-based lobby firm Lamar Consulting in
May 2018.
In HSA 5, prominent Virginia Beach-based US Southeast real estate developer and mega-
millionaire Steven Sandler is with Bloom Medicinals, which won 5 dispensaries in Ohio through
127 OH, LLC in which Sandler is the largest owner (50%). Bloom is also operating in MD and IL.
Both Sandler and another Virginia Beach-based real estate developer Edward Salvator Garcia
who chairs ESG Companies which has built over 20,000 residences showed up as marijuana
applicants in Arkansas through a FOIA request in that state. It is unknown whether Sandler and
Garcia applied in Virginia.
Other recognized applicants in Virginia include Columbia Care, which based on five registered
entities with the Virginia State Corporation Commission applied in all five regions, and gave
$10,000 to the Governor Northam Inaugural Committee in January 2018 and retained lobby
firm Two Capitols Consulting in May and June 2018. They also include Curaleaf (PalliaTech VA,
LLC) which operates in 11 states, and Green Thumb Industries (CSE:GTII) through GTI Virginia
LLC and possibly Green Thumbs Capital, LLC.
NORML’s legislative lobbying priorities in 2019 include officially legalizing THC (THC-A which is
currently legal becomes THC through heating) and 5 to 7 new pharmaceutical processor
permits. In the Richmond Times-Dispatch article “State panel handing out Virginia’s first
medical marijuana licenses will conduct work in secret,” Jenn Michelle Pedini, formerly the
Executive Director of Virginia NORML and now the Development Director at NORML nationally,
said: “It is in the best interests of patients, of consumers, for there to be transparency
throughout this process. Patients deserve to know who is making their medicine, if that
company has been operational in other states, if they have been compliant, if they have had to
stop production or have been cited for other issues.”
Update: On September 25, the Board of Pharmacy announced winners PharmaCann in HSA I
(Charlottesville), Dalitso in Manassas specifically in HSA II (Northern Virginia), Dharma
Pharmaceuticals in HSA III (Bristol), Green Leaf Medical in HSA IV (Richmond) and Columbia
Care in HSA V (Hampton Roads). As a reminder, the ownership behind these companies is
exempt from FOIA disclosure law.
29
US Legal Marijuana Louisiana Condensed Report
LOUISIANA MARIJUANA
Public-private partnership model case study
➢ Adult-use marijuana projected annual retail market: $1 billion (New Orleans)

➢ Business legalization date: May 19, 2016
➢ First license winner announced: June 15, 2017
➢ Retail sales to date: N/A (November 2018)
➢ Patients certified to date: Data not recorded (47 registered physicians currently)
➢ Legal businesses: 2 producers and 9 retail pharmacies
➢ Producer pre-investment valuations: $5 million and $10 million (both distressed
situations)
➢ Pharmacy pre-investment valuations: $10 million avg.
In a public-private partnership legalization model unique to the US, a production and R&D
duopoly was awarded to Louisiana State University and HBCU Southern University in 2015.
Pharmaceutical lobbying amended Louisiana’s marijuana law to require certain patients to
use Epidiolex and other FDA-approved drugs, exclusively or at least through fail first protocol,
before accessing Louisiana-produced marijuana. Currently, LSU is an effective monopoly and
is planning to charge pharmaceutical-level pricing for uninsurable marijuana.
Louisiana first legalized medical marijuana back in 1978, but the Department of Health and
Human Resources did not follow through with assigned rulemaking. In 2014, Sen. Freddy Mills,
a pharmacist, sponsored a bill to establish a production and sales framework that was
vehemently opposed by the Louisiana Sheriff’s Association and that failed 6-2 in the Senate
Health and Welfare Committee.
Over the following months, before her passing, Dr. Alison Neustrom, the daughter of Lafayette
Parish Sheriff Mike Neustrom, testified about the benefits of marijuana treating side effects
associated with her pancreatic cancer chemotherapy.
HBCU Southern University given a license last minute: A new bill was introduced in 2015,
authorizing 10 dispensaries and the right of first refusal for 1 production facility to Louisiana
State University’s Ag School. After objection by the state’s Legislative Black Caucus, HBCU
Southern University’s Ag School was added alongside LSU. This bill was signed into law on June
29, 2015 by Governor Bobby Jindal, however it was merely symbolic in that doctors were
30
required to “prescribe” instead of “recommend” federally illegal medical marijuana, which they
would not do; “Prescriptions” are federally regulated, and prescribing marijuana exposes
medical professionals to criminal liability and losing their DEA controlled substance registration.
In February 2016, Adam Orens and Marijuana Policy Group (MPG) produced a comparative
analysis of the potential Louisiana marijuana market. Under the present law – based on
marijuana access exclusively for patients clinically diagnosed with glaucoma, cancer
chemotherapy symptoms and spastic quadriplegia – MPG projected $12.3 to $14.8 million in
annual retail revenue. With the addition primarily of chronic pain to the list of qualifying
conditions, MPG projected between $200 and $334 million in annual retail revenue.
In 2016, a law was passed replacing all “prescription”-related language with “recommendation”
enabling the development of a Louisiana marijuana market, at least in Section 1 of the law.
Section 2 of the law retained all of the prescription language. In the event the DEA reschedules
marijuana to Schedule 2 of the Controlled Substances Act federally – which was widely believed
to happen in the Summer of 2016 – Section 1 would become null and void, and physicians
would be required to prescribe marijuana. It is unclear what the effects of rescheduling
marijuana would have on the viability of the Louisiana market. Instead of rescheduling
marijuana, the DEA issued a registration process for new commercial R&D producers. For nearly
50 years, the US, through NIDA, relied on a single grower – the University of Mississippi – to
produce marijuana used in federally-funded research.
Pharmaceutical lobbying forces use of FDA-approved marijuana for certain patients: Other
provisions were added to Louisiana’s 2016 marijuana law. The list of qualifying conditions was
expanded to encompass cancer, HIV, AIDS, cachexia or wasting syndrome, seizure disorders,
epilepsy, spasticity, Chron’s disease, muscular dystrophy, and multiple sclerosis. If the FDA
approves the use of marijuana for any of these conditions, the condition is no longer covered
by the law. UK-based natural cannabinoid pharmaceutical company GW Pharmaceuticals
valued at $5 billion produces Epidiolex, approved by the FDA in June 2018 for treating seizures
associated with Lennox-Gastaut and Dravet syndromes in children aged 2 and under. GW
Pharmacy will charge $32,500 annually per patient for Epidiolex. GW Pharmaceuticals’ Sativex,
developed for spasticity from multiple sclerosis, is at FDA Phase 3 in the US. In February 2017,
Leafly reported that GW Pharmaceuticals and its US subsidiary, Greenwich Biosciences, were
moving cannabis bills in at least two states that would give the company a “temporary
monopoly” on legal CBD products. Greenwich Biosciences retained the services of registered
lobbyists in at least nine state capitals. Greenwich Biosciences is a registered lobbyist client in
Louisiana since 2016.
Also in Louisiana’s marijuana law, if the FDA approves the use of a different form or derivative
of marijuana for any qualifying medical condition, the patient must first be treated using step
therapy or fail first protocols. FDA-approved synthetic-cannabinoid medication includes
Dronabinol used for the treatment of symptoms associated with AIDS and cancer
chemotherapy through brand forms Marinol, produced by AbbVie Inc. valued at $150 billion,
and Syndros, produced by Insys Therapeutics which also sells Subsys sublingual Fentanyl and
31
donated $500,000 to oppose a ballot initiative for adult-use marijuana legalization in Arizona in
2017. It also includes generic and brand forms of synthetic-cannabinoid Nabilone, approved for
use in the treatment of chemotherapy-induced nausea and vomiting.
1) Louisiana State University: LSU Ag Center released its Solicitation for Offers (SFO) on
February 8, 2017, due on March 31, 2017. The LSU SFO required principals of responding
entities to demonstrate at least $5 million in combined net worth. Demonstrating the ability to
fund the operation was demanded but not required. The respondent, through its CEO and
principals, had to possess 3 years of consecutive years of experience “sufficiently alike”
marijuana operations at the time of submission. The SFO had no submission fee. Winners were
required to contract with the East Baton Rouge Sheriff’s Office for 24/7 facility security and
with the Louisiana State Police to escort all transportation of marijuana.
An addendum to the SFO included Louisiana Board of Pharmacy-prepared marijuana market

estimates which include THC and CBD dosing recommendations. This estimate showed over
800,000 qualifying patients in Louisiana, 20,000 to 26,000 of which were projected to
participate in the market. LSU’s project concept business plan, introduced at a public
presentation in October 2016 with 500 individuals signed-up to attend, projected around 3,000
patients by 2022, with 45mg of marijuana oil per patient recommended daily at an
“approximate startup cost of $2.95 per dose” based on “industry standards.”
7 groups responded to the LSU SFO, including out-of-state groups Columbia Care, Citiva Medical
and GB Sciences.
LSU selects financially-troubled company that failed minimum qualifications: Las Vegas-based
respondent GB Sciences, Inc. (OTC:GBLX) and CB Medical (partnered with American Cannabis
Company OTC:AMMJ) were selected as finalists. GB Sciences entered the marijuana industry on
March 18, 2014 by acquiring the technology for indoor-cultivation chambers to grow single
marijuana plants called GrowBlox. At the time of SFO submissions, GB Sciences had
accumulated a deficit of $28 million from marijuana-related operations and generated
$300,000 in total revenue (in 2015) over 3 years in marijuana.
On June 14, 2017, LSU Procurement sent a Notice of Intent to GB Sciences local partner William
“Bill” Settoon Jr, informing that GB Sciences Inc. was “tentatively” selected as the winner; it
needed to meet 1 of 14 minimum required qualifications in the SFO before moving into
contract negotiations. LSU disqualified Columbia Care and Southern Roots Therapeutics for
failing to meet a minimum requirement in April 2017. Southern Roots Therapeutics had
submitted an offer with $8 million raised from Tuatara Capital.
After a “stormy” committee meeting given concerns primarily with GB Sciences’ financials, the
LSU Board of Supervisors resolved to allow President F. King Alexander and Chair Scott Ballard
to execute a contract with GB Sciences Inc. Worth $30 million in the US OTC at the time, GB
Sciences Inc. did not gain value upon the announcement. The LSU Board of Supervisors met
again on September 11 to finalize the contract, but “that didn’t happen,” per The Advocate,
32
which further wrote: “Members instead discussed the second letter from (second-place
finisher) CB Medical questioning GB Sciences’ financial viability.” On September 14, LSU
contracted with “GB Sciences Louisiana, LLC,” which it described as “wholly-owned subsidiary
of GB Sciences, Inc.” This contract guaranteed LSU $3.4 million from GB over 5 years, with
options for two 5-year renewal periods. Strangely, GB Sciences Louisiana, LLC was registered in
Louisiana in February 2017, but was not the entity used to respond to the SFO; GB Sciences Inc.
was registered in Delaware at the time of the SFO and did not register to do business in
Louisiana, failing to meet another minimum required qualification in the SFO.
GB Sciences Inc. initially planned to issue stock to raise capital to build the LSU production
facility. Five months after signing its contract, in February 2018, GB Sciences Louisiana secured
a $10 million commitment from the Lafayette-based Hohorst family at a $10 million pre-money
valuation, 8.6 million of which has been exercised to date. The Hohorsts had initially won the
Southern University bid with Med Louisiana. This contract was then awarded to another group.
Med Louisiana then reorganized into Wellcana Group to invest in LSU. Per its 2018 SEC annual
report, GB Sciences Inc. paid Austin-based Quantum Shop LLC $1.7 million “primarily related” to
building out LSU’s production facility. Quantum Shop LLC is a museum exhibit company with no
history of marijuana facility construction owned by Jeffery Poss, the son of GB Sciences Inc. CEO
John Poss.
2) Southern University: Southern University (SU) took a different approach to its marijuana
opportunity. With a university system-wide endowment of around $10 million, compared to
LSU’s $850 million, marijuana was viewed as a savior for this Historically Black College and
University, especially in the context of state-level budget cuts for higher education. Unlike LSU,
SU wanted to integrate marijuana academically and in an interdisciplinary way.
In 2016, members of the SU Board of Supervisors’ marijuana research committee visited

Colorado production facilities with law firm Vicente Sederberg, which more than likely
introduced SU to Adam Orens both MPG and Denver Relief Consulting, the latter of which is an
owner in multi-state license winner Cresco Labs. SU hired Adam Orens to develop its Request
for Applications (RFA) through the SU System Foundation, the latter of which was the subject of
infighting among Board members. The RFA was released on May 8, 2017, and due June 30,
2017. There was a $25,000 application fee and a $100,000 bid bond.
7 companies submitted applications, including New Orleans-based AquaPharm working with

Vicente Sederberg. 3 applicants with LSU also applied to SU: Columbia Care, Citiva, and
Southern Roots Therapeutics (SRT). Advanced Biomedics (AB), Med Louisiana (Med LA) and SRT
were chosen as finalists, and on September 8, 2017, the selection committee recommended to
the Board that Med Louisiana be approved as the vendor. Med Louisiana had 0% Black-
ownership and offered the least amount of guaranteed revenue to the university. Concerned
with both of these factors and wanting to select the winner itself, the Board voted to give the 3
finalists a chance at updating its best and final offer, to be presented to the Board 2 weeks
later. SRT updated its guaranteed revenue to SU to $6 million to match AB. On September 22,
the Board chose Advanced Biomedics, led by Chad Bodin and investor Carrol Castille, which
33
claimed to have $14 million in cash ready to invest in marijuana. These two wealthy (and white)
men owned nearly 90% of AB.
On October 20, 2017, Med LA filed a public records request with SU, requesting copies of the
other two finalists’ applications and emails, text messages and phone call records by and
between SU Board members, the university and employees at its procurement department. SU
delayed responding to this public records request. Med LA then filed suit in Baton Rouge, asking
the district court to force these records from SU or for SU to reimburse Med LA. The court
hearing was delayed. Wellcana Group was then formed on January 10, 2018, and as mentioned
earlier, invested into LSU marijuana in February.
Advanced Biomedics owners sue each other: In February 2018, no contract had been signed
between SU and AB, and AB’s founder Chad Bodin started looking for investors outside of
Carrol Castille. Castille had created “AB Holdings” to invest in AB. In March 2018, SU agreed to a
contract with Bodin and AB. Castille then sued Bodin in April, alleging that Bodin had secretly
and fraudulently negotiated a contract with SU, breaking the rules of AB’s Operating
Agreement. SU gave Bodin and Castille an ultimatum on April 27: it had until May 4 to execute
the contract tendered or SU would negotiate with another group. Bodin then sued Castille,
claiming Castille never put up the $12 million he promised in order to become a member of AB.
Meanwhile, days before the May 4 ultimatum, Bodin agreed to $20 million in financing for
effectively 80% of AB from Baton Rouge-based investors through James Financial, affiliated with
Ladenburg Thalmann which underwrote the marijuana industry’s first IPO on the NYSE, a REIT
called Innovative Industrial Properties (NYSE:IIPR) which lists PharmaCann in NY and MA,
Holistic Industries in MD and MA, and Vireo Health in MN, NY and PA in its sale-leaseback
investment portfolio.
On May 3, in a court filing draft published anonymously to Scribd.com, Carrol Castille

threatened to sue SU. Castille worked with Breaux Bridge-based Herert, Abels & Angelle which
includes attorney Randy Angelle who is close to Sen. Freddy Mills, and Fox Rothschild LLP’s
cannabis law practice group. Castille sought monetary damages from SU if SU weren’t stopped
by an injunction from contracting with a different vendor and forced to negotiate with “the
only member that has authority to act on behalf of AB: AB Holdings.” The Advocate reported on
May 4, at 4:00 pm, that SU extended the ultimatum deadline to May 10. By 4:30 pm, James
Financial delivered executed deal documents to SU that it had signed earlier that day with
Bodin and AB. On May 7, AB introduced James Financial to SU administrators. On May 8, AB
informed James Financial that its dispute with Castille was resolved and that it no longer
needed James Financial’s $20 million investment.
James Financial filed suit on May 24 against AB and Bodin for damages and breach of contract.
The next day, the Board of Supervisors approved an amended contract with AB. The 5-year
term agreed to in March – with options for two additional 5-year terms per Board approval –
was changed to 15 years and only terminable for cause. AB planned to build new construction
to be completed “within 5 years.” This 15-year contract guarantees $18 million to Southern,
nearly 2x its total endowment. Castille and attorney Randy Angelle were present at this
34
meeting without Bodin. Southern would receive a $1 million signing bonus from AB upon AB
passing criminal background checks with the Louisiana Department of Agriculture and Forestry.
3) Marijuana Pharmacies: In an under-the-radar process unreported by media, the Board of

Pharmacy released solicitations for applications for 9 regional marijuana pharmacies on August
31, 2017, due quickly on September 29, 2017. There were 44 applicants. As explained by the
Board of Pharmacy on its website, the Board’s Application Review Committee announced
rankings then advised each applicant that approving 1 applicant for each region would require
the “denial” of all other applicants, considered an “adverse licensing action” required to be
reported to the National Practitioner Data Bank (NPDB). 23 applicants subsequently withdrew
their applications. 9 permits were awarded on April 17 and 18, 2018, and included Black-owned
New Orleans regional winner H&W Drugs Store, owned by Ruston Henry. In May, applicant Rx
GreenHouse – owned by Sajal Roy, CEO of Louisiana and Maryland-based pharmacies and the
owner of a marijuana dispensary in Maryland – sued the Board of Pharmacy after it awarded
H&W Drugs Store; Rx Greenhouse had been ranked 1st in New Orleans, and H&W was ranked
4th. Louisiana’s marijuana pharmacies are being valued between $5 million and $20 million;
ownership transfers of less than 50% do not have to be approved by the Board of Pharmacy,
only disclosed.
C) Outlook:
AB has not yet submitted background checks with LDAF, and SU therefore has not yet received
its $1 million signing bonus. In fact, Castille, who formally became the majority owner of AB
without making any investment into the company, is yet to contribute a dollar toward SU and
the development of its marijuana operations. Meanwhile, LSU / GB Sciences is an effective
production monopoly in Louisiana, and is planning to make its first sales to marijuana
pharmacies in November 2018. LSU / GB is planning pharmaceutical-level pricing – in the
vicinity of $30,000 per patient per year at 25x the cost it had projected in its project concept in
October 2016 – for non-FDA-approved and uninsurable medicine. It is unclear whether LSU has
approved this pricing, which it is required to do in its contract with GB per section 14.5.
Most patients will face the choice of either debilitating costs with LSU or remaining in the
criminalized market in a state with some of the harshest penalties for marijuana possession in
the country. The Times Picayune recently published “Black people in Louisiana nearly 3 times
more likely to be arrested for pot possession,” citing a Southern Poverty Law Center report on
racial profiling.
LSU / GB, the Louisiana Department of Ag and Forestry, the Louisiana Board of Pharmacy and
the private marijuana pharmacies – without SU – are working together to expand the market
legislatively and through rulemaking. In May 2018, intractable (chronic) pain was legislatively
added to the list of qualifying medical conditions, massively boosting the potential patient pool
and market size. In September 2018, the Board of Medical Examiners voted to remove the limit
on 100 patients recommended per physician, as well as eliminate the 90-day physician
visitation requirement.
35

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October 2018

Inside the US Marijuana Money Grab Happening Now

● Marijuana is transitioning from the underground to legal markets globally at an

This 150-page whistleblower report (excluding exhibits) is an in-depth and behind-the-scenes

ü Pay lobbyists and fund political campaigns: FL, MD, AR, VA

In Maryland, Michael Bronfein (Curio Wellness), a top Democratic donor nationally,

In Louisiana, GB Sciences has become an effective monopoly and is preparing to charge

The legislature legalized marijuana in 2014, creating 5 vertically-integrated businesses that

➢ Adult-use marijuana projected annual retail market: $5 billion

➢ Current marijuana license value distributed by state: $600 million

12 unsuccessful applicants petitioned for administrative hearings within two weeks.

➢ Adult-use marijuana projected annual retail market: $1.5 billion

➢ Current marijuana license value distributed by state: $645 million

Temescal Wellness – whose Massachusetts operation was founded by RESI-appointed industry

The Washington Post Editorial Board published “Maryland is mired in a medical-marijuana

Consolidation begins: Despite rules implemented to limit ownership to 1 grower, 1 processor

➢ Adult-use marijuana projected annual retail market: $600 million

➢ Current marijuana license value distributed by state: $360 million

Dispensary selection process outsourced: With mounting public pressure, 4 out of 5

➢ Adult-use marijuana projected annual retail market: $1.5 billion

➢ Current marijuana license value distributed by state: $125 million

Virginia legalized 5 vertically-integrated regional monopoly businesses in March 2016. The

In developing a NOIRA background document used to begin promulgating permanent rules,

In a September 8, 2017 presentation delivered to the Virginia Pharmacists Association, VBOP

SB 330, introduced by Sen. Siobhan Dunnavant, required marijuana dispensing be reported to

1. “Temperature and Humidity” definition requires standardized production methods that

As mentioned earlier, this includes marijuana and marijuana paraphernalia

➢ Adult-use marijuana projected annual retail market: $1 billion (New Orleans)

➢ Current marijuana license value distributed by state: $110 million

An addendum to the SFO included Louisiana Board of Pharmacy-prepared marijuana market

In 2016, members of the SU Board of Supervisors’ marijuana research committee visited

7 companies submitted applications, including New Orleans-based AquaPharm working with

On May 3, in a court filing draft published anonymously to Scribd.com, Carrol Castille

3) Marijuana Pharmacies: In an under-the-radar process unreported by media, the Board of

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