An ongoing investigation by the Cannabis Control Commission (CCC) continues to delay Patient Centric’s official entry into the marijuana business.
Geoff Rose, CEO of the West Tisbury–based company, confirmed that the CCC’s concerns about his lender, Acreage Holdings, a national cannabis conglomerate, are holding up his state licenses. Rose is seeking licenses in West Tisbury and Framingham. He also is in the final stages of reaching a host community agreement in Tisbury, he told The Times. Patient Centric partnered with Acreage in November 2018.
The state law that legalized marijuana sales only allows a single company to own or hold a controlling interest in three licenses in the Bay State. Botanist, a direct subsidiary of Acreage, currently operates one medical marijuana treatment center license in Worcester, and holds two provisional medical marijuana treatment center licenses for dispensaries in Shrewsbury and Leominster.
Last week, investigators with the CCC published a report that showed management services and loans provided to Patient Centric and Health Circle — which is working to open retail outlets in Rockland and Marshfield — may put Acerage “in a position to control the decision-making of Patient Centric of Martha’s Vineyard, Ltd., and/or Health Circle, Inc.”
Acreage’s agreement with Patient Centric contains a provision that suggests that the “termination for default of the master services agreement (under which the affiliate pays Acreage a percentage of sales in exchange for consulting services) would result in termination or default of the loan or capital agreement,” according to the report.
“The contractual arrangements between the Applicant’s parent company and the affiliates contain provisions that the commission may deem to be controlling interests,” investigators wrote in the report. “However, these are inoperable agreements, and Acreage has committed to construction of terms and an intention to reform provisions consistent with noncontrolling interests.”
Rose said “inoperable,” is a legal term and reiterated that Acreage is “committed to construction of terms and intention to reform provisions consistent with noncontrolling interests.” The dialogue between the commission, Acreage, and his attorney is ongoing.
The commission began looking into the contractual arrangement between Acreage and Patient Centric in July, according to the report.
Any concerns that Patient Centric is being manipulated by Acreage are unfounded, Rose said: “They’re my lender and they provide services.”
According to the report, Acreage also “expressed an intent to reform several provisions that may be construed to establish a controlling relationship with [Patient Centric].” Those adjustments include no longer requiring Patient Centric to submit its budget for approval, or to give Acreage a say over who is on its board of directors, among other provisions.
Rose borrowed $4 million in revolving credit from Acreage, according to the CCC report. Patient Centric will owe Acreage 1.5 percent of its revenue, plus $10,000 and 25 percent of its quarterly earnings before taxes. Acreage also provided Rose with a $550,000 bridge loan.
Rose said he remains confident the details will get worked out to the commission’s satisfaction. He’s hopeful that could happen as soon as its next meeting, which is scheduled for March 5. Meanwhile, Patient Centric, which had one of the earliest licenses for a medical marijuana dispensary, is not yet serving the public. The West Tisbury growing facility is built, and has been inspected as recently as Jan. 22, Rose said.
None of the local Island boards have raised any concerns about this business’ dealings with Acreage, Rose said. In West Tisbury he has his final permits, and a host community agreement in place.
Meanwhile, it seems weekly a new facility opens off-Island, including one recently in Provincetown.
“Yes, it is frustrating, but I’m optimistic this is going to be resolved in short order,” Rose said. “I’m going on eight years of frustration … It’s all moving forward. It’s just taking longer than I expected.”
Rose said he has no regrets about his decision to borrow from Acreage. He said the company has been a great lender, and has provided much-needed expertise. “They’re a professional organization, and I couldn’t be happier with them,” he said.
The way to be profitable in cannabis is to be vertically integrated. All of the large conglomerates are buying a controlling interest in State Grow Processors and Dispensary License holders. I feel for Patient Centric, they are swimming with the sharks.
Rose made a big mistake choosing an off island investor with a precarious background.
The people spoke– we want legalized marijuana, both medical and recreational.
It’s a weed, for F- sake. People have been smoking it for millennia.
I feel like I could side with Andrew on this one and say cut the regulations.
The state should get out of the way and let this man do what the people voted for.
Comments are closed.