Week in Review: MA Company Wins Court Fight, NY Taking Applications + More CO Pesticide Concerns

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By John Schroyer

A Massachusetts dispensary company prevails over the state in a legal battle over licensing, New York begins accepting applications for just five business permits, and tens of thousands of additional marijuana plants are sequestered in Denver over pesticide concerns.

Here’s a closer look at several notable developments in the marijuana industry over the past week.

Denial Denied

Not all lawsuits are from sore losers.

That’s a central takeaway from a ruling in Massachusetts earlier this week, when a judge rebuffed the state’s health department for first awarding provisional business permits to a dispensary company and then revoking them last June.

Medical Marijuana of Massachusetts, which was formerly run by ex-congressman William Delahunt, sued after its provisional licenses to operate three dispensaries in the state were yanked following a controversy over the permit process and allegations of favoritism.

But the company prevailed this week when a superior court judge ruled that the state had erred and ordered it to grant the company licenses.

“I love it,” crowed consultant Avis Bulbulyan, who had helped the company prepare its application to the state.

He stated that the initial process of awarding provisional licenses was legitimate, but the health department was then influenced by media reports focused on charges of favoritism in the process and other concerns.

The department “allowed themselves to be influenced by the controversy,” Bulbulyan said.

He suggested that the state thought it could work its way out of the spotlight by trying to make an example out of a few applicants and rescinding their licenses.

“But that didn’t happen,” Bulbulyan said. “The groups that had won approval and then got disqualified now have a decision to make: Do we file a lawsuit and contest the disqualification in round one, or do we just go through round two and submit another application?”

To date, the state has awarded 15 provisional certificates (not including the three that Medical Marijuana of Massachusetts will receive), and just three dispensaries have been given permission to begin growing MMJ. But Massachusetts’ law, which was approved nearly three years ago, allows for 35 dispensaries statewide.

A newly revamped application process, which the department announced earlier this month, will begin May 15.

And They’re Off

It’s going to be a potentially tough and expensive road for MMJ business applicants in New York over the next few weeks. The state announced on Monday that it has opening the application period for licenses, which will run through May 29.

Estimates of how much it will likely cost competitive businesses have typically run into the millions of dollars, with the application and licensing process alone priced at $210,000. And then there are associated costs: Finding locations, outfitting them for cultivation and dispensing, figuring out transportation for product if necessary, hiring consultants, and so on.

New York attorney Adam Scavone, who works with the cannabis industry, said he has a friendly bet with a colleague that around 25 businesses would apply for licenses, and that he knows directly of around 10 companies that plan on submitting applications.

“There’s so many people coming out of the woodwork,” Scavone said. “You never know who’s going to put their money where their mouths are.”

One lingering unknown, however, is when dispensaries will actually begin opening – and whether they can meet some tight deadlines. If licenses are issued in July, which is the rough timetable the state has laid out, then by law the five winning companies need to be “operational” within six months, Scavone said.

“You’d have three months to build out a facility, and three months to grow, cure, extract, package and dispense,” Scavone said.  “Seems ambitious to me.”

Pesky Pesticide Problems

Yet another Colorado cannabis firm has been ensnared by the recent crackdown on pesticide use.

LivWell, a recreational and medical marijuana company with nine shops scattered around the state, was required to isolate roughly 60,000 plants until it gets the all-clear from the state Department of Agriculture, according to 9News.

That follows at least nine other companies that were also forced to essentially quarantine tens of thousands of plants after both city and state officials became concerned over potential pesticide contamination. One of the primary culprits is an anti-mildew agent called Eagle 20, which many in the industry say is a common pesticide used by a majority of growers.

But whether it’s really safe to use on marijuana or not is still up for debate.

The Department of Agriculture has one list on its website labeled “Pesticides for use in marijuana production” and another one titled “Selected example of pesticides that cannot be used in marijuana production.” However, a spokesman for the department said in an email that neither of those lists are legally binding.

“They are published solely for informational purposes and intended simply to assist the industry in reviewing the labels of existing pesticide products to determine which ones can be legally use on marijuana,” wrote Matt Lopez, a spokesman for the agency. “There may be other pesticides not yet specifically reviewed which also have labels that allow or prohibit such use.”

Dan Rowland, a spokesman for Denver’s marijuana policy team, suggested that cannabis growers may be better off avoiding pesticide use if possible, to avoid the risk of having their plants quarantined.

Rowland said the Denver Department of Environmental Health, which issued the hold order to LivWell and other growers, isn’t expanding its inspections for pesticide contamination, but that if growers want to be certain to avoid such intervention, then they should probably not utilize pesticides.

“I wouldn’t characterize it as we’re expanding our search. But we’re doing inspections all the time,” Rowland said. “Broadly speaking, (growers) should follow the (pesticide) label directions.”

That, however, is a catch-22 because there are no pesticides formally approved for cannabis.

John Schroyer can be reached at johns@mjbizmedia.com