Pubdate: Sat, 16 Jul 2011
Source: Kennebec Journal (Augusta, ME)
Copyright: 2011 MaineToday Media, Inc.
Contact: http://www.kjonline.com/readerservices/Send_a_Letter_to_the_Editor-KJ.html
Website: http://www.kjonline.com/
Details: http://www.mapinc.org/media/1405
Author: Michael Shepherd, Staff Writer

MARIJUANA DISPENSARY OUTFIT IN DEAL WITH EX-NBA PLAYER

AUGUSTA -- A financing agreement has been finalized between the holder
of half of Maine's medical marijuana dispensary licenses and a former
professional basketball player.

The $2 million agreement between Northeast Patients Group and an
organization led by former NBA player Cuttino Mobley comes as
Northeast faces a lawsuit from its former California-based backer.

The litigation and the deal with Mobley that sparked it have big
implications for Maine's fledgling medical marijuana industry:
Northeast holds exclusive state licenses to operate dispensaries in
Maine's most populous markets: Portland, Kennebec County and the
Bangor area, as well as Thomaston.

Catherine Cobb, director of the Maine Department of Health and Human
Services' Division of Licensing and Regulatory Services, provided an
email to the Kennebec Journal saying an agreement between Northeast
and Mobley was in place.

"The (Northeast) board has conceptually agreed to the terms,"
Northeast's lawyer, Augusta-based Daniel Walker, wrote in the email to
Cobb. "We are now translating those terms into updated budget
documents and a summary of the term sheet, which we will get you (Friday)."

Cobb said Friday afternoon the term sheet likely would arrive later in
the day but would not be publicly available until Monday. She said her
expectation was that the finalized deal would stay very close to a
February letter of intent.

Mobley's deal

Terms outlined in the Feb. 23 letter of intent say Mobley will provide
Northeast with $2 million, in four increments, for the exclusive right
to supply Northeast dispensaries with drinks, edibles, topical
solutions and alcohol-based herbal extractions called tinctures.

Mobley -- -- a former Maine Central Institute player whose 11-year NBA
career ended in 2008 after being diagnosed with a heart condition --
also will consult on security, cultivation, operations, marketing,
quality assurance and public relations, among other things, the letter
reads.

Mobley negotiated a repayment schedule that includes an 18 percent
annual interest rate, effective a year after an agreement is
finalized. After that, interest is to be paid monthly.

"My initial reaction is that sounds like something where people are
trying to make money instead of helping patients," said Jesse Stout,
27, the former founding executive director of the Rhode Island Patient
Advocacy Coalition.

Mobley has a "first priority security interest" in all assets of
Northeast should it default on the loan.

If the deal goes into effect and aids Northeast in opening its
dispensaries, it wouldn't be the first foray into medical marijuana
for Mobley. He's also invested in Rhode Island's fledgling industry --
on much friendlier terms.

But it would be the first time Mobley has seen a marijuana dispensary
he funded actually open for business.

Much invested, no return

According to paperwork filed with Rhode Island, the Summit Medical
Compassion Center backed by Mobley won one of three licenses to sell
medical marijuana there.

Mobley supplied $4 million: $500,000 as an "equity contribution" that
doesn't have to be paid back; $3.5 million as a line of credit, to be
repaid beginning after two years at 6 percent annual interest.

Mobley's major investment into medical marijuana has yet to bear fruit
in the Ocean State.

According to Ann Marie Beardsworth, the spokeswoman for the Rhode
Island Department of Health, there were 3,689 patients enrolled in the
state's program as of last week.

But no compassion center -- the equivalent of a Maine state-licensed
dispensary -- has opened.

The program was put on hold by Gov. Lincoln Chafee after he received a
letter from a United States attorney saying the centers could violate
federal law.

Summit's state-filed predictions for growth and revenue exponentially
exceed those of the other two facilities whose licenses were granted.

In its application, Summit told Rhode Island officials that, by its
third year of operation, the center would employ 80 full-time
employees, serve 8,000 patients and collect $23 million in revenue.

Greenleaf Compassionate Care Center Inc., slated for Portsmouth, R.I.;
and The Thomas C. Slater Compassion Center, in Providence, were far
less hopeful in their third years.

Predictions from Greenleaf's application say only 12.5 full-time jobs
would result, 533 patients be served and less than $1.2 million in
revenue gained.

The Slater numbers are rosier, but nowhere near Summit: 32 employees serving 1,500 patients, generating less than $4 million in revenue.

The man who co-founded a Rhode Island group that keyed passage of that
state's medical marijuana law scratches his head at Summit's
projections -- even though the Mobley-backed compassion center would
be in Warwick, Rhode Island's second-largest city.

"I just don't see the millions of dollars in revenue they're
projecting here," Stout said. "I disagree with any estimates or
projections that you're going to make $20 million doing this.

"Summit is the outlier," Stout said. "The figures are either
unrealistic or just not likely to happen."

Beardsworth said location was a key factor impressing the committee
that offered its approvals in January.

Still, she said Summit's projections seem possible.

"The (selection) committee didn't feel those numbers were out of a
reasonable estimate range," she said.

Maine implications

As of Wednesday, Maine had 1,807 patients enrolled in its medical
marijuana program, according to John Thiele, medical marijuana program
manager for the Division of Licensing and Regulatory Services.

State documents in Maine show Northeast expects to have more than
1,100 patients at its four locations and earn more than $7 million in
revenue in its second year of operation here.

But since none of the four Northeast dispensaries has opened, many are
skeptical. The state's other four -- in Frenchville, Biddeford, Auburn
and Ellsworth -- have.

Northeast has only an up-and-running cultivation site, in Thomaston,
which was given the go-ahead to grow by Thiele in June.

"They're not open now. There's not a dime coming through the door,"
said Charlie Wynott, the executive director of the Westbrook-based
Maine Medical Marijuana Patients Center.

Wynott bristled at the disclosure of Mobley's involvement.

"All I can say is, 'I told you so.' I knew outside money was coming in
from the beginning with Northeast Patients Group from Berkeley," he
said. "The state refused to look at it that way. As long as they got
their $15,000 per dispensary, they didn't care."

Wynott said his organization has virtually stopped recommending
dispensaries to patients seeking help to control pain -- he recommends
growing your own.

If you can't, he said, you should get a trustworthy
caregiver.

"I really want to know why the state is allowing this money from out
of state, knowing it's out-of-state," Wynott said.

That's because Cobb, speaking Thursday, said the law allows
out-of-state funding for marijuana dispensaries.

"It is a Maine company and its principals are Maine residents," she
said. "It doesn't mean the funding, or bank, needs to be in Maine.
That would be overstepping our role."

Wynott isn't satisfied. "I'm totally upset about it and I think it
should be Maine people serving Maine patients," he said.

Berkeley Patients Group sued Augusta-based Northeast Patients Group
and Executive Director Rebecca DeKeuster on July 6 in Cumberland
County Superior Court, alleging DeKeuster used confidential
information to strike the deal with Mobley without telling them about
the talks while she served as Berkeley's New England expansion director.

DeKeuster's contract with Berkeley, submitted to the court, prohibits
her from discussing company-related confidential information without
Berkeley's written consent.

That contract also bars her from competing for business with Berkeley
for two years after she leaves Berkeley.

The lawsuit seeks repayment of $632,195 in loans from Berkeley to
Northeast and asks the court to order DeKeuster, of Augusta, to leave
Northeast.

Mobley attorney Terry Fracassa, DeKeuster and Northeast attorney
Walker did not return calls Friday from the Kennebec Journal.
- ---
MAP posted-by: Richard R Smith Jr.