Maryland Town Must Pay $600k to Feds Over Cannabis Tenant

The town of Hancock, Maryland is being forced to pay back a $600,000 federal grant for rehabbing a building after the town rented the facility to a medical cannabis company, according to a Herald-Mail Media report.

At issue are Community Development Block Grant funds, which are distributed by the U.S. Department of Housing and Urban Development, that were given to Hancock to rehab the former Fleetwood Travel Trailer building. After Fleetwood left the site, the building was rented to Evolve Composites, but that company would ultimately close its operations at the site and in the town. Subsequently, it was rented to medical cannabis firm Harvest of Maryland but, because cannabis is federally outlawed, the funds cannot be used for the project.

Mayor Ralph Salvagno told Herald-Mail Media that the town will use rent proceeds from Harvest to pay back the loan and that, long-term, Harvest is expected to buy the property from the town.

The federal and state government also demanded that the town repay an additional $324,000, which Salvagno called “something of a surprise,” noting that officials have “never doubted” that they would have to repay the $600,000. The state, federal, and city governments came to an agreement that only the $600,000 would need to be repaid and the town would pay back the grant at $200,000 a year over three years.

Harvest has been operating at the site since 2017. The town owns a 5 percent stake in the company.