Ohio Regulators Investigating Two Medical Cannabis Companies

Two Ohio medical cannabis companies are accused of lying on their applications and violating the state’s industry rules, Cincinnati.com reports. The Board of Pharmacy claims that Greenleaf Apothecaries transferred ownership of the firm without state approval, or mispresented facts on its dispensary application. The agency accuses Harvest of Ohio LLC of lying on their application claiming that they were an “economically disadvantaged group.”

Greenleaf was awarded five dispensary licenses and announced in December of last year that it had a management agreement with New York-based Acreage Holdings. The state’s medical cannabis rules ban ownership transfers until after one year of operation.

Pharmacy board attorney Erin Reed indicated that the agency does allow dispensaries to make small ownership changes in certain situations, such as adding an employee with a financial stake in the company.

“Folks are coming to us with their challenges we’re doing everything we can to help them work through it. We are certainly balancing the need to discipline against patient access.” – Reed, to Cincinnati.com

According to the report, in December 2018 Acreage agreed to loan Greenleaf $8 million to build out its cultivation facility, $5.5 million for processing, and $10.5 million for its five dispensaries. In exchange, Greenleaf agreed to sell all its interests to Acerage when the state allowed.

In an April report, Acreage said it was acting in an advisory capacity and Greenleaf maintained “operational control.”

Tom Haren, an attorney for Greenleaf, said the agreements with Acreage came after the company had submitted its dispensary applications.

“Greenleaf is obviously frustrated by the board’s decision to issue these meritless notices, which have unnecessarily delayed the opening of three of the highest scoring dispensaries – in three of the state’s highest population centers – at a time when too many Ohio patients lack access to the medicine they need,” Haren said in a statement to Cincinnati.com.

Harvest of Ohio had claimed that 51 percent of the business was owned by Ariane Kirkpatrick, an African-American businesswoman in Northeast Ohio. The state’s law required 15 percent of all licenses to go to social equity applicants – African-Americans, Native Americans, Hispanics or Latinos, or Asians. However, that portion of the medical cannabis law was struck down by a court last year.

According to court documents obtained by Cincinnati.com, Harvest claims they have a “unique way of organizing an LLC … with ownership that is only minimally from an economically disadvantaged group.”

The board believes the company “committed fraud, misrepresentation, or deception in furnishing information” on the application.