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Prospective marijuana dispensary: Lottery system not good for patients

Politics

WARWICK, R.I. (WPRI) – Alex Lavin angles his face about 45 degrees downward toward a small screen notched into a metal wall.

Apparently recognizing his facial features, a disembodied female voice says “Thank you,” and invites Lavin and a reporter to enter a small vestibule through doors that have automatically opened.

The metallic-walled vestibule, called an “air shower,” sends a burst of hair-tangling filtered air swirling through the tight space before a second set of doors opens on the other side.

This is the high-tech entrance to Kelsy Green, a would-be medical marijuana cultivation facility that Lavin says cost more than $5 million to build inside Dean Warehouse in Warwick. (Brad Dean, an owner of the warehouse, is listed in documents as treasurer of Kelsy Green.) The facility is still awaiting final approval for a state-issued license to start growing cannabis.

Lavin invited Target 12 to visit Kelsy Green last week to show off what he calls state-of-the-art, medical-grade features unseen in other Rhode Island cannabis facilities. Lavin is also one of dozens of business owners planning to vie for one of the coveted medical marijuana dispensary licenses the state plans to issue in 2020.

“Our driving principle is quality and price,” Lavin told Target 12 in an interview. “What we want to be able to offer the state is to be able to put a real medical facility on the map for Rhode Island.”

Lavin is the CEO of Growth Industries of New England, which owns and operates Kelsy Green. He has created a separate company, Green Reservoir, to apply for the dispensary license.

Green Reservoir has already made news, after the company’s then-lawyers sent a letter to the R.I. Department of Business Regulation (DBR) threatening to file a lawsuit if the state didn’t start taking applications for dispensaries immediately.

Rhode Island calls its medical marijuana dispensaries “compassion centers,” and the General Assembly passed a law in June expanding the number of compassion centers from three to nine.

“If prompt action is not taken with respect to the licensing of new compassion centers, our office is prepared to file a complaint with the Rhode Island Superior Court,” lawyer Stephen Izzi wrote Oct. 7 to DBR director Liz Tanner on behalf of Green Reservoir. A copy of a potential lawsuit was included in the letter.

A previous letter had been sent from lawyer Mark Ryan, a State House lobbyist who worked on behalf of Growth Industries. Democratic House Speaker Nicholas Mattiello has confirmed he paid a visit to the facility, as well.

But Lavin says he is now backing away from politics, and cut ties with the law firm that threatened litigation.

“We’re not into any type of political agendas here,” Lavin said. “We’ve cut ties altogether with any type of lobbying efforts or anything of that nature, for the simple reason that this facility speaks for itself.”

Lavin is strongly opposed to a new lottery system proposed by Democratic Gov. Gina Raimondo that would essentially choose the new compassion centers by pulling applicants out of a hat.

“Merit has to trump everything when you’re talking about a medical facility,” Lavin said. “You don’t want to go for heart surgery and pick out a number out of a random hat to allow who’s going to perform heart surgery on you.”

Raimondo’s proposed regulations are expected to be finalized soon, after a public comment period ended on Dec. 21. The draft plan said prospective dispensaries would pay $10,000 to apply, with qualifying applications randomly selected from within six geographical zones.

The idea, argues Raimondo, is to remove any “special deals for special people,” and avoid public corruption such as what has been alleged in Fall River; that city’s soon-to-be-former mayor, Jasiel Correia, was indicted in September for allegedly extorting bribes from prospective marijuana companies. Correia denies the charges.

“I don’t want politicians making these decisions, myself included,” Raimondo said in a recent interview for the 12 on 12 Digital Original “The Business of Cannabis.”

But Lavin says a merit-based point system, perhaps calculated by an independent accounting firm, would better serve the nearly 18,000 medical marijuana patients in Rhode Island.

“If you’re controlling every aspect, and putting quality measures into every aspect, the end consumer … gets the best quality medicine at the cheapest price,” Lavin said. He said the company is putting “FDA-grade standards” into all its products.

Lavin said everything in Kelsy Green is built for quality control and standardization. There are iPads on the walls outside grow rooms that detail temperature readings, humidity, pressure, and control the timing of the fans and lights.

Facial-recognition technology is used to enter the Kelsy Green cultivation facility.

He says the walls and the air ducts were built to be medical grade. Water will be directly injected into the plants via an automated system. And Lavin says he spent $1.8 million alone on a custom-built air conditioning and filtration system that will keep the air inside the building extremely clean.

Kelsy Green would sell cannabis to the Green Reservoir compassion center, so Lavin argues it would be a mistake to leave it up to pure chance whether they get a license.

“I feel if you’re a patient you should feel very uneasy about that whole process,” Lavin said.

The multimillion-dollar cultivation facility still has another hurdle to overcome: DBR has not yet issued Kelsy Green a license to grow cannabis.

While Kelsy Green was “approved” to be a cultivator in 2017, the state asked in November for more documentation about the company’s financial ties, after discovering they hadn’t all been listed in previously submitted documents. State law requires cultivators to disclose all directors, managers, investors and any other financial connections as a condition of getting a license. Lavin himself is not even listed in the most recent disclosure documents for Kelsy Green provided by DBR to Target 12.

Lavin says DBR was justified in asking for the information, and his team submitted 800 pages of documents earlier this month in response to the request. Brian Hodge, a spokesperson for DBR, said the materials are being reviewed.

Part of what the regulators look for is any financial connection to any one of Rhode Island’s other marijuana licensees, which include three compassion centers and 51 licensed cultivators. (Another 27 cultivators, including Kelsy Green, have licenses pending.)

Even an indirect connection, such as a licensing agreement with a cannabis company in another state that has ties to a Rhode Island licensee, could be disqualifying.

Such a situation recently arose when marijuana giant Acreage Holdings tried to buy Greenleaf dispensary in Portsmouth, but was blocked by a judge due to its ties to the company CanWell, which has a management contract with Summit Medical Compassion Center in Warwick. (Acreage Holdings declined to comment on whether the corporation still wants to buy or open a dispensary in Rhode Island.)

Lavin’s cannabis company, multistate operator Growth Industries, has licensing agreements in California and boasts expertise from cultivation to sale. The company has several brands, including Buddha Hemp and Royal Budline, which its website says are sold by thousands of retailers.

The company also issued a press release in May announcing that it had secured $17 million in private investment for the facility in Rhode Island.

Steph Machado (smachado@wpri.com) covers Providence, politics and more for WPRI 12. Follow her on Twitter and on Facebook

Ted Nesi and Eli Sherman contributed to this report.

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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