Grow, Gift, Repair

CCC recap of last week’s meeting

The corporations each insisted their operations will comply with state law, despite revelations that they have close ties to numerous license-holding entities, in many cases through onerous management contracts and high-interest loans.

The commission has said it is investigating the allegations; the state Department of Public Health, which previously oversaw medical marijuana, found during a preliminary investigation last year that a number of entities with medical licenses had used “loopholes” and “shell companies” to disguise their affiliations with two large firms, Sea Hunter and Acreage.

On Thursday, three commissioners — Shaleen Title, Britte McBride, and Steven Hoffman — made clear they want to review such management contracts.

“I’d like to see a review of management contracts regardless of whether they’re called a ‘management contract,’ ” McBride said.

Title echoed the sentiment, asking, “As a matter of course, are management contracts, loans, leases — are those reviewed?”

Executive Director Shawn Collins said inspectors would review such contracts for companies seeking a transfer of a license or other large-scale change in ownership or control. He cautioned that it would be burdensome to review every lease, loan, and other agreement for all applications involving a new board member or other small-scale changes in ownership or control that the commission considers.

“We have the ability to secure any and all documents that would be helpful in answering the question, ‘Where does the control reside?’” Collins said. He said he felt confident in his investigators’ abilities to dig into the complex organizational structures, but he may need to hire an accountant trained in investigating financial crimes.

“If there is a portion of revenue going back to another company, do we then ask for that contract?” Title asked.

“My understanding is yes,” Collins said.

Collins explained the agency’s proposed procedure for reviewing such deals: First, the applicant would submit required documents and disclosures of affiliated entities, and an investigator would be assigned to determine whether more records were needed. Then, the investigator would dig through public records, filings, and background checks. If warranted, the investigator may interview a company’s leadership about any discrepancies or information that was lacking. Finally, the commission would review the investigator’s complete report and vote on whether to approve the deal.