When Jerry Farrell Jr. was the state’s Department of Consumer Protection commissioner, he was responsible for ensuring that drug companies followed state laws governing the safety of their products.
Farrell is putting that regulatory background to work in a new venture, by leading a group of investors who have applied to operate a medical marijuana manufacturing facility in Meriden. Farrell, a lawyer who was the consumer protection chief from 2006 to 2011, believes his group has an edge over the more than 20 other entities who submitted applications with the state earlier this month to run to grow and sell medical marijuana.
“This industry is much more than people actually think; it’s not about letting people sit around and smoke marijuana,” Farrell said. “It’s highly regulated, and our proposal is to develop capsules and transdermal patches, products which are fairly sophisticated from a medical standpoint. I have the background in medical business regulations to make sure it’s going to be done right.”
Farrell is one of dozens of attorneys in Connecticut who are involved with companies who are applying to grow or dispense medical marijuana. Though few — if any — others have a financial stake in a specific enterprise, many are helping with the formation of corporations, requests for zoning approval, forging of contracts with vendors and the drafting of employment contracts. “This is a highly regulated program, so naturally there is a lot of work for lawyers to do,” Farrell said.
Last year, Connecticut became the 17th state to approve use of marijuana for a list of specific health problems, ranging from cancer to post traumatic stress, under some of the tightest regulations in the country. Since then, 1,243 patients have been certified to use medical marijuana, with the largest numbers being located in Fairfield County.
The application deadline for companies wishing to operate production and dispenary facilities was Nov. 15. Applications came from throughout the state, with a heavy representation from central and southern Connecticut, including Bridgeport, Waterbury and East Haven.
William M. Rubenstein, the current Consumer Protection commissioner, is overseeing the state’s medical marijuana program. His office will review the 26 applications for dispensaries and 16 applications for production facilities before making final decisions. (Some businesses have submitted applications for both.) Rubenstein is award three production licenses and three to five dispensary licenses early next year.
Still A Stigma
It is anticipated that each marijuana manufacturing and sale business will employ 20 to 50 people, and inject millions of dollars into local tax bases. Nevertheless, Diane Whitney, a Pullman & Comley attorney who represents two investment groups trying to open medical marijuana operations, said her clients met with strong public opposition in Fairfield, which prompted zoning officials there to refuse to allow any marijuana-related business. Several town, including New Canaan, Westport, Ansonia and West Hartford, have issued moratoriums preventing consideration of marijuana facilities for a year.
Farrell, whose company is called Central Connecticut Health Ventures, is all-too-aware of the stigma still attached to such businesses. “I want to make it clear that I’m involved in this venture as a business person. I’m not acting in this transaction as an attorney,” he said. Farrell indicated the company hired outside counsel to assist with the myriad of zoning, regulatory and corporate law issues that are involved in launching a medical marijuana business.
When Connecticut approved the use of marijuana to be prescribed for cancer patients and others with severe health problems, Farrell said he saw the immediate potential need for legal services. But ethical questions were raised by members of the bar, including the Connecticut Bar Association, which issued an advisory opinion last year on what role lawyers could play in assisting medical marijuana enterprises. After all, selling marijuana still violates federal law.
At a recent forum at the University of Connecticut School of Law, John Logan, chairman of the CBA Professional Ethics Committee, offered advice on medical marijuana ethics that even he acknowledged was vague. “Lawyers may advise clients on the state medical law and they may not assist clients in violating federal law,” Logan said. Essentially, he added, “lawyers are responsible for their own conduct.”
Whitney, an environmental and land use lawyer who also participated in the forum, pointed out that the U.S. Department of Justice released a memo in August which indicated the federal government was unlikely to crack down on businesses in states where medical marijuana has been approved.
As a lawyer, Whitney acknowledged that the continued federal prohibition presents “ethical and risk management concerns.”
In response to those concerns, Pullman & Comley’s risk management committee established a protocol for her representation of the medical marijuana businesses, to ensure that the law firm’s work does not run afoul of federal law. That protocol includes Whitney keeping the committee informed “every step of the way,” and getting approval before making court appearances, she said.
She added that the federal memo helped officials in some municipalities feel comfortable enough to open their doors to the medical marijuana enterprises. But in other towns, she said, resistance arose “as a result of the federal prohibition.”
“It’s a real stumbling block,” Whitney said. “I think the fact that marijuana still violates federal law has added to the challenge of getting zoning approval in many towns.”
Whitney is representing Advanced Grow Labs, which has applied for a permit to grow medical marijuana in West Haven. She is also representing Connecticut Wellness Center LLC., which is seeking to grow and sell marijuana in Norwich.
She said her experience has been that local approval for grow operations has been less difficult than for the dispensaries. “I can only guess the negative response to dispensaries is based on concern is that they will attract illegal activity, such as robbery of the customers who go there to pick up their prescriptions.”
Whitney has argued that the businesses should be considered no different than “any pharmacy.”
Medical marijuana enterprises didn’t have to get zoning approval for their products before filing their applications with the state. But they did have to show that it was likely they could win zoning approval. With that in mind, Whitney presented Fairfiled officials with her client’s plans for a dispensary. Whitney was surprised by the public opposition that eventually nixed the idea for that location. “The location we wanted to use had a school bus nearby, and that sent waves of concern there,” she said.
Some residents thought such a business should be relegated to the outskirts of town, in an industrial zone, but Whitney and her clients didn’t think that was appropriate. “These businesses should be on Main Street, just like a CVS or a dry-cleaner,” she said. “I think if you put them out on their own, and send patients to industrial zone, that could create more problems from a security standpoint.”
Meanwhile, her clients in West Haven and Norwich met with less resistance. “A lot of towns are waiting before granting any approvals, to see how things work,” Whitney said.
Farrell’s group had no trouble getting local support in Meriden. He said a proposal to use 50,000 square feet in the former International Silver Co. building was given “a golden letter” from Meriden’s top zoning officials, indicating “we’re set for approval in Meriden.”
Farrell said when he was with the Department of Consumer Protection, he was tasked with prosecuting drug manufacturers who violated state laws. “We were confronted with contaminated and adulterated products, we prosecuted against manufacturers of toys with lead paint in them, asbestos and e coli contamination,” Farrell said. “We investigated contaminants in food products and all kinds of medicine recalls. When you have that kind of background, it helps. This is a very serious business; this isn’t someone out in their backyard growing tomatoes.”
Farrell said the medical marijuana his company hopes to bring to market will “be delivered as medically pure, and can’t have any chance of containing a contaminant.”
Unlike state-regulated marijuana, the substance sold illegally on the street can be contaminated with pesticides, and heavy metals, among other substances, Farrell said. “Part of the reason the legislature wanted this program to be so highly regulated, was to get this benchmark of safety for people,” he said. “You’re talking about providing treatment for people whose health is already at issue. To put them at greater health risks doesn’t make sense.”
Because of his experience running the regulatory agency, Farrell says he has the “moral backbone” to make sure the company he’s involved with does the right thing. “That way, there will be no question that at the end of the day that the product the customer is getting is a safe one,” he said.
A ‘Bit Awkward’
Oscar Parente, a corporate transactions lawyer with the Hirschman Legal Group in New Haven, is representing a company called C-Three. The company is led by Thomas Macre, who filed an application to run a manufacturing facility and dispensary on East Aurora Street in Waterbury.
Parente said Macre got the local support he needed for his application on his own. “We didn’t represent him before any local government body there,” he said. “He did that on his own. We do know that he has the local support.”
The attorney’s focus has been on performing work for the client as he would with any new business venture. “If and when he obtains the licenses he’s applied for, my sense is that our representation would be a continuation of what we’ve done so far,” Parente said.
That includes drafting contracts for leases and with potential vendors and creating employment policies. For example, the company has created a pending employment agreement with a licensed pharmacist, who will work to ensure quality control and compliance of state laws the medical marijuana they intend to produce and sell.
But since C-Three is awaiting approval from the state for the business to operate, naturally, each contract is conditional, Parente said. “Absolutely,” he said. “It’s a little bit awkward because everything is conditioned on getting a license to operate. Obviously, we’re not going to hire a pharmacist if we don’t have a license to run a dispensary.”
Once the business is operating, he said, those contracts will be updated.