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Parts of application from firm awarded medical-pot growing license nearly identical to 1 rival group's material

by Hunter Field | June 27, 2018 at 4:30 a.m.
FILE - In this Feb. 14, 2018, file photo, marijuana plants are displayed at a dispensary in Berkeley, Calif. U.S. health officials say a closely watched medicine made from the marijuana plant significantly reduces seizures in children with severe forms of epilepsy and warrants approval in the U.S. The Food and Drug Administration posted its review Tuesday, April 17, of the experimental medication ahead of a public meeting later this week. (AP Photo/Marcio Jose Sanchez, File)

A company that was awarded one of Arkansas' first medical-marijuana growing licenses copied important sections of its application from a competing group, according to sources, public records and other documents.

An Arkansas Democrat-Gazette review of public records found that large portions of Delta Medical Cannabis Co.'s successful cultivation license application had the same wording -- verbatim in some cases and slightly tweaked in others -- as the language used in 46th-ranked Courageous Ann's application.

The sections of Delta Medical Cannabis' application where the near-identical material appears are those that the five members of the Arkansas Medical Marijuana Commission merit-scored to decide which five companies would receive the licenses. While portions of the publicly released sections are redacted, much remains open for review.

Electronic fingerprints on Delta Medical's internal documents and company emails -- provided by sources -- show how the contents of Courageous Ann's application funneled into Delta Medical's hands through accounts linked to its previous attorney, Michael Langley.

Langley is the former director of the Arkansas Alcoholic Beverage Control Division, the agency that now oversees the state's burgeoning medical marijuana industry. Langley was not involved with medical-marijuana issues during his time at the agency, having left several years before voters approved the constitutional amendment on the drug in 2016.

Langley, who now works as an attorney for the Arkansas Contractors Licensing Board, said he had no comment about the newspaper's findings when reached by phone Monday.

[DOCUMENTS: Compare the applications of Courageous Ann and Delta Medical Cannabis Company]

Delta Medical Cannabis Co. officials and attorneys didn't respond to emailed questions and comment requests Monday and Tuesday. An attorney for the company said Tuesday that she was not able to contact her client, who she said was out of state.

Courageous Ann's current attorney, Patrick Benca, declined to comment for this article.

The similarities between Courageous Ann's application and Delta Medical Cannabis' application are especially evident in the sections where each company describes the steps it would take to reduce unpleasant odors and light coming from the growing facility.

"Courageous Ann will use multi-stage air treatment to prevent odors, smell, fragrances, and other olfactory stimuli from negatively affecting citizens and neighboring properties," reads Courageous Ann's application, which the commission provided to the Democrat-Gazette in response to an Arkansas Freedom of Information Act request.

"Light pollution harms ecosystems, prevents citizens from enjoying starry night skies, and can negatively affect people's health and sleep. To prevent these outcomes and respect the community in which it will operate Courageous Ann will prevent light pollution, glare, or brightness from emitting out of the facility," the document reads.

Delta Medical Cannabis' proposal is almost identical:

"Delta Medical will use multi-stage air treatment to prevent odors, smell, fragrances, and other olfactory stimuli from negatively affecting neighboring properties," reads the fifth-ranked application, which is publicly available on the commission's website.

"Light pollution harms ecosystems, prevents enjoyment of starry night skies, and negatively affects health and sleep. To prevent these issues, Delta Medical will reduce light pollution, glare, or brightness from emitting from the facility."

[DOCUMENTS: Read complaints filed + winning applications from top five growers]

The Democrat-Gazette obtained a copy of the Microsoft Word document that Delta Medical Cannabis used to complete its cultivation license application. The newspaper used the metadata buried in the document file to trace its apparent edit history. The data show that someone using the sign-on of "Michael Langley" replaced Courageous Ann's name and biographical information with the same information for Delta Medical Cannabis Co.

For instance, the Microsoft document data reveal that the person using Langley's sign-on deleted Courageous Ann's information from the section detailing its business plan and replaced it with Delta Medical Cannabis' name while keeping the wording roughly the same.

The Microsoft document's metadata and interviews also reveal the document's origins.

Layle McFatridge, a Colorado writer and cannabis industry consultant, is listed in the metadata as the document's creator. McFatridge reviewed portions of the merit-scored section of Delta Medical Cannabis' publicly available application after being contacted by the Democrat-Gazette, and she confirmed that she wrote much of the material that ended up in the company's application, although some of it was slightly edited, she said.

McFatridge added that she wrote the material while working for Canna Advisors, a Colorado-based cannabis-consulting firm, and she wasn't sure which Arkansas company the materials were written for because she didn't usually interact directly with clients.

Canna Advisors contracted with Courageous Ann to help compile its application, according to documents reviewed by the Democrat-Gazette.

Delta Medical Cannabis Co., however, was not a Canna Advisors client, said Greg Huffaker, a Canna Advisors program manager who is an attorney.

McFatridge, who no longer works for Canna Advisors, said it would be unusual and likely improper for materials prepared by her or Canna Advisors to be shared with a competing company by a third party.

Huffaker, speaking generally about his company and not any situation in Arkansas, said the company takes its intellectual property seriously.

"Like any business, in the sense that the commodity we sell is advice and at times writing, it's just like if somebody is going into the grocery store and stealing a candy bar," he said.

An organizational chart created by Canna Advisors for Courageous Ann was also shared with Delta Medical Cannabis' owners in a July email identified as being sent by Langley. Sources provided the email to the Democrat-Gazette. The chart is titled "Bevans Family AR." The Bevans family is one of the principal owners of Courageous Ann.

The organizational chart that ultimately appeared in Delta Medical's application, while similar, wasn't identical to the one Canna Advisors created for Courageous Ann.

The similarities between Courageous Ann's and Delta Medical's applications are even more striking when compared with the same sections of other winning applications. Even the headings and formatting of Courageous Ann's and Delta Medical's applications mirror one another but are different from those used by other groups.

For example, in the section of the application where the commission asked companies to explain how they'd prevent their products from being diverted to the black market, Courageous Ann and Delta Medical begin the section with near-identical passages:

"Courageous Ann understands the importance of diversion prevention and will carefully track all medical marijuana and medical marijuana products within their facility. From seed-to-sale, Courageous Ann will audit their inventory continuously and accurately, matching items in the ITS to those physically on-hand."

"Delta Medical understands the importance of diversion prevention and will carefully track all medical marijuana and medical marijuana products within its facility. From seed-to-sale, Delta Medical will audit its inventory continuously, accurately matching items in the ITS to those physically on-hand."

Although Delta Medical's and Courageous Ann's applications are similar, it's not unusual that they were scored so disparately because of many of the available points pertaining to the backgrounds and experiences of those behind each application. Bonus points were also available to each applicant for a variety of components, including minority ownership, geographic location and community service.

These are the latest issues uncovered as part of this newspaper's review of the first five companies that stand to receive Arkansas' first cannabis-growing permits in the license application process. Several unsuccessful applicants also have found a handful of scoring inconsistencies and irregularities that have been unfurled in court documents.

Also, Arkansas Attorney General Leslie Rutledge revealed in a letter to the Arkansas Supreme Court that one Medical Marijuana Commission member reported receiving a bribe offer from one company -- Natural State Agronomics -- that was applying for a license. Commissioner Carlos Roman told authorities that he declined the offer, and Natural State Agronomics has denied offering a bribe. Law enforcement officials are investigating the matter.

Despite the mounting number of issues, the state Supreme Court last week lifted a lower court's injunction preventing the commission from formally awarding the first five medical marijuana growing licenses. The commission plans to continue with that process in the coming weeks once the high court's ruling is finalized.

At that point, state regulators have said they will consider and investigate the complaints that have been lodged against the five companies.

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Asked whether copied application materials could disqualify a company from consideration for a cultivation permit, Scott Hardin, a spokesman for the Arkansas Department of Finance and Administration, said the agency couldn't comment on "any alleged action by applicants as licenses have not been awarded."

However, he pointed to a section of the Medical Marijuana Commission's rules that lists reasons a company's application could be denied, including the "provision of misleading, incorrect, false, or fraudulent information."

Examples of redacted applications submitted by medical marijuana cultivation hopefuls.

A Section on 06/27/2018

Print Headline: Scrutiny reveals 2 like pot filings; 2 rival firms’ wording similar

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