One of the eight companies the state picked earlier this year to cultivate medical marijuana in Utah has faced accusations of fraud in at least two of the other states where it operates.
The investigations began and were publicized in local newspapers before the state Department of Agriculture and Food announced it was granting Harvest of Utah a growing license this summer. But state officials and county leaders in Weber County, where the business will operate, say they were unaware of the complaints before inquiries from The Salt Lake Tribune.
Harvest Health and Recreation Inc. was under regulatory scrutiny this spring in Pennsylvania for allegedly misrepresenting its business to win more permits than it was allowed there, according to The Philadelphia Inquirer. The state’s Department of Health ultimately reached a settlement with the company in August after resolving “all outstanding issues,” and it relinquished two of its dispensary permits, The Inquirer later reported.
The Ohio Board of Pharmacy opened a separate inquiry into the company in early July on suspicion that it had made false claims about being owned by an economically disadvantaged group in an attempt to win an advantage on its dispensary application there last year, according to an article from The Cincinnati Enquirer. The company has yet to open its Ohio dispensaries pending resolution of the probe.
The state announced that Harvest of Utah and the others were selected for a growing license on July 19, beating out 73 other companies seeking their chance to grow the state’s first legal cannabis crop.
Three companies that lost out on state permits appealed the process to the state’s Procurement Policy Board in August, alleging unfairness and inconsistency in the state’s selection system. The panel upheld the decision of the protest officer in September. One of the companies has since petitioned to the Utah Court of Appeals.
In an interview with The Salt Lake Tribune, Weber County Commissioner Gage Froerer said the probes into Harvest raise a “red flag” but would not necessarily be disqualifying.
“Any time I hear that a company makes false claims, it’s definitely concerning to me because that opens up the possibility they made claims to us on their application that were false or misleading,” he said. “Does that mean that we automatically not permit them? Probably not. We’d want to obviously do some additional due diligence to find out really the scope and what the nature of the complaint was.”
The county still has to approve the company’s building permit, which is pending awaiting payment of associated fees, according to Rick Grover, the county’s planning director.
Alex Howe, Harvest’s head of corporate communications, acknowledged the investigations in an email but did not respond to inquiries about why the company had not informed the state of Utah or Weber County officials that it was under regulatory scrutiny.
To resolve the outstanding investigation in Ohio, Howe said the company has been “working closely” with the state’s Department of Commerce and Department of Pharmacy to answer "any outstanding questions that surround the dispensary and cultivation permits our affiliates have been granted.”
In Utah, he said the company is “excited to bring high-quality and premium medical marijuana experiences to those” suffering from “serious medical conditions.”
The Utah Department of Agriculture and Food put out a call in late May for interested growers and charged a six-person panel with representatives from its department and the Utah Association of Counties to score the applications.
The agency received 81 applications and was authorized to grant up to 10 licenses, but it ultimately chose to hand out eight to avoid an overabundance of cannabis. Half of those were given to existing Utah businesses, while the rest were awarded to out-of-state companies, like Harvest Health and Recreation, which is based in Arizona.
In its request for proposals, the state said licensure would be given to those "that best demonstrate experience with establishing and successfully operating a business that involves: complying with a regulatory environment; tracking inventory; and training, evaluating, and monitoring employees.”
Harvest’s 41-page application to the state of Utah — a redacted copy of which was provided to The Tribune through an open records request — touts the company’s experience as one of the “largest cannabis companies in the country" and its adeptness at adapting to operating policies and procedures in the various states where it operates.
Jack Wilbur, an information specialist with the state’s agriculture department, said it’s difficult to know if the probes into Harvest Health and Recreation would have had “any impact” on the selection committee’s choices, had it been aware of the complaints.
“It would really depend on what the situations were in those other states and whether they were related to any of the things that we had considered to be very important in our selection process,” he said. “It’s just really hard to know without knowing all the details of what was going on.”