HARRISBURG — Pennsylvania health officials are defending their decision to award a coveted medical marijuana grower's permit to a firm whose affiliate in Minnesota had two former executives charged this year with smuggling a half-million dollars worth of the drug across state lines.
Pennsylvania Medical Solutions in Scranton was one of only 12 companies to win a permit last week to grow medical marijuana in the state. Records show the firm is run by Vireo Health. In February, Minnesota officials charged two ex-employees of its affiliate there with illegally transporting medical cannabis oil while they worked for the company.
State officials in Maryland last month suspended preliminary licenses for Vireo's medical marijuana affiliate in that state, citing the company's failure to turn over documents including records related to its Minnesota facility, according to a published report.
Pennsylvania Health Department officials on Monday stood by their decision to award a permit to Pennsylvania Medical Solutions. A spokeswoman said the Minnesota charges were filed against individuals who no longer work for the company, not the company itself.
Vireo has not been sanctioned by any government agency, Health Department spokeswoman April Hutcheson said.
"Remember, the permits are given to business entities, not people," she said.
In a statement, Vireo spokesman Andrew Mangini said: "We're proud to have been awarded a license in Pennsylvania through a highly competitive process, and look forward to joining the Keystone business community and to providing medical cannabis products to patients suffering from serious and debilitating conditions. While we're aware of allegations against two former employees of our Minnesota affiliate, those individuals have no role in our application or in the management of our company."
Amid fierce competition, Pennsylvania Medical Solutions beat out dozens of firms for the grower's permit here. Industry experts say such permits could be worth millions of dollars.
In announcing the first round of awards last week, Pennsylvania officials said 177 entities paid a nonrefundable $10,000 application fee — a total of $1.77 million — for a shot at growing medical cannabis under lights and in highly-secured warehouses.
By this week's end, the state is expected to announce awards for 27 more permits to dispense medical marijuana.
State health officials have been tight-lipped about key details in the selection process. Although they posted the winning 12 grower applications online, large swaths of the applications were redacted from public view. Scorecards released after the winners were announced revealed how the firms rated in specific areas such as security, training, and diversity, but officials have not explained how some scores were reached.
Pennsylvania Medical Solutions' application shows that a number of its principals, financial backers, and employees are executives at Vireo Health LLC, which, in addition to its medical marijuana facility in Minnesota, has a location in New York.
Last year, Maryland officials awarded one of Vireo's affiliates, MaryMed LLC, a preliminary permit to grow and dispense medical marijuana. Last month, those permits were suspended, and it is unclear when or if they will be reinstated.
A commissioner on the state's medical cannabis board told the Baltimore Sun that despite numerous requests, MaryMed had not turned in documents related to Vireo Health and its operations in New York and Minnesota.
According to court records in Wright County, Minn., the two former Vireo Health facility executives were charged in February with smuggling $500,000 worth of marijuana oils in late 2015 from the company's facility in that state to its growing plant in Otsego, N.Y.
The pair — who held the titles of chief medical officer and chief security officer — allegedly used an armored truck to illegally transport the oils to help Vireo's New York subsidiary, which faced a product shortfall ahead of New York's January 2016 launch of legal sales. The two allegedly entered fake information into a database that tracks shipments of medical marijuana to cover their tracks. Investigators unearthed a December 2015 email from a New York facility employee that one of the two executives "is here today with Christmas presents from MN."
The case is pending, court records show.