SALEM — A company that is suing the city after it was rebuffed for a chance to sell recreational marijuana in Salem is now threatening further legal action after talks deteriorated in recent weeks on its new proposal for a medical marijuana business.

Officials with Mederi, one of eight companies that competed last year for local host agreements to open retail pot shops in Salem, told The Salem News they were now looking to open a medical dispensary on Highland Avenue. But they intend to file a second lawsuit against the city regarding the failed talks for a dispensary, which company CEO Chris Pantano characterized as "purely discriminatory."

Part of the problem appears to stem from issues with communication and which ensnared a city councilor who moved quickly to try and get the word out to constituents about the possible project.

 

Mederi's initial suit was filed early this year after the company was turned away from host agreement talks that saw the city sign agreements with four companies and pass on four others. That case, which has raised questions about how the city narrowed down its list of applicants, is still pending. The next hearing date is Thursday in Lawrence Superior Court.

But as that case played out, Mederi has been trying to work with Mayor Kim Driscoll to get a medical marijuana operation at 250 and 260 Highland Ave., the same site they planned to open their recreational business.

"We approached the mayor at the end of August to talk about this letter of non-opposition, about medical," said Meredith George, the company's chief financial officer. "We had a sit-down at the end of August with the mayor, Beth Rennard (the city solicitor), and our lead investor, and they (the city) said it was their preference that we follow the same process ATG followed when they got medical."

Alternative Therapies Group (ATG), at 50 Grove St., opened the state's first medical dispensary in 2015 and was the third shop in Massachusetts to begin recreational sales at the end of 2018, as the city was wrapping up the four host agreements for retail sales.

Since that sit-down, Mederi has received what it says are mixed messages over what ATG did to land a deal in Salem, and no definitive, outlined process that ATG followed.

"The city was supposed to send us all their records (on ATG)," Pantano said. "They apparently don't have any records. There was no record they could find about the very first dispensary that ever happened in the Commonwealth of Massachusetts, which is a little strange to me."

Highland Ave is an issue

But that August sit-down stuck by a promise the city made to residents in 2018, according to Rennard.

"The mayor and I met with them — with Mederi and their attorney," Rennard said. "The mayor said, 'I've committed to the neighborhood and Councilor (Tim) Flynn that we weren't going to cluster marijuana facilities on Highland Avenue.'"

That gets to concerns that the busy four-lane road would become a pot hotspot. Six of the eight applications the city had received for retail pot targeted Highland Avenue, and the city only moved forward on two of those proposals.

So the sit-down concluded with an understanding that a neighborhood meeting was needed to get feedback from people who live nearby, according to Rennard. If neighbors could sign on and back the idea of medical on Highland Avenue, then Driscoll would hear the plan out.

Another meeting was held, this time with Flynn in the room, and it ended with Flynn coming up with dates for a neighborhood meeting.

"We were working on trying to find dates he was available to do that," Rennard said. "And then Councilor Flynn put something on social media about the site."

That included a post on Sept. 19 to Facebook, where Flynn said his priority "is making sure the neighbors are involved and have a say in the process." Minutes later, he ran a live video from the site explaining the proposal in greater detail.

That, Rennard said, became an issue.

"I haven't heard from Mederi about a meeting date at this point," she explained. "They weren't pleased with the social media."

Asked about Flynn's posts, Pantano said he and George were able to identify several errors in how Flynn characterized the company's past and present plan, but declined to give specific examples.

"Tim wasn't given permission to post about the meeting," George said. "Due to the lawsuit, we wanted to be extremely careful about the message and how it went out."

And that loss of control became a significant issue, according to Pantano.

"You are a public servant. You don't work for Mederi," Pantano said. "You don't get to say what our plans are or aren't when we're still game-planning what our process is."

Flynn, in a recent interview, said his primary concern with the proposal "was that before anything moves forward, I want the neighborhood to know what's going on, because there were several neighbors who were in touch with me when they were looking to do a retail shop over a year ago."

"I don't believe I'm there for any top-secret meeting. I'm there to get the information, and whatever I get, I'm going to be transparent with the neighborhood," he said. "I'm not concerned whether they're upset with me. I wasn't told this was a secret or not to mention it, so I did my homework."

Soon after Flynn's post, Pantano explained in an email to The Salem News that Flynn "was NEVER supposed to be putting anything out publicly until the process was agreed to with our lawyers."

Allegations of discrimination

Mederi says its biggest issue is the lack of clarity in how to get a medical dispensary off the ground in Salem. The company maintains that the city issued three letters of non-opposition — a key step to getting a license from the state — for medical businesses.

Driscoll, who declined comment for this story citing pending and future litigation, confirmed that two letters were issued. One was to ATG, while a second went to Good Chemistry, a company that at one point targeted Derby Street for a retail business that the city's building department later rejected on zoning grounds.

George, however, contends that a city official at one point named a third letter for Mayflower, a short-lived proposal that had targeted Canal Street.

In the midst of their discussions, Pantano said, city officials made several attempts to explain how ATG was able get a letter of non-opposition. That included sharing a 2014 Salem News story with Mederi about how ATG courted local and state officials.

"When the city realized they didn't have a sufficient record to create a process on, they said they'd sign a letter with us if we met with the ward councilor and got sufficient neighborhood support," George said. "We were apprehensive to get involved in a process with such ambiguous guidelines."

Pantano said the city then pushed for Mederi to get a special permit first for the medical use, prior to any letter of non-opposition — a requirement Salem officials held recreational proposals to a year ago. ATG, however, secured letters of non-opposition for the medical dispensary prior to a special permit.

"The whole point of us sitting down with the city before getting ahead of anyone... it's very uncommon to get a special permit without a community host agreement," George said. "Unfortunately, that was the process for recreational — but not for medical."

That's a major problem for Pantano.

"We aren't partaking in a discriminatory process where Mederi's being mistreated," he said, "when three other letters of non-opposition were signed by the mayor prior to them ever having sites or site control."

The last straw for them was when Flynn posted on Facebook.

"We really wanted to work with the city and try to conform to this evolving process," George said. "But when you feel like the message is being taken out of your hands and out of context and being portrayed to the public in a way that isn't mutually agreed upon, that isn't the basis for any relationship going forward."

Contact Salem reporter Dustin Luca at 978-338-2523 or DLuca@salemnews.com. Follow him on Facebook at facebook.com/dustinluca or on Twitter @DustinLucaSN.

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