GROWTH PAINS FOR MEDICAL POT

The Issue of Out-Of-State Funding Is Causing Some Controversy As
Maine's Industry Gets Off the Ground.

AUGUSTA - A financing agreement has been finalized between the holder
of half of Maine's medical marijuana dispensary licenses and a former
professional basketball player.

The $2 million agreement between Northeast Patients Group and an
organization led by former NBA player Cuttino Mobley comes as
Northeast faces a lawsuit by its former California-based backer.

The litigation and the deal with Mobley that sparked it have big
implications for Maine's fledgling medical marijuana industry.
Northeast holds exclusive state licenses to operate dispensaries in
Maine's most populous markets: Greater Portland, Kennebec County and
the Bangor area, as well as Thomaston.

Catherine Cobb, director of the Maine Department of Health and Human
Services' Division of Licensing and Regulatory Services, provided an
email to the Kennebec Journal saying an agreement had been reached
between Northeast and Mobley.

"The (Northeast) board has conceptually agreed to the terms,"
Northeast's lawyer, Daniel Walker, wrote in the email to Cobb. "We are
now translating those terms into updated budget documents and a
summary of the term sheet."

Cobb said Friday that the term sheet would not be publicly available
until Monday. She said her expectation is that the final deal will
stay very close to a letter of intent from February.

Terms outlined in the letter of intent Feb. 23 say Mobley will provide
Northeast with $2 million, in four increments, for the exclusive right
to supply Northeast dispensaries with drinks, edibles, topical
solutions and alcohol-based herbal extractions called tinctures.

Mobley also will consult on security, cultivation, operations,
marketing, quality assurance and public relations, the letter reads.

He negotiated a repayment schedule that includes an 18 percent annual
interest rate, effective a year after an agreement is finalized.

The deal with Northeast wouldn't be Mobley's first foray into medical
marijuana. He has also invested in Rhode Island's fledgling industry.

As of Wednesday, Maine had 1,807 patients enrolled in its medical
marijuana program, said John Thiele, program manager for the Division
of Licensing and Regulatory Services.

State documents show that Northeast expects more than 1,100 patients
at its four locations and more than $7 million in revenue in its
second year of operation.

But since none of the four Northeast dispensaries has opened, many
people are skeptical. The state's other four dispensaries -- in
Frenchville, Biddeford, Auburn and Ellsworth -- have opened.

Northeast has only an up-and-running cultivation site, in Thomaston,
which was given the go-ahead to grow by Thiele in June.

"They're not open now. There's not a dime coming through the door,"
said Charlie Wynott, executive director of the Westbrook-based Maine
Medical Marijuana Patients Center.

Wynott bristled at the disclosure of Mobley's involvement.

"All I can say is, 'I told you so.' I knew outside money was coming in
from the beginning with Northeast Patients Group from Berkeley," he
said. "The state refused to look at it that way. As long as they got
their $15,000 per dispensary, they didn't care."

Wynott said his organization has virtually stopped recommending
dispensaries to patients -- he recommends they grow their own or get a
trustworthy caregiver.

Cobb said the law allows out-of-state funding for marijuana
dispensaries.

"It is a Maine company and its principals are Maine residents," she
said. "It doesn't mean the funding, or bank, needs to be in Maine.
That would be overstepping our role."

Berkeley Patients Group sued Augusta-based Northeast Patients Group
and Executive Director Rebecca DeKeuster on July 6 in Cumberland
County Superior Court, alleging that DeKeuster used confidential
information to strike the deal with Mobley without telling it about
the talks.

DeKeuster's contract with Berkeley, submitted to the court, prohibits
her from discussing company-related confidential information without
Berkeley's written consent. That contract also bars her from competing
for business with Berkeley for two years after she leaves Berkeley.

The lawsuit seeks repayment of $632,195 in loans from Berkeley to
Northeast and asks the court to order DeKeuster to leave Northeast.