KITTERY, Maine — Marijuana company Sweet Dirt, homegrown and headquartered in Eliot, Maine, is calling on the town of Kittery to halt its current retail marijuana business licensing process and rescind the three license invitations it has granted.
If these requests aren’t met, the Maine-based business is threatening to sue the town for the lottery process it designed for three recreational marijuana licenses in the town.
Sweet Dirt’s claim, essentially, is Kittery created an unfair process by holding a lottery that allowed businesses looking to open a pot shop in town to buy as many lottery entries as they wanted at $750 each. The town profited, selling more than 700 entries in the lottery and raising more than $535,000 in revenue. Sweet Dirt argues, however, it allowed applicants to engage in “lottery manipulation.”
Despite the threat of legal action, though, Kittery Town Manager Kendra Amaral said the town’s retail marijuana licensing process will continue without interruption.
Attorney Michael Strauss of Nixon Peabody LLP represents Sweet Dirt, which was founded by married couple Kristin and Hughes Pope in 2015. The business operates a medical marijuana location, Sweet Dirt Medicinals, and a cultivation facility in Eliot. Since the beginning of the month, Strauss has sent several correspondences to town attorney Kristin Collins of the firm PretiFlaherty calling out what Sweet Dirt contends was a problematic license distribution process.
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Sweet Dirt points out the town’s lottery rules stated businesses with a valid Maine tax identification number were allowed to file a pre-application per separate property. Multiple pre-applications were also accepted by the town for the same property.
Under those guidelines, different entities were created by the same registered agents to apply for the same locations multiple times, thus increasing the probability of winning the lottery for the coveted right to open a recreational use pot shop in Kittery. Entries were sold prior to the lottery that was held Oct. 28, with the winners and runners-up selected from a drum of ping pong balls in a process approved by Kittery’s Town Council.
“All Sweet Dirt wants is for the town of Kittery to use a fair process to determine which marijuana retail businesses will be issued licenses,” Strauss wrote.
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Jim Henry, chief executive officer of Sweet Dirt, referred to the lottery as a “deeply flawed process.”
“As a company founded by Mainers, located here, and operating with the state of Maine as our focus, Sweet Dirt wanted nothing more than to expand its ability to serve the Kittery community,” he said in a prepared statement. “But the Town Council deprived us and others of a fair shot at doing so.”
A letter sent Dec. 22 states Sweet Dirt plans to file a lawsuit in the new year if its requests are not met.
How Kittery’s marijuana shop lottery played out
Sweet Dirt gave itself 12 chances in the lottery for the right to apply for the one available license for a retail adult-use marijuana shop in Kittery’s C-2 zone (Route 236), spending $9,000 on lottery entries.
Strauss wrote in a letter to Kittery, “Sweet Dirt scrambled to navigate the lottery system and how best to position itself for a fair chance.”
The C-2 zone lottery winner was Brandon Pollock, believed to be the co-founder and CEO for Maine and Massachusetts weed giant Theory Wellness. Pollock bought most of the 248 lottery entries sold for the C-2 zone, giving him the majority of the ping pong balls in the lottery, far more than Sweet Dirt and other entrants.
Strauss wrote in a letter to Kittery’s attorney that, in the C-2 zone, which also held $75,000 worth of pre-applications from North Berwick-based Green Truck Farms, Sweet Dirt was the 15th ball drawn, putting it well down the waitlist.
“The town tried to make it appear as though neither it nor the applicants exercised any control over the lottery outcome. But the opposite was true,” he said. “Though ping pong balls may have been randomly selected from the raffle drum, the lottery was rigged before the drum’s first spin because the town allowed entrants to pack the drum with entries in advance.”
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One winner was also chosen for Kittery’s C-1 (Ripley Road and Route 1 area) and C-3 zone (Route 1 Bypass, State Road and Old Post Road area).
C-1 zone lottery winner Nick Friedman, believed to be Pollock’s fellow co-founder and Theory Wellness’ chief strategy officer, submitted most of the 446 entries in that zone.
The C-3 zone lottery was won by Mitchell Delaney, owner of Indico, which already operates a medicinal marijuana business in town. He bought 10 of the 11 lottery tickets sold in the zone.
Lottery winners received 30 days to file a license application before the town would move on to the runner-up in the lottery.
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Kittery’s Town Council approved the lottery system in August for three retail stores after Town Councilor Jeffrey Pelletier proposed amendments to a plan town boards had created to issue the retail marijuana shop licenses on a first-come, first-served basis.
The evening Kittery’s retail marijuana business license ordinance was adopted, a running report pertaining to the ordinance compiled by Amaral was released.
Amaral shared in the report that town staff felt they could effectively manage a first-come, first-serve license distribution process, adding “it limits the areas for human error and unintended delay or impact to a license application,” in comparison to a lottery.
“We identified that the lottery process could lead to gaming the system, in that an applicant that can afford the pre-application fee can enter multiple applications for multiple locations to increase their chances of getting a license,” she wrote. “We cannot find a reasonable and fool-proof way to avoid this.”
Amaral said Kittery will not meet Sweet Dirt’s requests to pause the license distribution and vacate the results of the town’s lottery.
“We certainly don’t begrudge anyone taking whatever actions they feel are in their best interest under law and the town will defend accordingly,” she said.
Strauss, in his correspondence with the town’s attorney, has cited Amaral’s caution to the Town Council about a lottery process, calling her comments and findings an “unambiguous warning.”
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“At the end of the day, the council was in their full right and authority to choose to go to the lottery system,” Amaral said. “Our role as staff is to advise but it is up to the elected Town Council to finalize and approve any ordinances.”
Acknowledging several complaints have been made to the town about its retail marijuana business license process, Amaral noted Sweet Dirt would be the first to file suit against the town over it.
Delaney, Friedman and Pollock, according to town records and past statements, are all in the midst of applying for licenses and receiving land-use approval from the town’s Planning Board for the town’s three retail marijuana shops. Amaral previously estimated the first shops in Maine’s southernmost and oldest incorporated town could open by the end of 2022.
On what grounds would Sweet Dirt file suit against the town?
Strauss said in an interview Sweet Dirt doesn’t wish to put company resources toward litigation but will to protect its interests.
“The message that Sweet Dirt wants to send is that they want to be part of the community resolving this problem as much as they want to become a license holder if fortune would have it,” he said of the business, which employs more than 100 people in Maine.
To bolster the company’s argument, Strauss wrote that, whereas the lottery was “purported to operate (as) a game of chance,” it ultimately “performed more like an auction to the highest bidder.” Sweet Dirt’s pre-applications were entitled to participate in a fair lottery process, Strauss wrote, though the lottery turned out to be “procedurally defective.”
“Litigation, it’s there. If we’ve got to do it, we’re doing it,” Strauss said. “Because this was not an appropriate procedure. This was an unlawful procedure.”
This article originally appeared on Portsmouth Herald: Sweet Dirt threatens to sue Kittery over its marijuana shop lottery
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