One Massachusetts Medical Marijuana License Applicant Has History Tied To Illegal Gaming

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With pot legal in Canada, there is little doubt that the US is going to eventually follow suit.  It may take a while but many of the states are making headway on legalizing marijuana for both medical and recreational sales.

The great marijuana rush is on in Massachusetts and the state is weeks away from opening the state’s recreational market.  Even former MA governor Bill Weld, long a proponent for legalizing marijuana, has jumped into the fray as a paid member of an advisory board for Acreage Holdings.  Weld is not the only politician getting into pot, Acreage’s advisory board also includes former US Speaker of the House John Boehner (R-OH).  According to a Bloomberg article, both Boehner and Weld say that they have never tried marijuana.  Really?

Massachusetts approved medical marijuana as part of a ballot question in the 2012 general election and there are currently over 55,000 active patients … a drop in the bucket as to what is to come when recreational sales are allowed.  It is also likely that current medical dispensaries will get into the recreational-use  business where there will be two retail areas, one medical, one recreational …  the only difference in product will be the price.  Recreational marijuana buyers will pay a total of 17 percent in state sales taxes and up to 3 percent in local taxes, which do not apply to medical use.

Currently, Massachusetts Department of Public Health (MDPH) is responsible for issuing licenses to dispense medical marijuana.  For those seeking a license, there is a somewhat rigorous application process to apply to be a Registered Marijuana Dispensary (RMD).  The MDPH maintains a website that provides information on companies seeking a medical marijuana license, so anyone can look.  The site lists documents filed by each applicant with a profile of the companies who are applying, their source of funds to capitalize the operations and the credentials of the individuals involved.  Applications only tell a sliver of the story and MDPH does its own due diligence on applicants, even looking at social media posts of applicants.  A spokesperson for MDPH provided a statement to me regarding the process, During the suitability review of each individual, all information presented during the background check is carefully reviewed and taken into consideration by DPH. Determinations are made on a case-by-case basis.”  This means that they look beyond just the documents submitted.   So how does someone evaluate an organization for a marijuana license?

In Peabody, MA (north of Boston) one company is seeking a medical license, Phytotherapy Inc.  The main person applying for the license is Alexander Athanas, a young entrepreneur who has a brief history in real estate since graduating from college in 2012 … a young guy.  On June 26, 2017, Athanas incorporated Phytotherapy in Massachusetts and listed himself as President.  The following month he submitted an application to MDPH to request a Certificate of Registration to operate a Registered Marijuana Dispensary (RMD).  He stated in the application that he had at least $500,000 on deposit at Citizens Bank in New Hampshire, a requisite amount needed to demonstrate that the company would be properly capitalized.  The following month, MDPH responded that Phytotherapy’s application was insufficient in that it did not specify the type of banking account that contained the $500,000 … a few days later it was specified that it was a “checking account.”

Leaping that low bar, Phytotherapy was invited to submit a Management and Operations Profile and in its October 12, 2017 submission, Athanas was replaced as Chief Financial Officer by Vincent Galano III, who has no prior experience as a chief executive since graduating with an accounting degree in 2012.  While Athanas was still listed as the applicant and President, MDPH does not require a “President” to provide his/her professional background as part of the profile submission. The specific language in the application is:

Chief Executive Officer; Chief Operating Officer; Chief Financial Officer; individual/entity responsible for marijuana for medical use cultivation operations; individual/entity responsible for the RMD security plan and security operations; each member of the Board of Directors; each Member of the Corporation, if any; and each person and entity known to date that is committed to contributing 5% or more of initial capital to operate the proposed RMD.

The CEO and Director of Cultivations at the Phytotherapy is Pritesh Kumar, who is also the CEO of Phytosciences Consultants (no relationship to Athanas’s company).   Kumar has been actively involved in a number of cannabis related ventures.  He was or is listed as Chief Scientific Officer at CERESLabs, Chief Scientific Officer at cannabis startup PharmaCielo Ltd (2016-2017), Chief  Cannabinoid Research Scientist Vida Cannabis in Canada (2014-2015), CEO of Kentucky Distillation Services, Scientific Advisor for Revive Therapeutics, advisory board member at AtlMed LLC in Florida and also heads a marijuana staffing company.  Busy guy.   Another future executive of Phytotherapy is COO Srikanth Kalapala, currently CEO of a small healthcare startup, Insita, in Chicago and director at a non-profit, WeRise Jamaica (could not find a website or information on WeRise but in Phytotherapy’s profile of Kalapala it states that the company is  “a non-profit organization that focuses on investing funds into education, technology, & healthcare in rural areas across Jamaica.)

Athanas is listed as being the sole provider of funding to capitalize Phytotherapy, so he would be subject to the background check that MDPH is conducting … which might could interesting.   Athanas’s father is Spiros Athanas who pled guilty in January 2016 (US  District Court for  the Western District of Oklahoma, CR-13-063) to charges associated with a massive illegal gambling operation that spanned decades.

Spiros’s, known as “The Greek,” luck ran out when he was caught up in the investigations into Legends, an on-line gambling operation, that was busted in April  2013.  The feds in the Western District of Oklahomafiled a 95 page indictment against 34 people and 23 businesses alleging that the kingpin of the operation, Bartice “Luke” King, had operated a vast, profitable online (and offshore) betting empire.  Spiros, though he never owned any part of Legends, had his own gambling operation based in Montego Bay, Jamaica, a place where the FBI said he moved his operations to in the 90s in order to avoid US criminal prosecution.  Spiros had a long history with a number of law enforcement agencies.  In the 1990s, he was investigated by the FBI, the IRS, the Massachusetts State Police and the New Hampshire State Police.  His phones were tapped, offices raided and property seized but no federal criminal charges were filed until the Legends case.

The FBI also stated that Spiros used bank accounts to not only enrich himself, but his family.   According to the FBI, Spiros’s primary source of income was through his gambling operation.  The road to the criminal trial was littered with a number of defendants pleading guilty and on January 29, 2016, Spiros too pled guilty to charges related to illegal gambling (aiding and abetting  in conducting illegal gambling business, conducting an illegal gambling business and transmission of wagering information) and agreed to pay $5 million.  He was sentenced to 12 months probation.  In fact, most everyone involved in that federal case got probation or time served.  When MDPH was asked about their knowledge of the case they issued a statement saying, “DPH carefully reviews and takes into consideration all information presented during the background check of the individual. DPH does not conduct background checks on relatives of the individuals associated with an RMD.

Athanas, through an LLC named Kouzin 7,  also owns the land in Peabody, MA on which the dispensary is to be located.  The business currently there is Brothers Kouzina, a proprietor of Greek food operated by Athanas’s aunt and uncle.  The restaurant has plans to move later this year to make room for Phytotherapy.

On November 8, 2017, Phytotherapy was invited to submit a Siting Profile, the next stage of the licensing application.

Regarding Phytotherapy, MDPH provided a statement “To be clear, at this time Phytotherapy only has a provisional certificate of registration (PCR), and has not yet been approved for a Final Certificate of Registration (FCR), which would allow the entity to medical marijuana.”

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