Marijuana: Ethan Ruby says honest dispensaries can't compete with ones selling to black market
Update: Last week, we reported about Ethan Ruby's plans to open a medical marijuana grow called Theraplant in Connecticut, and his claimed involvement in a Colorado MMJ operation; see our previous coverage below.
After the piece's publication, Ruby responded to our interview requests. He says he was misquoted by other news sources about owning a marijuana business Here's his story, along with information about what we've been able to confirm.
According to Ruby, GrassRoots Health and Wellness (GRHW) is actually owned by Daniel Emmans. He maintains that news outlets such as the Hartford Courant, which quoted him as saying he owned the business, will be making corrections shortly -- although they have not done so at this writing.
"I am an unpaid consultant [for GRHW]," Ruby says. "I didn't have a financial interest; I just had a concern for the business."
Emmans is a college buddy of Ruby's who co-owns a real-estate company with him that at least partially funded the start-up of GRHW three years ago.
"Dan, with my permission, used money ($160,000) from our real estate company to start Grassroots," Ruby says. " I am not on any documents for GrassRoots Health and Wellness."
Since Ruby has not been a Colorado resident for at least two years, he cannot legally be on any documents. He moved to Colorado last August to become a MMJ patient, because cannabis helps him with a spinal-cord injury, he says.
GRHW's application never made it through the entire state application process to become a state certified dispensary. But Department of Revenue representative Daria Serna notes that many MMJ shops that are open remain in licensing limbo due to a large backlog of applications.
GRHW's application filed in 2010.
The reason that the operation in Colorado was even mentioned in other articles, Ruby says, is because the executive staff for Grassroots, including the owner, managing director and master gardener, are hoping to move to Connecticut to operate Theraplant. However, this plan hinges on the fate of their application with Connecticut's Department of Consumer Protection.
As for Grassroots, Ruby concedes that the dispensary ceased operations in Colorado this past March.
"Grass Roots needed to relocate the retail and production operations," he says. "As GRHW poured over the financial and strategies involved, it was decided that it was a much better use of resources, personnel and money to focus 100 percent on Connecticut."
There are several reasons Ruby wants to move the operation out of Colorado.
"We do not choose to skirt laws or come up with caveats to circumvent laws that are put there for a purpose," he says. Grassroots abided by all laws, he continues, while rival dispensaries deal out the back door to other states and break regulations to sell more medicine. "These guys [Grassroots employees] are too by-the-book and too adherent to safety protocols to compete in this marketplace."
He adds that since the passing of Amendment 64, there will be no money left in the medical industry -- and he believes the federal government is a high threat to recreational shops.
Of course, Ruby's claims aren't universally accepted. Owners of medical marijuana dispensaries have long insisted that they are selling cannabis only to licensed patients and reject black-market profit possibilities -- and some MMJ entrepreneurs think the medical industry will remain strong, with patients keeping their red cards in order to avoid paying recreational taxes. In addition, many in the industry are hopeful that federal government will allow states to create and oversee their own marijuana policies.
Ruby already has a $2.5 million warehouse in Connecticut picked out as Theraplant's headquarters. He says he's received $750,000 from investors and has another $7 million waiting for him if the application gets approved.
"We are starting off very slow and very conservative, with a couple hundred pounds a month," Ruby says. "As demand increases we have the ability to ramp up to close to a 1,000 pounds per month."
Ruby did not have a figure for how much the Colorado shop was producing while it was open.
Continue to see our previous coverage on Ruby. Original post, 11:59 a.m. June 27: Leaving the safely charted waters of the medical marijuana industry in Colorado for the great unknown -- the nascent MMJ industry in Connecticut -- sounds a little crazy, right?
Well, it would be if you owned a medical marijuana business in Colorado -- which is something Ethan Ruby has reportedly been claiming as he attempts to open a grow facility in Watertown, Connecticut under the business name, Theraplant. But his Colorado roots aren't exactly showing at this point.
Ruby told Waterbury's Republican-American newspaper that "Theraplant has had a growing facility in Denver for 3.5 years, which employed 29 people at its peak." The paper reported that "the Denver plant is ceasing production so he can concentrate on the venture in Connecticut."
But according to the Department of Revenue's Daria Serna, "Ethan Ruby is not in the State's DOR system as owning a dispensary in Colorado."
The Theraplant logo as seen on a form Ruby submitted to the Connecticut Department of Consumer Protection.
Could this just be a glitch in the DOR system? After all, we know this kind of thing happens....
Signs point to no. Ruby told the Boston Globe in an article last October that he is planning to create an organic marijuana distribution center to cater to patients like himself -- and nowhere in the article does it mention Ruby currently owning a dispensary.
And Theraplant? As of this time, we could find no proof it ever existed in Colorado. There are a couple of business listings on sites like lookupbear.com and bizapedia.com, that show a business located in Plantsville referencing that name. The listings, however, are not complete and do not give any information regarding the business aside from its address -- 159 Nunzio Drive. Otherwise, the only other listing for "Theraplant" is for a dietary food supplement by Naturex and the flood of news stories that are claiming its existence.
We haven't been able to reach Ruby at this writing; we will update this post if he responds to Westword's interview requests. So for now, all we can do is speculate as to why he would claim ownership of a business that appears not to exist.
Here's our three best guesses.
1. It gives him credibility when looking for investors.
The laws backing the medical marijuana legislation that was passed last year in Connecticut are very stringent. The state's Department of Consumer Protection (DCP) requires an application fee of $25,000 and an additional $75,000 if accepted, plus a $2 million bond.
According to the Republican-American article, Ruby has raised $750,00 from investors for the pre-application process and has another $7 million waiting on the contingency of getting a license.
With that money he plans to spend $2.5 million to purchase the building, $4 million in renovations, up to $1 million for lights and grow equipment, $200,000 for extraction equipment, and a large amount for the safe.
2. It looks good to the state.
Theraplant submitted a letter to the DCP in late April. In it, Ruby offers several recommendations for amendments to be made to the regulations concerning the Palliative Use of Medical Marijuana Law. These include changes to the policy that require producers to individually package marijuana prior to delivery. He also suggests altering storage rules, since "marijuana is fragile."
3. It gives him an upper hand in an undeveloped market.
The law allows for at least three but not more than ten marijuana cultivation centers in the state. These operations will then sell to a number of dispensaries determined by the DCP. Patients will also not be allowed to grow their own and there have yet to be any dispensaries open in the state -- so being the first grow house in the area would be hugely beneficial.
Also, since Connecticut is the fifth most densely populated state, there is the potential for a larger customer pool in a smaller area. According to the "Kind Clinics Business Plan for Connecticut," this could make Connecticut an exceptional market for medical marijuana operators.
Of course, Ruby could be telling the truth about his Colorado past, at least in some roundabout, off-the-cuff way. But one thing's certain: His name isn't on the registry.
More from our Marijuana archive: "Cannabis Time Capsule: Tripping on THC in New York in 1893."
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