- Associated Press - Thursday, June 26, 2014

DOVER, Del. (AP) - As a lobbyist who once worked for U.S. Sen. Tom Carper seeks to run Delaware’s first medical marijuana dispensary, state officials are trying to keep a lid on the negotiations, and a judge has scheduled a hearing next week in a legal battle that could decide who ultimately runs the operation.

Public health officials informed Mark Lally, president of First State Compassion Center, in a letter last month that his organization had submitted the top bid for the medical marijuana operation.

Officials released the letter Thursday in response to a Freedom of Information Act request by The Associated Press, but have been unwilling to discuss it publicly. Kelly Bachman, a spokesman for Gov. Jack Markell, said in an email last month that because the Department of Health and Social Services was still in negotiations, officials would not have any further comment.

“It is important that both First State Compassion Center and the Office of Medical Marijuana remain silent on the status of the contract until it is signed,” public health director Dr. Karyl Rattay wrote in the May 16 letter.

Lally, a former state trooper who once ran the governor’s executive protection unit and later served as Carper’s Sussex County director, said in an email that his organization is continuing to work on with DHSS on plans for the marijuana dispensary.

“We look forward to formally announcing our organization’s plans in the near future,” Lally wrote.

A lawyer for Lally said in court documents that parties involved in the negotiations are “mandated by the state” to keep them confidential. Attorney Timothy Holly, who represents Lally in a lawsuit filed by former Lewes city councilman A. Judson Bennett, also wrote that Bennett “is going to great lengths to derail the negotiation process, including by trying this matter in the court of public opinion….”

Bennett claims Lally breached an agreement to help Bennett seek a license to operate Delaware’s medical marijuana dispensary, or “compassionate care center.”

Bennett says Lally, without his knowledge or consent, began working with Sigal Consulting earlier this year to land the contract, despite being prohibited from trying to help any competing enterprise as long as Bennett was trying to obtain the license. Lally denies the assertion.

Lally’s attorney argues that there is no basis for the lawsuit, and that it is premature, given that no contract to operate a compassionate care center has been awarded. A chancery court judge has scheduled a hearing Monday on Lally’s motion to dismiss the case.

Jon Levine, president of Sigal Consulting, a Massachusetts-based firm that is backing Lally’s bid, said Lally was leading the negotiations and that Sigal is not directly involved.

“I know that they’re working on the contract,” said Levine, whose firm specializes in developing medical marijuana operations. “We do not do anything with the negotiations.”

Court documents indicate that Bennett hired Lally in October 2011, agreeing to pay him $25,000 for one year and requiring him not to represent any “actual or potential” competing parties. Bennett and his business partner, Jeffrey Siskind, entered into a similar agreement with Lally in January 2013. That agreement called for Lally to be paid $1,000 a month for at least six months, and for him to receive 10 percent of the net profits of any medical marijuana enterprise. It also required Lally “to refrain from assisting others in a similar enterprise unless and until Siskind and Bennett withdraw from pursuing said licensing …”

But Bennett claims that during a meeting in Florida in February to discuss plans for submitting a bid, Lally asked whether he would be interested in a joint venture with Sigal Consulting, which helped develop the Slater Compassion Center in Providence, Rhode Island, the largest state-licensed medical marijuana dispensary in New England.

Bennett says that after he opted not to enter into the joint venture, Lally beginning working covertly with the New England group.

Court documents show that Lally submitted a zoning certification request to New Castle County officials in April on behalf of First State Compassion Center regarding a medical marijuana facility on property that Sigal expects to close on.

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