WELLFLEET — A new cannabis dispensary called Terps is expected to open next month at the intersection of Route 6 and Cove Road in the Cove Corner building, right next to the Dunkin’ doughnut shop in the space formerly occupied by an antiques dealer.
The shop will be opening under the terms of a host community agreement (HCA) negotiated with the Wellfleet Select Board in June 2018 by a company called Nature’s Alternative, which still nominally owns the business. That agreement states that any “interest or obligation” outlined in the HCA cannot change hands without the prior consent of the select board.
The ownership of Nature’s Alternative has, in fact, changed since the HCA was granted. In 2018, the company was owned by the Medeiros Family Trust, Patrick Casey, and Nicholas Salvador. Aspen Blue LLC, a Rhode Island-based marijuana company, now owns 99.9 percent of the company. The sale took place because of a change in location — from the former South Wellfleet General Store to Cove Corner — that the original shareholders did not want to be party to.
The change in ownership appears to fall in a gray area of the law regulating marijuana businesses. Although the business entity in this case, Nature’s Alternative, has remained the same, the people behind that entity have changed. Attorneys consulted by the Independent differed in their interpretation of whether an “interest or obligation” in the HCA had actually changed hands.
“When you negotiate a contract with someone, you negotiate terms that are specific to the people who are negotiating them,” said Michael Fee, a lawyer who lives in Truro and has represented marijuana entrepreneurs. “It is the people, and not the business name, that are party to that contract.
“It’s pretty clear that the marijuana business should have disclosed that it was changing hands,” Fee continued. “In accordance with the HCA, it should have asked the Wellfleet Select Board’s agreement.”
Benjamin Zehnder, the Orleans attorney who represents Nature’s Alternative, said that the company was forthright with the select board. “The underlying ownership of Nature’s Alternative, like many marijuana companies, has changed over time,” he said. “Certain selectmen expressed concerns that they wanted to know who the owners were, and we provided them that information.”
Nature’s Alternative informed the select board only after the ownership had already changed, however. The HCA calls for the company to obtain the “prior written consent” of the board before changing hands.
Michael DeVasto, chair of the Wellfleet Select Board, said he agreed with Zehnder. “I’m not a lawyer,” he said, “but we were told at some point that the contract is with the LLC and that corporate restructuring or ownership is not up to us.”
Recreational marijuana is illegal in Rhode Island, where Aspen Blue, the current owner of Nature’s Alternative, is located. Although one of the members of Aspen Blue LLC separately owns a medical cultivation center in Rhode Island, the company’s business operations are all taking place in Massachusetts. The company says it expects to open stores in Mashpee and Attleboro, and to cultivate its own cannabis in those locations.
“No member of Aspen Blue has a residence on the Outer Cape,” said Matthew Wilkes, the chief business officer for the Terps shop in Wellfleet.
“Terps is short for terpenes,” said Wilkes. Terpenes are the aromatic oils in cannabis that give different strains their specific flavors, like citrus, mint, berry, lavender, and orange peel. It is also believed that terpenes cause different effects in the various cannabis strains. For example, terpenes associated with lavender are believed to lower anxiety, whereas terpenes associated with rosemary are believed to be stimulating.
Wilkes said that construction of the shop at Cove Corner will be completed this month, at which point the Mass. Cannabis Control Commission will come in for a final inspection. “We have a high level of confidence we’ll be open in May,” he said.
Terps is also in the process of conducting first- and second-round interviews for jobs in the shop. “For the most part, we’re hiring locals,” said Wilkes.
The Nature’s Alternative Wellfleet HCA requires that 3 percent of the company’s revenue be paid as a community impact fee for five years. (HCAs are part of the documentation that prospective marijuana businesses need to submit to the Cannabis Control Commission in order to obtain a license.) The agreement also calls for Nature’s Alternative to prioritize local vendors in the construction, maintenance, and operation of the facility, as well as to prioritize hiring local residents to work in the shop.
Attorney Fee did not think the company’s lack of transparency in its ownership change would necessarily count against it.
“In this instance, where this business is trying to establish itself in good stead with the community in the long haul, being opaque is not the way to proceed,” he said. “Transparency would have been the way to do it. It’s probably a misstep not to have disclosed, but that’s not to say that they can’t redeem themselves.”