Medical marijuana grower gets another extension from county

SUNBURY – Northumberland County has granted another extension to a medical marijuana grower looking to buy land on county’s prison campus. Commissioner Sam Schiccatano tells WKOK he and Commissioner Chairman Rick Shoch approved to give a third extension to Parea BioSciences. The approval was made through Parea’s holding company, MNK 03 Holdings. The closing date was extended to September 30.

 

Parea is looking to purchase 10 acres of county land near the new prison for $1.5 million. The majority commissioners first approved the deal in May 2018. Parea has already paid the county a non-refundable $31,000 to hold the property. Parea also paid an additional $10,000 Wednesday to get an extension from the county.

 

Schiccatano says the county gets $10,000 every time Parea asks for an extension. He says a lot of ‘distractions’ have slowed Parea down with meeting deadlines. Schiccatano says he has no problem giving the company an extension, and no one else interested at buying the property at this time.

 

Those ‘distractions” referred to by Schiccatano, are from Commissioner Kymberley Best, who has been opposed to the deal, but did legally withdraw her objections against the company recently. She provided a five-page statement, saying federal law currently prohibits growing marijuana, and a marijuana farm is not a suitable neighbor to the county prison campus.

 

Best says she also has concerns about the political and personal relationships members of the company have with Shoch. Best has threatened to encourage an investigation by the State Attorney General. You can see Best’s full statement below. Schiccatano says he would welcome the State Attorney General’s investigation, as he as many things to discuss with him as well.

Commissioner Best full statement: 

“I have continually opposed the scheme of the majority commissioners to put a marijuana growing facility on the Northumberland County South Campus for two main reasons : 1. Federal Law currently prohibits growing marijuana, in any form on publicly owned lands.  2.  A Marijuana farm in not a suitable neighbor to our our county prison, a juvenile facility and a drug rehabilitation center.  My concerns, however, do not stop there. Add closed door meetings and opening a public road, for ZERO financial consideration and an exercisable two mill tax increase, through our South campus for the sole reason of enabling a private company to get subdivision approval. Finally, I have concerns about the political and personal relationships that members of this company have with Chairman Shoch.

The majority commissioners originally proposed to lease part of the South Campus to Parea Biosciences.  This would have allowed a private company to grow marijuana on public land.  At the time, guidance from the Department of Justice to United States Attorneys prioritized prosecution of marijuana growth on public lands.    I was deeply concerned that the lease of our public land to pot growers could risk federal prosecution and forfeiture of the entire South Campus where the majority commissioners just built an expensive new prison.

Over one full year ago, in May 2018, the majority and Parea, determined to push ahead, found a way around my concerns.    They entered into an agreement, rapidly assigned to a shell company, Vinyanor, LLC, to buy a part of the South Campus for 1.5 million dollars.  The majority commissioners touted this proposed deal as a much needed shot in the arm for the County’s budget.    An insignificant down payment of $10,000.00 was made, when typically ten percent ( $150k here ) is a customary down payment in a commercial real estate purchase.

Neither the closing nor the 1.5 million has ever come to be.  It seems that Parea and its shell companies did not have and could not get $1.5 million.  This is hardly surprising as federally insured banks won’t lend money to a company engaged in activity that violates federal law.  It should be noted that as part of Parea’s state application for a growers permit, all assets were to be in place, yet the terms of their sales agreement with the County had an out clause for failure to have financing to move forward to closing.

After the deadline for closing came and went, Parea, again playing shell games, came to the commissioners, now doing business as  MNK O3 Holdings, LLC and asked for an extension of time to close.  (1st Amendment March 2019)  MNK assured the County that this time the legalities were worked out and the money would be in place to close.  The majority commissioner voted to approve this scheme.

Here we are again, the deadline for closing came and went (May of this year ) .  Neither Parea, nor MNK 03 Holdings, nor any of its puppet companies could seem to find the money that it and the majority commissioners have promised would come to the County.

Now, far more than a day late and one and a half million dollars short, MNK 03 Holdings, LLC is running short on time to honor their commitment from the state to be up and running. They have come to the majority commissioners with yet another request for extension of time to close.   Looking closely at the proposed extension agreement, it becomes clear that it is not what it purports to be.

First, there were two drafts.  The first proposed that closing would occur at the end of August.  The second draft moved closing to the end of September.  That, coupled with a history of inability to pay, does not inspire confidence that the buyers will actually have the money in hand on closing day.

Second, the buyer, under the terms of the proposal, would get to occupy the premises prior to closing.  They would even be able to do renovations and construction.  In exchange for this, the buyer does not even have to provide any documentation or guarantees that funds are available to close.  If the real intention is to pay $1.5 million, this agreement should, at the very least, demand assurances, like a commitment letter, that financing is in place.  This again would be common practice for a respectable commercial real estate transaction. Not having typical legal practices applied makes this 2nd Amendment suspect and risky to the County.

The majority commissioners will claim that there are strict enforcement measures in the agreement.  They will point to confession of judgment clauses and monetary penalties should the buyers remain in possession beyond closing day without paying the purchase price.

The confession of judgment clauses are laughable window dressing.  They are drafted so poorly, either through the negligence or the deliberate intent of Solicitor Frank Garrigan, that they are all but unenforceable.  The buyer could very easily avoid the confession of judgments face or  simply by assigning its rights to yet another shell company, just as it has so many times before now.  The only purpose those clauses serve is to make this document look to all of you like something other than what it is.  This is a Lease with an option to buy with absolutely NO safe guards or fair market consideration for the County.  Rather than damage clauses for failure to close as promised, this company gets a sweet lease (hold over) deal and can begin operations.

That brings us the the supposed monetary penalties and the real intent of this deal.  The buyer can remain in possession * indefinitely, so long as the majority commissioners allow it, by paying $500 per day.  Do not be fooled into thinking that this is a lot of money.  It comes to about $15,000 per month.  That’s roughly the same amount of money that Guadenzia and DTA pay to lease portions of the South Campus.  Only, for the marijuana company, its an even better deal.

Here, we see the real intent of this deal.  The circumstances indicate that the buyers have no intention of closing and the majority commissioners know this.  Rather they, get what they originally wanted, a de facto lease.  As an added bonus to a private company, because the agreement operates in a legal loophole, the property would not go back on the tax rolls.  The County, Coal Township and the Shamokin Area School District all lose out on real estate tax revenue.  (Note that this 2nd Amendment supersedes any prior language in prior agreements in conflict ie; promise to pay taxes v. Not)

It is very important to note that nothing in the proposed extension prevents the buyers from growing marijuana while in possession of COUNTY owned property.  Given the highly unstable state of federal law on this issue, we will put the entire South Campus at risk if we permit this deal to go through.  Finally, purely as one Commissioner advocating for taxpayers, I feel that we have given publicly owned land to a private company to profit while leaving the taxpayers with nothing and no one to stand up for what they should and could be getting.

This 2nd Amendment is nothing more than a political sham and the people of this County should ask why the majority commissioners are so eager to give these benefits to a private company with which they have political and personal relationships?  Should elected officials not avoid even the appearance of this ?  Why, when there are so many viable sites available in our County, does this company, out of the many that applied, get access to county property to begin their business without purchasing the land as they contractually promised to do?  In a multi-million dollar industry such as medical marijuana, is  a $500 a day lease what you believe is fair ?

I will be personally contacting the Pennsylvania Attorney General and urge an investigation.  I will contact the Disciplinary Board to investigate whether Solicitor Garrigan has violated the Rules of Professional Conduct by advising his clients to enter into an agreement  that advantages aids a private for profit company, over which exposes the County, ( his client) as risk.   When I swore into office as your Commissioner, I took an oath and I will abide by that oath.  I did not choose this seemingly unnecessary controversy but I feel responsible and obligated to express my outrage as a commissioner and taxpayer.”

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