Never has it been more clear than during the current COVID-19 pandemic that marijuana has arrived at the forefront of mainstream American society.
In state after state, governors and public health officials are deeming cannabis businesses “essential” operations that can stay open amid coronavirus-related forced closures and stay-at-home mandates. People might not be able to go bowling or see a movie in theaters, but they can still stock up on marijuana.
It wasn’t long ago that anyone growing and selling marijuana faced the risk of being arrested, prosecuted and jailed. But now, in the era of expanding legalization, cannabis providers in many states are held up as vital members of the community who are providing a valuable service on par with picking up prescription drugs at a pharmacy or filling up your car at a gas station.
Advocacy groups have pushed governors and state officials to ensure that medical marijuana patients in particular can maintain access to the cannabis they need. But because many people who use marijuana for therapeutic purposes don’t necessarily jump through the hoops needed in order to become officially certified as patients, recreational businesses are also seen as crucial access points that need to stay open.
“Most of the American public and an increasing number of government leaders stopped buying into the demonization of cannabis years ago,” Karen O’Keefe, state policies director for the Marijuana Policy Project, said. “Now, not only have two-thirds of states recognized that medical cannabis should be legal—with 11 legalizing adult-use—many are recognizing that safe access to cannabis is essential.”
NORML Executive Director Erik Altieri said it is “encouraging to see our nation’s public policy in practice is finally catching up to where the vast majority of Americans have been for years.”
“The recognition by our government officials that cannabis is indeed not just here to stay, but an essential part of life for millions of Americans—particularly in the patient community—is a welcome move in the right direction,” he said. “It is also a move that could not have come at a better moment for those who still require access to maintain quality of life during these trying and troubled times.”
In some states, officials have enacted new temporary policies such as expanded delivery services or curbside pickup that make it easier for consumers to get their hands on marijuana while respecting social distancing measures. Others are allowing doctors to issue medical cannabis recommendations via telemedicine instead of requiring that they conduct in-person examinations.
Here’s a look at how states that are taking steps to maintain legal marijuana access during the COVID-19 outbreak:
Regulators deemed cannabis retail outlets to be essential businesses that can stay open amid a broader stay-at-home order. Localities, including Los Angeles County and San Francisco, have also said that certain cannabis businesses are essential providers that can continue operations.
Gov. Jared Polis (D) issued an executive order allowing marijuana businesses to provide curbside pickup services and letting doctors issue medical cannabis recommendations via telemedicine without in-person examinations. A subsequent order from the governor says that marijuana businesses are critical retail operations, but only for the sale of medical cannabis or curbside delivery. Regulators also issued emergency rules temporarily loosening requirements for fingerprinting of marijuana business owners, modification of premises and transfer of cannabis product samples for testing.
Regulators deemed medical cannabis businesses to be essential and thus exempt from a general mandate to suspend in-person operations.
The state surgeon general issued an order allowing physicians to issue medical cannabis recertifications to existing patients—but not new ones—via telemedicine.
Gov. J.B. Pritzker’s (D) stay-at-home order declares marijuana dispensaries and cultivation facilities to be essential businesses that can stay open. Dispensaries are also being allowed to do curbside sales of medical cannabis—but not recreational marijuana—products.
Medical cannabis growers, processors and dispensaries. are exempt from an order Gov. Larry Hogan (R) issued to close non-essential businesses. Regulators are also allowing dispensaries to deliver medical marijuana to patients in parking lots.
Gov. Charlie Baker (R) issued a stay-at-home order deeming medical cannabis businesses—but not recreational marijuana ones—to be essential and exempt from a general shutdown. Regulators also encouraged medical cannabis delivery services to promote and expand their offerings, and are allowing doctors to remotely recommend marijuana to patients through the use of telehealth waivers.
Marijuana businesses will be able to continue curbside sales and home deliveries but cannot perform in-person transactions in stores under a stay-at-home order issued by Gov. Gretchen Whitmer (D). Regulators previously sent a bulletin allowing curbside pickup and encouraging delivery services, and another bulletin extending the period of prequalification status for marijuana business license applicants that may experience building delays.
Regulators are allowing medical cannabis patients to do curbside pickup at dispensaries and are letting doctors issue recommendations via telemedicine.
Gov. Phil Murphy (D) exempted medical cannabis dispensaries from a stay-at-home order. Regulators moved to allow patients pick up medical marijuana at dispensaries’ curbsides and to reduce caregiver registration fees.
Regulators ruled that medical cannabis businesses are essential and can stay open. They also allowed curbside pickup services, extended expiring patient and caregiver cards for 90 days and suspended background checks for new industry employees.
The state Department of Health deemed that medical cannabis providers are essential businesses not subject to a general closure order. Those that are authorized to carry out home delivery are temporarily allowed to expand those services without written approval.
Gov. Mike DeWine’s (R) stay-at-home order exempts medical cannabis businesses from a broader business shutdown. The State Medical Board also moved to allow doctors to issue medical cannabis recommendations via telemedicine without meeting patients in person. Additionally, regulators are letting patients phone in orders ahead of their arrival at dispensaries to reduce time spent inside.
Regulators approved rules to allow curbside delivery of marijuana at licensed retail locations and to increase medical cannabis sales limits. They also moved to make it easier to obtain cannabis worker permits.
Regulators deemed medical cannabis providers as “life-sustaining” operations that are exempt from Gov. Tom Wolf’s (D) order to close businesses in general. They also took other steps, including allowing patients to have marijuana brought to their cars outside of dispensaries and letting caregivers make deliveries to an unlimited number of patients.
Gov. Jay Inslee’s (D) stay-at-home order exempts marijuana businesses as essential, allowing them to stay open. And regulators are allowing marijuana dispensaries to carry out curbside service for medical cannabis patients.
Despite the significant number of states deeming cannabis businesses to be essential and issuing rulings temporarily expanding their services, that is not the case in every legal marijuana market.
And despite the accommodations, many regulators are also directing businesses to implement social distancing measures such as limits on the number of customers who can enter a retail operation at a given time or guidance on physical space between those who are standing in line—changes that can slow down operations and reduce revenue.
Still, many industry leaders seems to understand the public health necessity of such moves, and cannabis law firm Vicente Sederberg LLP, for example, issued a set of suggested voluntary guidelines for marijuana businesses to consider.
For now, industry trackers have indicated that sales are strong as consumers stock up in preparation to hunker down at home for several weeks.
Nonetheless, the industry has called on Congress to give it equal access to disaster relief funds—a request necessitated by the fact that ongoing federal prohibition means that their operations are still illegal and not generally eligible for such aid.
Legalization opponents, meanwhile, are not pleased with moves by a growing number of states to keep cannabis stores in business despite the steps intended to foster social distancing at such locations.
“We have seen numerous reports of marijuana stores with long lines of people stocking up on the drug and have additionally seen states move to keep these stores open,” Kevin Sabet, president of prohibitionist organization Smart Approaches to Marijuana, said. “Quite frankly, this presents a unique harm to public health and safety. Across the country, states are doing everything in their power to limit the gathering of people in one location. Long lines outside of establishments engaged in the distribution of marijuana should be a tremendous cause for concern.”
When it comes to consumers, while advocates have cautioned them to consider refraining from smoking or vaping for the time being due to the risk of agitating lungs amid the respiratory effects of the novel coronavirus, they have also pointed out that there are other ways to use cannabis, such as edibles.
For now, the coronavirus pandemic has further highlighted the disconnect between federal and state policies: Under one set of laws cannabis is a banned drug, and under the other it’s a medicine deemed just as essential as any other.
(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)
Photo courtesy of Carlos Gracia.
Texas Lawsuit Challenges State’s New Ban On Smokable Hemp
Four Texas companies are suing to overturn the state’s new ban on the manufacture and sale of smokable hemp products, which they warn will shut Texas companies out of a multibillion-dollar industry and lead to inaccurately labeled products on store shelves.
In a lawsuit filed in Travis County District Court on Wednesday, the companies are asking a judge to declare the ban unconstitutional and allow hemp products intended for smoking or vaping to be produced and sold legally across the state.
“At a time when the Texas economy is reeling from the fiscal impact of COVID-19, it is unfortunate that the State chose to foreclose such a large economic opportunity for our state and instead chose to force long-standing Texas businesses and jobs across the border to neighboring states, such as Oklahoma,” said attorney Chelsie Spencer, counsel for lead plaintiff Crown Distributing LLC.
“Crown Distributing, which manufactures the popular Wild Hemp brand of smokable products, stands to lose $59.6 million in revenue over the next five years if the bans are upheld,” Spencer told Marijuana Moment in an email. “The state of Texas stands to lose $2.9 million in sales tax revenue alone.”
Texas legalized hemp in 2019, in large part to capture a piece of an industry that is booming following the federal legalization of the crop through the 2018 Farm Bill. Hemp, a category of cannabis that contains less than 0.3 percent THC, has a variety of uses: Its seeds are a nutritious food source, its fibrous stalks can be made into textiles or building materials and its flowers can produce a variety of cannabinoids, most notably cannabidiol (CBD).
Texas’s hemp law as passed by the legislature specifically prohibited the manufacture of hemp products intended for smoking or vaping, though it left open the door for selling products made out of state. But a year later, regulators at the Texas Department of State Health Services (DSHS) issued rules extending that ban to forbid the retail sale of any smokable hemp products. That restriction took effect on Sunday.
Plaintiffs in the lawsuit argue that both those provisions should be overturned. The state legislature’s ban on processing and manufacturing smokable products violated the state constitution’s protection of economic freedom, they say, while DSHS lacked the authority to extend lawmakers’ ban to include retail sales.
“DSHS characterizes banning distribution and retail as ‘a logical extension’ of banning manufacturing,” the lawsuit says. “But even if this were true (it is not), agencies have no authority to enact rules that they deem to be a ‘logical extension’ of law.”
Cannabis advocates in the state agree, calling the change a regulatory overreach.
“Hemp regulators are over-stepping their authority and encroaching on the economic liberty of Texas business owners,” Heather Fazio, director of Texans for Responsible Marijuana Policy, told Marijuana Moment. “It’s absurd to forbid the in-state sale of products that are completely legal in Texas and across the country. Consumers can simply make their purchases online and have it shipped, legally. Cutting local entrepreneurs out of this thriving market is bad for business and bad for Texas.”
Joining in the lawsuit are America Juice Co. LLC, a Crown affiliate that also manufacturers smokable products; Custom Botanical Dispensary LLC, an Austin-based retailer that sells smokable hemp products; and 1937 Apothecary, also based in Austin, which makes and sells consumable hemp products including tea, smokables and gummies.
“If allowed to move forward, these bans on smokable hemp products will shutter businesses across the state, resulting in a loss of jobs and tax revenue,” the companies said in their complaint. “They impede the economic liberty of Texas businesses, pose an existential threat to Texas hemp manufacturers, farmers, and retailers, and are sure to stifle growth of a budding Texas industry.”
As for the ban on producing and manufacturing smokable hemp products, the companies say it violates the state constitution’s protections against arbitrary economic restrictions.
“There is no plausible law enforcement benefit from banning the Texas manufacture and processing of smokable hemp products,” the lawsuit argues. “Imposing an arbitrary constraint here is particularly perverse because the law does not ban the use or consumption of smokable hemp products. As such, Texas consumers will simply buy smokable products made out-of-state.”
“Stated differently,” it continues, “if Texas had banned the processing and manufacture of cheese in Texas, Texans wouldn’t stop eating cheese.”
Banning in-state sales are also problematic from a practical standpoint, the lawsuit argues. Because smokable hemp flower is indistinguishable from hemp flower intended to be used for other purposes, the companies argue, marketers will be encouraged to mislabel products in efforts to skirt the ban.
“The retail ban—especially in view of DSHS’s public comments—has no more logic to it than the ban on processing and manufacturing smokables,” the lawsuit says. “Texans can still purchase and use smokable hemp products manufactured out-of-state. Texans can also purchase hemp that is not labeled or marketed ‘for smoking’—for example, hemp marketed as ‘tea’—and they can use that hemp to make their own smokables or with the vaporizing devices shown above. If anything, the Rule and DSHS commentary encourages Texas farmers and retailers to mislabel hemp flower so that consumers will still be able to purchase hemp flower grown in Texas.”
While Texas’s legalization of hemp last year was met with considerable fanfare, its rollout has been bumpy. In addition to industry frustration over bans on smokables, legalization has also sparked unintentional disruptions in marijuana enforcement across the state.
Because hemp—whether as flower or vape liquid—is virtually indistinguishable from marijuana without testing, law enforcement agencies across the state say they’re now unable to bring sound criminal cases without analyzing seized cannabis for THC. Facing backlogs and high costs of private labs, prosecutors have dropped hundreds of low-level cases. The situation has led to a patchwork of marijuana enforcement policies across the state and uncertainty for consumers, who still risk arrest for hemp products that are perfectly legal.
In February, state officials announced a crucial caveat to a long-awaited test to help determine whether samples were hemp or marijuana: State labs wouldn’t perform testing in misdemeanor cases. The Texas Department of Public Safety “will not have the capacity to accept those,” a letter from Director Steve McCraw said.
In the meantime, Texas hemp companies that once saw the state as a business-friendly environment are considering whether to set up shop elsewhere. The new lawsuit says that Crown is already weighing a move to Oklahoma, citing concerns of more than $50 million in lost revenue during the next five years and as many as 60 lost jobs.
It’s not just about profits, the companies insist. “To the extent the Legislative Ban purports to address law enforcement concerns or health related concerns,” they argue, “it does nothing.”
“The Legislative Ban cannot rationally be understood to reduce the prevalence of smokable hemp in Texas. On the contrary, it works against promoting safe and effective products for consumers,” the lawsuit says. “Rather than keeping the manufacture and processing of smokable hemp products in-state, the products will be manufactured and processed out-of-state and shipped into Texas outside its full regulatory reach for consumer safety. The state of Texas will have little to no regulatory oversight over these products.”
Read the full lawsuit challenging Texas’s ban on smokable hemp below:
Cannabis Investors Involved In Shady Coronavirus Mask Deals, Industry Insider Claims
Contracts, emails and spreadsheets that Juanita and Dawn Ramos shared with ProPublica detail how domestic and foreign investors, many with marijuana industry ties, seized upon the nation’s public health disaster.
By J. David McSwane, ProPublica
In late April, as an escalating pandemic shut down most of the country and the federal government shelled out billions of dollars to untested contractors for protective masks, Juanita Ramos got a call from a friend in the marijuana business.
Her friend and some other ganjapreneurs were buzzing over a potentially huge payday. They had in their possession a $34.5 million purchase order from the U.S. Department of Veterans Affairs. A contractor hired by the VA to provide 6 million N95 respirators to the nation’s largest hospital system had searched for weeks but found none of the potentially life-saving masks. So he had reached out far and wide for help, offering to cut in anyone who could help him finance, purchase and deliver masks by his deadline.
His PO, as it’s commonly called, had made its way to players in the cannabis industry, where deals are made quickly and often in cash. The friend asked Ramos: Did she want in on the action?
Ramos had modest connections in the medical supply chain through her work in legal marijuana and thought perhaps she could help terrified health care workers get urgently needed protective gear while also pocketing a little extra cash. Ramos, 66, enlisted her daughter, Dawn, 50, and both hit the phones, calling moneyed folks they knew in the marijuana business.
Marijuana retailers, operating in the no man’s land between state legalization and conflicting federal law, often get financing outside of traditional banks from private-equity firms and wealthy individuals. A famous example from The Before Time: Last fall, two indicted Soviet-born businessmen working for President Donald Trump’s personal attorney, Rudy Giuliani, tried to finance a pot business with cash from a Russian investor.
In the marijuana space, Ramos thought, there are people with deep pockets who can move money around fast, avoiding the hang-ups that might slow such an urgent purchase.
“It’s quick money,” Ramos told ProPublica. “And the broker game in the marijuana and industrial hemp industry — it’s exactly the same.”
For working the phones, Ramos and her daughter said they only made about $200, but their experience and the records they kept tell a cautionary tale for hospitals, agencies and schools that are still scrounging for masks ahead of a potential second wave of coronavirus.
Contracts, emails and spreadsheets that Juanita and Dawn Ramos shared with ProPublica detail how domestic and foreign investors, many with marijuana industry ties, have seized upon the nation’s public health disaster.
They show that some brokers attempted to use forged documents to gain access to masks coming off production lines of 3M, the manufacturer that makes the gold-standard masks capable of filtering 95% of particles that could transmit the novel coronavirus.
In one exchange, the owner of a Swiss nutritional supplement company detailed his plan to buy millions of 3M masks at $3.71 apiece and resell them to the Federal Emergency Management Agency, whose purchase order priced masks at $7 each.
The emails include bogus U.S. Food and Drug Administration certifications; videos and photos of real or imaginary mask stockpiles; bank statements claiming to reflect billions of dollars that could be wired instantly; and, of course, nondisclosure agreements to keep participants quiet.
These coronavirus-era artifacts were collected by a self-described medicine woman who lives with her daughter in Austin, Texas. It took only a few months for her to grow disgusted with what she saw in the rogue personal protective equipment market and decide to tell her story.
The Mystery Woman
I had first heard of Juanita Ramos back in April as I reported the other side of the VA deal.
I had accompanied VA contractor Robert Stewart Jr. on a private plane to Chicago, where he promised I could watch him deliver medical-grade masks to a VA warehouse. But the reporting trip yielded something different: a close-up look at the frenzy the federal government created when it agreed to pay obscene prices for masks to just about anyone claiming they could deliver. The only procurement I witnessed that day was of McDonald’s fast food.
Several times as his deal fell apart, Stewart cryptically referred to Ramos, whom he’d met on a phone call with various mask brokers. He believed Ramos had a connection to Vice President Mike Pence, the head of the federal coronavirus task force, and was greasing the wheels to help Stewart get a contract extension.
He didn’t have a number for this mythical Ramos, and I had turned up nothing about her on deadline. Ramos remained a mystery after the story ran, but a non-journalist friend of mine texted what I thought was a random joke about a nonexistent person: “Juanita Ramos is either a stripper in Atlanta or a Native American medicine woman.”
Ramos had a common name, and I was pre-filtering based on what little I knew, scouring LinkedIn and other databases for someone with Washington connections. But my friend, Crizno (don’t ask), had gone down a random late-night Google hole and found a photo of Ramos holding a dead eagle, bestowed upon her by a Cherokee Nation chief when she completed spiritual medicine training.
Weeks later, I finally contacted the correct Ramos and shared my story of Stewart’s unsuccessful VA deal. I told her he believed she was a conduit to the vice president.
“I’m reading this and I’m like holy hell — what?” she said as she saw the article for the first time. “First off, I don’t even like Mike Pence.”
Ramos insisted she has no White House connections.
“I help write legislation for medical marijuana,” she explained, referring to her work with the Utah Association for Responsible Cannabis Legislation and Sacred Roots Healing, an educational group that helped skeptics accept that non-THC cannabis products don’t make children with autism, like, super high. She’d also worked for a major CBD company in Colorado, the first state to legalize recreational pot.
“I mean, I’m down for the farmer. And believe me, Mike Pence ain’t gonna do shit for the marijuana industry or the farmer.”
“I don’t know how I became the mystery woman,” she quipped, “But this was a great ha-ha.”
It was true, as Stewart said, that she had joined a call with him and Troy King, a former attorney general of Alabama who had apparently become a mask broker. In the final hours before the VA axed Stewart’s contract, King had been helping him track down potential mask sellers and financiers.
“I said, lookit, I will do what I can to contact people that may have access to masks, but I don’t know if it can happen,” she explained, but that was the extent of her role. In retrospect, she’s not sure why she was even on the call. She said she had no connections, no masks, no funding. She complained that after that phone call, she was inundated with offers from mask brokers, which sometimes included client needs lists and “proof of life” videos of secret stockpiles of masks.
“I’m getting emails from these guys saying, lookit, I have 10 million masks or I have, you know, gloves, or we have what was the other thing? Gowns. Let us know if you need any. And I’m like, I don’t want anything to do with these guys.”
I asked her to send me examples of the emails she had collected. She forwarded an April 25 purchase order that suggests King had planned to flip the masks, buying them from a foreign seller and reselling them to Stewart, who would then sell them to the VA. In mask trade parlance it was a “broker chain,” wherein inventory switches ownership multiple times until the end buyer, in this case the VA, pays a price high enough for everyone to get a cut. Once the buyer pays up, money drips down.
That purchase order, included in an email thread with brokers I’ve independently found to be involved in the deal, suggested King, through his limited liability company, intended to buy the VA’s would-be masks from JV Tock Trading Corp., a Canadian distributor.
Chris Kruger, a managing partner at JV Tock, said the company got a call from King and other brokers just hours before the VA deal was about to implode.
The company execs were asked “if we could try and help them save their purchase order that they’re about to lose.”
Kruger said JV Tock got a call the next day saying that “the attorney general’s gonna pull some strings to help them out.”
The company decided not to work with King and was unaware of the purchase order, Kruger said. His company is on the up and up, he said, and hasn’t made much money in its efforts to get more masks to Canadian and U.S. buyers, which have led to countless dead ends.
“The entire industry is one of the most frustrating headaches I have ever dealt with,” he said. “Greed and dishonesty run rampant.”
Through a spokeswoman, King denied any involvement with JV Tock.
“The document you attached to your email is not one of my company’s purchase orders,” his statement said.
Three days later, a different purchase order showed another broker in Arizona offering to buy millions of the same type of 3M masks for $3 apiece from — wait for it — another broker. At the time, 3M’s list price was about $1.27. The VA, however, had agreed to pay about $5.75 apiece, a 350% percent markup, which left plenty of profit for a successful broker chain.
I wanted to see more. So I flew down to Texas at a critical moment in the state’s struggle with COVID-19. Hospitals were near capacity because of an explosion of new infections following Gov. Greg Abbott’s mixed signaling on the importance and enforcement of wearing masks.
Ramos lives in Circle C Ranch, a master-planned maze of cedar trees and stone facades southwest of downtown Austin, where residents enjoy a golf course and an Olympic-size pool that is, inexplicably, heated.
She’s definitely not the shrewd, White House-connected capitalist I had been led to expect. She refers to her higher being as “creator” and places colorful stones at the bottom of all sinks so that when you wash your hands, bad energy washes off and returns to the earth.
From her brown leather sectional, Ramos outlined her dream of helping people while making a modest profit, and how it was scuttled by bogus documents, misinformation and greed.
“I told my daughter, ‘Hey, if we were to look at doing this, we would do like maybe a penny or 2 cents,’” she said, referring to the potential profit margin on each mask.
The plan fell apart when friends in the marijuana industry connected her to Drew O’Malley of Boston Capital Consultants, Ramos said. Emails and records show O’Malley, whose background is in Connecticut real estate, was trying to broker multiple high-dollar deals involving foreign investors and private-equity groups, including the VA deal with King and others.
Ramos said her alarming conversations with Boston Capital Consultants eventually led her to sever ties.
“This Drew guy was telling me that they put, like, $1.25 on top of a mask,” Ramos alleged. “And I’m like: ‘What are you talking about? People are dying, and you guys are ripping people off for a buck twenty five?’ It’s like broker-broker-broker-broker for, like, 15 people in the middle, right? And then that dollar mask turns into eight bucks, or seven bucks or whatever.”
“I don’t want to get caught up in the ripping people off,” she added. “That’s blood money to me.”
Emails Ramos shared show O’Malley passed along a few letters of intent, commonly referred to as LOIs, in which prospective buyers outline how much they’ll pay for masks that are either sitting in a warehouse or on a manufacturer’s production line.
On April 29, Ramos received an LOI showing that a Zurich investor named Stephan Schmid, who runs a dietary supplement company, hoped to buy 100 million N95 respirators a week from 3M at $3.71 each. The end buyers for the deal included FEMA and hospitals.
This happened at the same time King and Stewart were trying to sell the same type of masks to FEMA at $7 apiece. Like the VA deal, the FEMA arrangement was ultimately nixed.
Schmid didn’t respond to questions.
O’Malley, who didn’t return calls and emails, is no longer employed by Boston Capital Consultants, according to his former boss, Aaron Marcy Sells.
Sells founded Boston Capital Consultants in 2018 after a career that involved marketing work for New England Patriots owner Robert Kraft, real estate investing through firms branded with his initials, launching bars and liquor brands and, more recently, trading through AMSCAN Inc., a holding company for cannabis ventures.
“They’re all big marijuana guys,” Ramos said.
Sells claims to have played no part in his company’s well-documented negotiations in the PPE trade. “If you asked me under oath what happened, I couldn’t tell you,” Sells told ProPublica.
“I don’t think Drew did anything wrong,” he added. “I think he got pulled in with some bad people. … The minute I smelled it, I pulled everyone away from it, and Drew left the company.”
Sells insisted that he shouldn’t be named in this story. “I am not involved in this Ramos and Troy King nightmare,” he said. And while I asked him multiple times if Boston Capital Consultants was as involved in the PPE game as emails sent out by his employees suggested, he provided only opaque dismissals.
“We do a lot of different business,” he said.
Ramos’ emails show the company was soliciting masks and gowns consistently through June, including in email blasts labeled “Deal of the Day.” For instance on June 5, Boston Capital Consultants sent out an email that’s an alphabet soup of PPE trade terms.
“DEAL OF THE DAY: 5.87 million KN95 Masks (FDA) – .95 cents per mask on the ground in L.A. PO/POF gets POL …”
KN95s are the Chinese version of the N95. The PO is a purchase order from a hospital or government agency. A POF is a proof of funds, such as a bank statement or letter of assurance from a bank. POL is proof of life — video showing the stock.
“THESE WILL MOVE FAST SO PLEASE DO SO AS WELL,” the email ends.
On July 14, Massachusetts business filings show Sells founded his latest venture: Safe and Clean Protection LLC. Its stated business purpose is to “manufacture and sell personal protective equipment (PPE).”
Three Paths to Masks
Resellers pursue three avenues to attain masks, according to interviews with brokers across the country and the dozens of emails Ramos shared.
The first is the all-cash spot buy, done fast to keep the feds from confiscating inventory.
A seller broadcasts that they have a mask lot on the ground, stashed in a warehouse or at a customs inspection hub. A potential buyer bids for the product and provides either a purchase order or bank records to show there’s money backing the deal. In return, the seller provides a proof of life. The money usually goes into an escrow account, similar to a real estate deal — released to the seller upon mask inspection.
Dawn Ramos said she saw brokers reselling inventory over and over in these spot buys just to keep it moving — technically not hoarding — so the federal government wouldn’t snatch it up. One broker “would get it and if he can’t sell it, and if it’s not gone by a certain time, they have to move it somewhere else, because otherwise it would be seized,” she said. Under the Defense Production Act, FEMA has stepped in to compel owners of mask lots to sell to the federal government at market prices if the broker is hoarding or price-gouging.
In late April, as its hospitals were inundated with COVID-19 cases, the VA’s top doctor expressed frustration that FEMA had swooped in and taken shipments the VA had ordered from vendors. FEMA has denied seizing supplies from other government branches.
The second type of deal is a direct buy from a manufacturer such as 3M. To pull this off, a purchase order must come directly from a hospital or government agency. This approach is less attractive to brokers because it requires more paperwork, oversight and the masks sell for near the list price.
The third type of deal is to purchase a production line, as the Swiss investor proposed. As one broker recently told me, “It’s basically futures trading.”
This is where the rampant fabrication comes into play. Getting a connection to a distributor or manufacturer is all but impossible right now, brokers say, and to even be heard you have to prove you have backing. Several companies, including JV Tock, have reported their brands being used in phony letters to help sell an illegitimate deal.
One exchange that dropped into the Ramoses’ emails illustrates the magical thinking pervading the mask trade.
In early May, a potentially existent English investor, using an obscure international charity, was working with a London-based consulting firm to establish that he should be a 3M distributor. His proposal included a letter purportedly from HSBC Bank reflecting more than $2 billion in available funds. The package also came with a letter of support from a California-based energy company that, he claimed, vouched for his bona fides.
Emails show this proposal floating between Boston Capital Consultants, including its owner, and Joseph Ingarra, who identifies himself as the “head rainmaker” at Apex Growth Solutions LLC, based in Palm Beach Gardens, Florida. Ingarra’s company appears to do some sort of marketing and claims to leverage the “world’s leading science of how people make choices.”
“I’m aware of a huge fckn lot 1-2B range in the UK,” Ingarra wrote to O’Malley and Sells in early May, referring to a large mask transaction.
“Get this shipped in one big shot and get paid quickly,” he said in bold letters.
But the proposed deal and documents raise questions. First, it’s coming from Florida. Second, the investor’s Delaware business address connects to a residential home valued at less than $200,000. Third, even in late April and early May, brokers say it was very unlikely such a large stock of masks, which weren’t being made in great abundance beyond pre-pandemic demand, ever existed.
Then there’s the letter vouching for the buyer on letterhead from UDECM, the California firm that designs and builds solar energy rigs primarily overseas. I sent the letter to the firm’s owner, Albert Rau, who called immediately to tell me he believes it was forged like dozens of others that he’s batted away in recent months.
“The letter is 100% fake,” he said. “We don’t know the people listed.”
Why pick his firm? Rau said he didn’t know, but early on in the pandemic, his firm was leveraging its international supply chain connections to help some nonprofits find masks. After UDECM dipped its toes into the sea of brokers, “it went viral,” he said.
“Everybody’s got documents out there being forged now,” he said.
Ingarra said he had no idea the document he shared wasn’t real.
“I have zero idea of who drafted that letter,” he said in an email. “I hope they catch the scumbag.”
So what exactly did we learn here?
Ramos ponders the question as she scratches the ears of Sherlock and Inspector Clouseau, two old fluffy-white toy dogs whose longevity she credits to daily doses of CBD oil.
History is about to repeat itself, she said, and she hopes hospitals, schools and governments don’t waste time with middlemen and profiteers. If they must, she said they should run background checks and do more vetting.
“I want to see your business license,” Ramos said. “I want to know who your attorney is. I want to see that you have the right to represent a hospital, and show me where it’s going.”
While life has slowed for Ramos and her daughter, brokers and importers say the global mask shortage remains. Many brokers told me they’ve moved on from masks — “too much trouble” — to focus on other PPE like gloves, which are becoming harder to source and thus more expensive.
But masks remain the best safeguard for workers and hospitals praying to block a respiratory killer, and the U.S. is still largely reliant on middlemen importers and brokers who are jacking up prices.
Two hours away, in Houston, the country’s fourth-largest city, several hospitals have reached the capacity of their intensive care units to treat the sickest patients. Statewide, the number of daily infections has jumped to about 10 times the April figure.
Nationwide, the COVID-19 death toll has surpassed 150,000 people. With the pandemic nowhere near under control, schools are reopening without plans to equip teachers and staff with life-saving masks. It’s the perfect storm all over again — low supply, intense demand, money to be made.
“It’s coming,” Ramos said. “It’s going to be repeated.”
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Illinois Shatters Marijuana Sales Record With Nearly 1.3 Million Products Sold In July
Illinois saw another record-breaking month of recreational marijuana sales in July, the state’s Department of Financial and Professional Regulation announced on Monday.
Despite the coronavirus pandemic, Illinois is reporting nearly $61 million in adult-use cannabis sales—smashing the previous record set in June of nearly $47 million. For the first time, more than one million marijuana items—1,270,063 to be precise—were purchased in a monthly reporting period.
Illinois residents accounted for $44,749,787 in cannabis sales, while out-of-state visitors purchased $16,207,193 worth of marijuana.
The new adult-use sales figures don’t include data about purchases made through the state’s medical cannabis program.
State officials have emphasized that while the strong sales trend is positive economic news, they’re primarily interested in using tax revenue to reinvest in communities most impacted by the drug war. Illinois brought in $52 million in cannabis tax revenue in the first six months since retail sales started in January, the state announced last month, 25 percent of which will go toward a social equity program.
In May, the state also announced that it was making available $31.5 million in restorative justice grants funded by marijuana tax revenue.
The out-of-state sales data seems to support Gov. J.B. Pritzker’s (D) prediction during his State of the State address in January that cannabis tourism would bolster the state’s coffers.
Prior to implementation, the pardoned more than 11,000 people with prior marijuana convictions.
Over in Oregon, officials have been witnessing a similar sales trend amid the global health crisis. Data released in May showed sales of adult-use cannabis products were up 60 percent.