15 Year-Old Federal Grant Revoked Because Maryland Town Rented Space to a Cannabis Grower

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The town of Hancock, MD has agreed to pay back a $600,000 federal loan they received to rehab a building because they began renting that building out to a cannabis company in 2015, nearly a decade after the loan was given to them. 

In 2015, Harvest Health & Recreation Inc., an Arizona-based cannabis company with locations all around the country entered into a partnership with Hancock who owned a factory building which was known Fleetwood Travel Trailer plant for nearly 40 years. Harvest approached the town and said it would renovate the plant building, spending $15 million on it with plants to employ 120 people through growing and processing. 

Harvest initially applied for both a growing and processing license but only received a growing license. In 2019, Harvest was also awarded a processing license and was the only business awarded a processing license by the Maryland Medical Cannabis Commission that year. At that point, according to The Morgan Messenger, Harvest employed 88 people and produced around 800 pounds of flower each month. A dispensary where Harvest products are sold is now located in Rockville, Maryland.

The arrival of Harvest to the former Fleetwood Travel Trailer plant was embraced by the town of Hancock, which has a population of around 1500 people and since 2005, had lost 1,000 jobs, including 289 when the Fleetwood Travel Trailer plant, which had been there for 36 years closed in 2005. When the Fleetwood Travel Trailer plant closed, Hancock acquired the property with help from Stanley Fulton, a businessman who donated money for the purchase. The town then received a $600,000 federal grant to rehab the former Fleetwood Travel Trailer plant through a Community Development Block Grant from the U.S. Department of Housing and Urban Development, which was then administered by the Maryland Department of Housing and Community Development. 

Once the space was rehabbed, it was rented by Evolve Composites, a manufacturer making cellular concrete and plastics and employing around 60 people opened up in the space in 2012. Evolve signed a lease for the building for seven years. But Evolve Composites closed the factory and soon after, Harvest approached Hancock about the use of the building.

In September 2015, Hancock received a letter from the federal government that said that if they were to rent the building—rehabbed using federal funds nearly a decade earlier—to Harvest, they would have to pay the $600,000 back.  In October 2015, knowing, Hancock Mayor Ralph Salvagno said, that they would have to pay the money back, Hancock Town Council unanimously voted for the partnership. As a result, Hancock owns 5% equity in Harvest’s operations in Hancock. The city does not serve on Harvest’s board and is not able to have any influence on how Harvest operates though that also means the city is not responsible for any liabilities or debt if Harvest accrued them.

As reported by Herald-Mail, on Wednesday, April 8, Hancock’s town council finally approved a plan to pay the $600,000 back over the next three years and will use rent paid by Harvest to do it. The strange sequence of events in which a state has entered the burgeoning cannabis business to offset lost revenue and jobs—and in this case, the distinctly small town effects of deindustrialization—is yet another example of the strange tension that arises between state and local government due to cannabis remaining a Schedule I drug under federal law.

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