Medical pot firm suing City Council

April 13--The company whose bid to open a medicinal marijuana dispensary in Blackburn Industrial Park was shot down by Gloucester's City Council in January has filed a lawsuit saying that city councilors wrongly approved a permit for another firm.

The lawsuit was filed Tuesday in Salem Superior Court by attorneys with Davis, Malm & D'Agostine in Boston representing Boston-based Mayflower Medicinals and Gloucester's Swan Net East Coast Services Corp. which owns the site and was to lease space to Mayflower.

The suit names all nine council members and Happy Valley Ventures Inc. as defendants, though it does not target the city or City Council as a unit. It also claims that three councilors failed to divulge their business and economic ties to local lawyer Joel Favazza, the rival company's attorney, through a Cape Ann networking and referral organization.

The action challenges the council's December approval of a permit for Happy Valley to build a medical marijuana production facility and dispensary at 38 Great Republic Drive. It does not specifically target the council's January rejection of the Mayflower application to open a dispensary within the Swan Net building at 41 Great Republican Drive, literally across the street. The city's zoning ordinance regarding medical marijuana facilities prohibits one from operating with 1,500 feet of another

The suit calls for rescinding the council vote to approve the special permit for Happy Valley, and to "grant such relief as justice or equity may require." It does not mention any dollar amount.

Ethics questions

The lawsuit charges that Councilors Joseph Orlando Jr., Steve LeBlanc and Sean Nolan -- all of whom voted to approve the Happy Valley permit, reject the Mayflower application and then keep the 1,500-foot zoning restriction in place -- failed to divulge ongoing business relationships with Favazza through a group called BNI Lighthouse. That organization is a local chapter of a global business networking organization that encourages members to refer business opportunities to one another.

In addition, the suit notes that Orlando never divulged that, as a lawyer with Orlando Associates, he works for his father, Joseph Orlando, and that the elder Orlando, a city Planning Board member, submitted a letter endorsing the Happy Valley proposal and then a second letter urging the council to reject the Mayflower application and uphold the ordinance.

The lawsuit also claims that the council wrongly denied former Mayor Bruce Tobey, the attorney representing Mayflower during the permitting process, the chance to rebut claims made in the elder Orlando's letters. The council voted that January night to deny any rebuttal based on precedent for not having allowed responses to anyone who had submitted written remarks but was not at the related meeting.

City Council President Joe Ciolino said Wednesday he could not comment on any of the lawsuit's allegations regarding the council's actions or the alleged conflicts of interest.

"My hands are tied; I can't really make any comment on any of it," he said. Because the matter is in litigation, he said any comment would have to come from Chip Payson, the city's general counsel. Payson did not return calls placed Wednesday seeking reaction or comment.

Similarly, neither LeBlanc nor the younger Orlando would comment, citing litigation concerns.

"I can't comment, even though I'd like to," the younger Orlando said.

Favazza decried both the challenge to the council's actions and the ethics allegations.

"Frankly, for this to come from a group that used Bruce Tobey as its mouthpiece -- for them to suggest that I'm in a business relationship because I'm in a networking group -- is a little desperate." He added that Councilors Ciolino, Melissa Cox and LeBlanc all served with Tobey in his final term as council president as well.

Project delay possible

Favazza said the lawsuit -- if it were to tie up Happy Valley's approved permit -- could force a delay in the Happy Valley project. The company, withMassachusetts offices in Newton, is seeking to close on its purchase of the 38 Blackburn site and invest more than $6 million in the combined dispensary and production facility. He said he and his clients will review the lawsuit regarding plans to go forward.

"In delaying this project, this lawsuit is the worst thing Mayflower could have done to the people that it knows need this treatment," he said, "the worst thing it could have done for the people of Gloucester." Neither Mayflower spokesman Frank Perullo nor Tobey returned calls seeking comment Wednesday.

In the suit, Mayflower and Swan Net allege that the council "committed error and acted to excess of its authority" in granting the Happy Valley permit, and "arbitrarily and capriciously gave weight and consideration to factors unrelated to zoning."

During its debate, the council cited economic benefits of the Happy Valley proposal, which is projected to bring in more than 50 full-time jobs, and tax revenue gains based on the company acquiring and building on a vacant lot. Councilors also acknowledged at the time they would be granting the special permit contingent on further site plan and other reviews.

Favazza, meanwhile, had also argued that a council approval of the Mayflower permit would force Happy Valley to reconsider its investment, knowing that another, competing dispensary might be permitted across the street. The councilors then rejected the Mayflower application in January, with the opposing councilors -- Cox and Val Gilman, in addition to LeBlanc, Orlando and Nolan --generally citing security concerns regarding the Mayflower plans for the Swan Net site.

Staff writer Ray Lamont can be reached at 978-675-2705, or via email at [email protected].

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