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Green light from city for medical marijuana

City, Silphium reach 'unique' agreement that returns 2.5 percent of profits to city; state licenses

By APRIL HELMS and ANDREW SCHUNK Reporter and Editor Published: June 28, 2017 12:00 AM
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TWINSBURG -- The medical marijuana industry in Northeast Ohio is becoming increasingly competitive, and Twinsburg has reached a unique agreement with one company to set up shop on Edison Boulevard, providing the company receives the proper state licenses for growing and processing.

Twinsburg City Council unanimously approved a Community Reinvestment Agreement June 13 with Silphium Grow LLC and MLP Realty LTD, an abatement-free pact that calls for the business to return 2.5 percent of its profits to Twinsburg, to be split between the city's general fund and Community Improvement Corporation.

Assuming between $10 million and $25 million in profits for Silphium, that could mean between $250,000 and $625,000 per year for the city and CIC.

Silphium offered to pay the city in the CRA; the city did not approach Silphium with the CRA as a tax or fee, according to city officials.

"I might have been hesitant with this if the city made the choice to do this, but there are six to eight companies vying to set up in Twinsburg," said Law Director David Maistros, who helped craft the CRA. "I can't imagine we will get more than one [medical marijuana business]."

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"We've been approached by multiple organizations ... that want a license to cultivate medical marijuana in Twinsburg," said Mayor Ted Yates. "We've met with several of them of them. They seem well-funded, very sophisticated. The [revenue agreement and CRA] is something they are offering to do, this is nothing that we have imposed as any tax or fee."

Under the agreement, Silphium's 2.5 percent would be funneled at 1.5 percent to the general fund and 1 percent to the CIC, according to the CRA. There is no tax abatement associated with this CRA, which are normally economic development tools to incentivize business development in Twinsburg.

"There is not an abatement of any sort in this," At-Large Councilor Bill Furey said. "This is a unique CRA. It is the first I've seen of this kind I've seen on this Council."

According to city officials, 1.5 percent of Silphium's profits will go toward any increased patrols, through overtime or part-time hires, associated with the Silphium facility.

While not severe, Maistros said increased patrols may be required initially. Silphium will also have its own extensive private security, according to city officials, and a live interior video feed will be recorded and broadcast from Silphium 24/7.

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"It's really an unknown," Maistros said. "Colorado went from zero to 60 in going from medical to recreational, and our [research] numbers were higher because of some of the crime associated with the dispensaries and recreational use. There is an anticipation for increased patrols [in Twinsburg], at least on the night shift."

"There is and could be some impact with our security forces," Yates said. "To combat that, [Law Director] Maistros has spent time working with several attorneys to create [this] Community Reinvestment Agreement, where part of the proceeds could handle part of the impact ... of the direct operations of this business."

The other 1 percent of revenue from Silphium would be funneled to the CIC "to help with redevelopment efforts," Yates said. The non-profit, 10-member CIC comprises elected city officials, school officials and community business representatives and is charged with serving as a liaison between developers and the city for a coherent, uniform downtown redevelopment plan.

The CIC is currently funded through a bed tax in the city.

Maistros said it will be a "couple years" before the city realizes any revenue from the CRA, assuming Silphium is granted the proper state licenses. There is no time frame associated with the CRA, and either party can back out at any time, Yates said.

If Silphium does not receive the Tier I state license in September, the CRA will be null and void. In addition to the 12 Tier I licenses (being offered in the state) allowing for 25,000 square feet for cultivation, the state's Medical Marijuana Control Program is offering 12 Tier II licenses that permit a 3,000-square-foot area for processing. The processing applications are due to the state, also in September.

Silphium, to be located at 2440 Edison Boulevard, must be up and running by Sept. 8, 2018, owner Dave Moorhead has said. According to Moorhead, about 7.4 percent of Ohio's market is in this area.

Moorhead did not return calls seeking comment.

Email: ahelms@recordpub.com

Phone: 330-541-9423

Twitter: @twinsburgohio

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