NY: Former Vireo Health Officer Wants Smuggling Case Tossed, New Details

Photo Credit: Tania Savayan

A former Vireo Health executive accused of smuggling medical marijuana into New York asked a court to toss the criminal charges, citing revelations in a multi-state battle over the cannabis company’s future.

Dr. Laura Bultman, the former chief medical officer of Vireo Health and medical marijuana dispensary in downtown White Plains, faces felony drug charges in a Minnesota court.

Prosecutors recently added a conspiracy charge in accusing Bultman of driving Vireo Health’s armored vehicle to smuggle the company’s medical cannabis oil from Minnesota to New York in 2015, court records show.

But Paul Engh, Bultman’s attorney, filed the request to dismiss, citing developments in a related legal battle over a Vireo Health medical marijuana affiliate in Maryland. It is the third attempt by Engh to have the drug-smuggling charges tossed.

Some new details in the case raised questions about cannabis-based drugs getting into the wrong hands in New York, and other states. That’s because Vireo Health officials testified that technology used in past years couldn’t sufficiently track cannabis-based oil, court records show.

Other new information involved Vireo’s medical marijuana affiliate in Maryland. Engh cited a Maryland legal hearing over the affiliate to cast doubt about the smuggling case in Minnesota.

New details emerge

Testimony by Vireo Health CEO Kyle Kingsley shed light on problems during the early years of medical marijuana in Minnesota and New York.

One issue involved Biotrack, the inventory program used to track cannabis oils and drugs to limit the risk of diversion.

Kingsley testified about the program’s failures during the hearing in Maryland. He noted how the issue has since been addressed by Vireo Health and its affiliates, Minnesota Medical Solutions (MMS) and MaryMed, the company in Maryland.

“(Kingsley) gave straightforward answers to the State’s questions on cross-examination; was candid about his own shortcomings and those of MMS and its employees; and admitted that there was a possibility that cannabis oil had been diverted,” Judge John Leidig wrote.

The comment referred to the Biotrack system’s use in 2015 by Vireo Health and other medical marijuana companies across the country. Kingsley’s testimony suggested New York and other states awarded medical marijuana licenses despite the broken tracking system.

The hearing stemmed from Maryland regulators’ decision to deny MaryMed from opening in that state, citing the medical marijuana smuggling case. Leidig recently recommended the ban be lifted because it relied on the inconclusive and pending Minnesota criminal matter, court records show.

“Because the commission delegated limited authority to…make proposed findings of fact but not conclusions of law, the questions of whether the Minnesota Court’s ruling is correct and whether the ruling is entitled to preclusive effect are beyond the scope of this analysis,” Leidig said, referring to the smuggling case.

“The answers, however, may be dispositive in determining whether there is a reasonable likelihood that medical cannabis was diverted from MMS to Vireo NY,” he concluded.

The whistleblower’s story

Bultman’s attorney also continued attacks on the credibility of whistleblower Daniel Pella, the company’s former chief scientific officer at the heart of the smuggling case.

Citing the Maryland hearing and prior arguments, Engh implied Pella was a disgruntled former Vireo Health employee who struck an immunity deal with prosecutors.

“Retributive deceit is what Mr. Pella’s about, a getting even for being fired, the making of false claims for his pernicious advantage,” Engh wrote, referring to claims that investigators relied on Pella’s lies to improperly obtain search warrants and arrest Bultman.

In other court filings, Engh tapped into politically charged debates over medical marijuana being used to curb the opioid epidemic.

“And how this prosecution favors Minnesota patients is a claim that can’t ever be made,” Engh said. “The case reflects a law enforcement bias against the use of marijuana that, for decades, has been the subject of many a felony.”

Engh expanded on the issue of marijuana use for chronic pain to reduce opioid use.

“The only beneficence from this case that we can imagine is directed at the opiate lobby which disfavors organic, nonaddictive treatment for those who seek safer alternatives,” he said.

“Big pharma will thank the citizens of Wright County (Minnesota) and their attorneys should there be a conviction, the morphine and Percocet sales remaining unobstructed by a small start-up.”

Engh’s comments came in disputing court decisions to join the case against Bultman to related smuggling charges against Ronald Owens, Vireo Health’s former chief security officer.

Bultman and Owens face felony charges of smuggling cannabis oil into New York. They face up to two years in jail and a $3,000 fine for violating Minnesota state medical marijuana laws.

Some aspects of the case are connected to New York state’s medical marijuana program, such as allegations that the marijuana oil was sold illegally to patients here and tested at the state government’s Wadsworth Laboratory.

New York State Department of Health, which oversees the medical marijuana program, has said it was independently investigating the alleged smuggling and would release its findings after the criminal case concludes.

The high-stakes case has implications for the cannabis industry in New York and Minnesota. It exposed potential holes in government efforts to prevent medical marijuana from crossing state borders, which increases the threat of federal Drug Enforcement Administration raids on companies licensed by state laws.

The Minnesota judge has previously denied Engh’s requests to have the case tossed, and found that Vireo Health’s leadership, including for Minnesota Medical Solutions (MMS), didn’t participate in the alleged smuggling scheme.

“The court finds that (Bultman and Owens) were working on their own behalf and not as agents or MMS/Vireo Health New York,” Judge Kathleen Mottl wrote.

Pre-trial proceedings are expected to continue this month, and a trial is scheduled for fall.

Read the latest court document here.