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Whistleblowers, angry neighbors sound off on Standard Farms

Three former executives of a medical marijuana growing operation, Standard Farms, in Pennsylvania’s Pocono Mountains, have lodged a multitude of whistleblower allegations against the company–claiming it broke state laws, violated regulations, and put consumers’ health at risk.

Lisa Pabon, the former director of administrative operations at Standard Farms in the Luzerne County community of White Haven, says she was terminated for refusing to lie on company applications for a growing permit in New Jersey, according to the Philadelphia Inquirer.

“I wasn’t going to go to jail for lying.”

She said Standard Farms grossly overstated her qualifications on the application and told her to claim that she was head of diversity and community outreach at the company – positions she never held. “I wasn’t going to go to jail for lying,” she told the Inquirer. Five days later, she was without a job.

Ms. Pabon refused to accept a severance package when she was fired, saying she didn’t want to be silenced by the non-disclosure agreement it contained.

She filed a wrongful termination lawsuit against Standard Farms last year and it was dismissed in the fall, but neither side is permitted to discuss the arbitrator’s decision, according to the Inquirer.

Returned & recycled vape cartridges

Ms. Pabon also alleges that the company “sold product with defective/leaky cartridges” that she believes were emptied and recycled instead of being destroyed as required by law. She says the vape cartridges contained at least $15,000 worth of marijuana oil returned from patients and vendors.

Although the vapes were clearly returned, there is no record of their return or their disposal in the state’s seed-to-sale cannabis tracking system. If the returned products had been destroyed, the company would have recorded the loss on the financial records she oversaw, but no such loss was recorded. A former company owner could not tell the Inquirer what happened to the returned vape products.

Ms. Pabon claims that instead of responding to her concerns appropriately, Standard Farms fired her and later told the court that she was terminated for being rude, incompetent, and difficult to work with. But just a month before she was fired, the company gave her a $25,000 bonus for a house near the growing operations.

Illegal chemical applications

According to the Inquirer, court records show that Renee Kelso, the former director of quality assurance at Standard Farms, quit her job rather than go along with the illegal and potentially dangerous chemicals used on the marijuana crops.

Ms. Kelso is bound by a non-disclosure agreement, but in court she testified that she tried to prevent her bosses from using a hydrogen peroxide mist to control the mold and mildew growing on the marijuana plants in Pennsylvania’s humid summer weather.

The state widely bans the use of the disinfectant and specifically forbids its use on marijuana. One Pennsylvania State professor told the Inquirer that hydrogen peroxide mist could alter both the good and bad chemical compounds in marijuana. Inhaling or ingesting hydrogen peroxide can have toxic effects on human health in other ways.

Ms. Kelso’s job in the company was to ensure the quality of the product – a role that often meant making sure it was in compliance with health regulations. According to the Inquirer, she testified in court that her bosses ultimately ignored her concerns and told her that compliance was no longer her job. She walked out of that meeting and, walking through the parking lot, took a picture of a SteraMist company van that allegedly arrived to mist the marijuana plants with hydrogen peroxide.

“We were bringing in material illegally”

Another executive quit Standard Farms because he said the company made him do things that he “wasn’t comfortable with.”

Paul Karlovich, who brought 30 years of horticulture expertise to the company, also said the company broke the law by ignoring restrictions on when seeds and cuttings could be brought in from other states.

“We were bringing in material illegally after the 30-day deadline,” Mr. Karlovich told The Inquirer, explaining that the importing period lasted 30 days. “Stuff just started showing up. I didn’t like it. I refused to allow them to do it at first. I would say I was coerced. They kept asking me. I relented. They’ll deny it, of course.”

Mr. Karlovich also said that making a clean cannabis crop in the humid Poconos was “a disaster in the making” because the plant is notoriously prone to mold and mildew. He saw the company didn’t have tools to mitigate the airborne mildew dust in the greenhouses.

Horrible stench angers neighbors

Residents of White Haven, a town with a population of about 1,000 people, are adding their own complaints on top of those made by the whistleblowers. They say the Standard Farms growing operations generate an insidious stench. The smell is so offensive that it has made living in the vicinity unbearable and tanked property values. Some residents have tried unsuccessfully to sell their homes. Others who could afford to abandon their homes have fled the town because of the pervasive odor.

One resident told the Inquirer that the stench is “tremendous” and described the facilities as “an eyesore.” She said there was no warning the operation was coming to town.

Mr. Karlovich said the company “didn’t have a proper odor mitigation system designed. It was all done on the cheap. It’s really expensive to retrofit.”

Unlike most other marijuana growers in the state, Standard Farms doesn’t grow in an enclosed warehouse. It uses greenhouses to avoid the expense of artificial lighting and uses powerful fans to blast the fumes out of its facilities, turning the mountain air into the “pungent perfume of skunk and diesel,” according to the Inquirer.

Making matters worse, Standard Farms is planning to add additional greenhouses despite an outpouring of complaints from White Haven residents.

Now part of a pot conglomerate

According to the Inquirer, two former hedge fund executives from New York City with no agricultural or horticultural experience founded Standard Farms. It quickly became the largest employer in town with about 70 employees, most of whom are part-time. The Greater White Haven Chamber of Commerce named it as “Best Business of the Year” in 2019. Tilt Holdings of Boston and Toronto now owns the company.  The Inquirer describes Tilt Holdings as a “multinational weed conglomerate.”

According to the Associated Press, Standard Farms received a loan from Tilt for up to $3,000,000 and is building a “state-of-the-art 10,000 sq. ft. processing facility in Garfield Heights. Ohio.

After the Philadelphia Inquirer published its article about the Standard Farms whistleblowers, the state’s largest medical marijuana retailer – TerraVida Holistic Centers – said it removed Standard Farm products from its stores.

Whistleblower laws protect relators

If you have any questions about whether you qualify as a whistleblower, contact one of the lawyers on our firm’s Whistleblower Litigation Team. You will receive a free and confidential evaluation of your claim. Beasley Allen lawyers Larry Golston, Lance Gould, Paul Evans, Leon Hampton, Tyner Helms and Lauren Miles are working in this area of law known as qui tam cases. A lawyer on the team will be glad to discuss the potential claim with you either in person or by phone, or you may use the web form below.

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