Hancock to repay $600K state grant due to cannabis business ties

by Geoff Fox

Hancock town officials have voted to repay a $600,000 grant from the Maryland Department of Housing and Urban Development (HUD) because the improvements it paid for have been used in connection with the Harvest medical cannabis operation.

The grant was received to revamp and repair the former Fleetwood Building, known as the Stanley Fulton Building. The building’s first occupant, Evolve, produced garden stones there, but the business has closed.

According to town officials, in 2015 they received a letter from the Department of Housing and Community Development stating if the town entered into an agreement with Harvest to use the facility to grow and produce medical cannabis, they would have to repay the full grant of $600,000.

Town Manager Joe Gilbert said last week the town was warned by the federal government not to enter into the agreement because federal laws do not recognize a medicinal marijuana company as an approved user of federal funds.

According to the October 21, 2015 Hancock News, when the grant was first issued, the requirement was the town had to create a certain amount of jobs through use of the grant. The Town Manager at the time, David Smith, said the town had done so and Evolve closed and defaulted on their rent.

At the time, Del. Mike McKay said he and Sen. Edwards would go to bat in support of the town if the grant money was disputed.

Gilbert said the town received rent from Evolve and that rent money was reinvested back in the building.

In a September 2015 letter, Maryland HUD said if the town rents the building to Harvest, they would expect the $600,000 to be repaid.

The letter also stated any money generated from the facility could be part of a repayment requirement as well.

That included all rent received between September 2015 and today, including $324,000 reinvested in the building.

After months of corresponding with HUD, Gilbert said the agency has agreed to forgo taking back rent revenue from the town building. Instead, they have asked to get back the intial $600,000 grant funds and $324,000 the town got from rent and invested in the building.

The total $924,000 would have to be repaid through the state to the federal government, Gilbert said.

Hancock Mayor Ralph Salvagno said there have been discussions over the last year and a half for Harvest to purchase the facility they now rent on South Street.

“It will happen at some point,” he said.

Salvagno said there is an obligation to repay the $600,000, but there is still some negotiation for the other amount.

Councilman Tim Smith said McKay had spoken up and the representatives were not concerned about the $324,000, just the original grant amount.

Salvagno said there was no doubt the town would need to repay the $600,000.

Officials agreed to pay $200,000 over the next three years, starting this year and through 2022.