Alta Greens lawyer still catching up on client’s cannabis proposal
First-term Gimli Coun. Peter Holfeurer remains pessimistic about on-again off-again plan for a cannabis processing facility.
The future of a proposed potentially multi-million-dollar cannabis plant in Gimli remains in limbo. It may be the biggest investment in the municipality since the arrival in 1969 of Seagrams, the Gimli distillery, now Diageo, which is exploring cannabis-infused beverages.
Council says the proponent, an Alberta start-up, has failed to respond to a draft development agreement, furnish a credible business plan or agree to purchase an 80-acre parcel of municipally-owned property.
It’s been a back-and-forth process that has yet to furnish all the details Gimli council members have demanded.
That’s the gist of a curious presentation by a lawyer who represents Alta Greens Ally. Counsel Brian Pauls represents Mohammad Reza (Rezaei Afsah), the one recorded shareholder of the company, incorporated a year ago, though Pauls thinks there may be at least one other.
Public records indicate that the RM of Gimli was prepared in January to sell the swath of farmland for $500 an acre, well below its presumed price on the market — that in an effort to provide an incentive to the would-be developer.
Council even went to the extraordinary extra step of agreeing to sign a non-disclosure agreement with the proponent.
Over the ensuing months, there have been no direct talks with the proponent, Reza Muhammad, of Alta Greens Ally, the Alberta-based start-up that hopes to develop a cannabis growing and processing facility on property on the western edge of Gimli Industrial Park.
Enter Brian Pauls, counsel for Alta Greens Ally. Pauls was decidedly ambiguous when he spoke to Gimli council at its regular meeting April 24.
Pauls, a Winnipeg lawyer, appeared as a delegation to Gimli council’s Wednesday evening. Pauls told council he believes Alta Greens Ally big vision, sketchy though it is, could be an economic boon to the municipality.
“He hired me,” said Pauls. “I’m not sure why. I didn’t really see that he needed a lawyer at the time. I guess he thought getting a lawyer would be a way to get some of his ideas out there.”
That said, off the hop, Pauls continued. “I don’t have any sort of plan but I know what he has planned,” Reza’s counsel said. “I suspect his project is a really, really good one for the RM and the surrounding area. It’s a question of ironing out what needs to be done to make it work.”
He noted that retail cannabis seems to be an industry that is taking off particularly in Canada and the larger market of the United States.
Pauls acknowledged that there was no need for a non-disclosure agreement, an early sticking point in the secret talks with the nascent company.
“I think he made a really big mistake in having everybody sign an NDA,” Pauls said of his client. “It’s ridiculous. I couldn’t see how council could talk about an idea that’s as vast as this — a big facility, lots of money put into it, and jobs and so on. It’s something that I don’t see why you would want to keep that a secret. And I don’t know why you would want to. I would think that is something people would want to find out. So I told him I thought that was ridiculous. That’s the first point I want to make.”
Given the full discussion by members of council that ensued, it is clear they no longer feel bound to keep its negotiations under wraps.
Gimli Mayor Lynn Greenberg is all in on cannabis. Coun. Thora Palson wants more than a handshake agreement that fails, she says, on many fronts.
Mayor Lynn Greenberg was all in when the Alta Greens proposal first emerged. But there were early hiccoughs at first due to the Alta Greens’s facility that the land be leased.
“I supported it from day one because I see the economic benefit,” Mayor Greenberg said. “I guess what happened in the beginning is that they [Alta Greens] didn’t want to lease the land. They wanted us to carry the property, and they would pay it over time. I think now they’ve changed their minds. They want to pay it upfront. That’s what I’ve been told.”
Deputy mayor Richard Petrowski said Alta Greens wanted a $5,000 down deal that would be paid over eight years. “That to me was a big red flag,” Petrowski, council’s finance chair, said.
Coun. Peter Holfeuer said the biggest disconnect was the changes suggested by the proponent’s development agreement which kept coming back in altered form. “We worked with him in faith for a month-and-a-half, two months,” Holfeuer said. “We’re just so far apart. Selling the property at probably 20 to 25 per cent the value is one thing. But in order for that property to be developed, they need licensing, that’s not a for-sure thing. We’ve never received a comprehensive business plan outlining what their intention is — just a business brief.”
Holfeuer said there have no indications that they’ll build anything on that property other than good intentions. “If we sold that property [to the proponent and he didn’t get the required licence], how do we protect that property? And how do we get that property back?” the councillor said. “There are a lot of concerns, a lot of red flags. Everything went back and forth for two months, and everything was urgent, very urgent. Here, we’re right back where we started.”
“He needed equity for the business. Everything seemed very strange, very odd. I think the whole approach was very unprofessional,” continued Holfeuer. “I was very supportive at the beginning but as we went along more and more red flags came up. At this point, I don’t support the project because we are that far apart.”
“Unless you can tell us that we can get closer together today,” he added, speaking to Pauls, “I’m not sure why you’re here.”
“The plan seems quite nebulous,” Pauls agreed. “It’s quite obvious that it has to be worked out. However, it’s quite obvious that it has to be worked out as it goes along. I would imagine that this is a large expenditure of money. We’re talking about taking 80 acres or more of land that’s going to have a growth operation that requires shelter, security and all the other things that have to be worked on. So we have to sit back. It’s a vast amount of money that’s going to have to be put into it. It’s understandable that we’d be looking for some kind of government assistance for some of those things. So making a plan that looks that far into the future is very hard to do.”
Holfeuer advised Pauls to get back to his client “to get a better understanding of where they went wrong.”
Deputy mayor Petrowski asked what stage the company is at with its application to Health Canada for a cannabis licence.
“No. I can’t say that,” said Pauls. “I think they had to have some kind of a plan, actually control of a plan before that [an application] would go anywhere.”
“I think they have to show that they’ve bought the land,” said Mayor Greenberg. “My understanding is that he’s willing to pay the land as soon as the title gets transferred. Is that not right?”
“Okay. To me, that’s a big thing,” the mayor said. “I look at the big picture. There’s supposedly 150 jobs coming there. That means people are going to buy houses in this community. They’re going to pay taxes. We don’t … there was a business sold in Gimli the other day; we don’t get involved in that. So we shouldn’t be involved in this. We sell him the land and he does what he wants.”
Coun. Thora Polson expanded on Holfeuer’s earlier comments. “What would be important to me would be a presentation of a business plan, a portrait of the company profile; and environmental impacts, environmental assessment and preliminary discussions with environmental authorities, that would be very important to me.”
She added there is a need for financial disclosure of the company.
“We’re nowhere near that,” the company’s counsel said. “That’s the best I can tell you. I believe he is the only shareholder or he and one of his family are the only shareholders. I think it is just a set-up to get going and raising funding. My client has the wherewithal to get this going without a lot of other people involved in it, which is what I’m sure is what you see.”
Petrowski amplified his concerns about a land sale. “If the project fails, if we sell the land and nobody else takes it — a creditor?” the deputy mayor said. “Then we don’t have the land.”
“But, Richard,” countered Mayor Greenberg, “if he buys it — and that’s good — we don’t have the land either.”
“We want him to succeed,” added Petrowski. “At the end of the day we want it to be filled up with buildings, warehouses and people working. I think we just need a better plan.”
“I believe we have to let them buy the property and get going,” the mayor added.
Greenberg said it is left to the proponent to talk to councillors, adding “I’m for it [the project] right at this moment.”
Said counsel Pauls: “So you like the concept but you don’t like the plan. It might be doable? Does everybody agree?”
“It might be doable,” said Holfeuer. “Anything is doable. But as it stands now I don’t know what it would take to move forward.”
Mayor Greenberg book-ended Pauls’s half-an-hour long question-and-answer session, saying it’s left to counsel Pauls to work with the three councillors to reach a consensus about the impasse.
Asked outside the Gimli municipal building after his presentation, Pauls said he is determined to flesh out what his client is prepared to do.
“I’m going to tell him,” Pauls said, “it’s going to be necessary to be more flesh on your plan.”
The hope, it seems, is that talks now off the rail but may be righted; a position Mayor Greenberg has supported, as he said, from the start.
Lawyer Brian Pauls is hopeful of a good outcome for his client.