Berkeley cannabis lawsuit reveals bitter infighting

Rebecca DeKeuster. Photo courtesy of Portland Press-Herald

Rebecca DeKeuster’s first job at the Berkeley Patients Group in 2004 was selling medical marijuana to patients for $14 an hour.

Within six years, DeKeuster was one of Berkeley Patients Group’s most powerful executives and visible representatives. She served on the city’s medical cannabis commission, appeared regularly at conferences around the country, and spearheaded the 2008 campaign to pass Measure JJ, an initiative to improve city regulations surrounding cannabis. By 2011, DeKeuster’s salary had shot up to $125,000 a year.

But in an unexpected turnaround, the Berkeley Patients Group has filed a lawsuit against DeKeuster – as well as a new organization she heads, the Northeast Patients Group – claiming DeKeuster breached a contract when the BPG sent her to Maine to set up a new string of medical cannabis facilities. DeKeuster stole the organization’s trade secrets, formed a secret alliance with a new financial backer, and failed to repay $632,195 in loans, according to the lawsuit.

As a result, the Berkeley Patients Group lost the inroads it had made into exporting its expertise and expanding into a new region of the country.

DeKeuster and the Northeast Patients Group refuted the charges through their Portland attorney, Daniel Walker.

“Suffice it to say that we and our clients have a much different view of the underlying facts and are prepared to present our case and counterclaims in court,” Walker said in a written statement.

The news about the bitter split between Berkeley Patients Group and one of its most high profile employees has unsettled Berkeley’s medical cannabis community.

“I just don’t want to comment on it very much,” said Debby Goldsberry, one of the founders of BPG who served on the three-member board of directors with DeKeuster. She is no longer affiliated with BPG. “But I will say I like Becky. Becky was always very dedicated to people and patients and social services. I hope everything works out because working it out is what’s best for the patients.”

DeKeuster, 41, a former school teacher and administrator, joined Berkeley Patients Group, the city’s largest dispensary, in 2004. She started out selling cannabis to some of the 800 to 1,000 patients who visit the San Pablo Avenue facility each day but quickly took on more responsibility. She became general manager of the organization and was eventually appointed one of its three directors. In that capacity she oversaw internal operations and human resources.

As DeKeuster became more influential, her profile rose. She was appointed to Berkeley’s Medical Cannabis Commission and played a prominent role in the 2008 voter referendum to revise the city’s medical marijuana laws.

The roots of the current litigious situation started in 2009, after Maine voters passed a referendum legalizing medical cannabis. Berkeley Patients Group appointed DeKeuster as “New England Expansion Director,” with an initial salary of $111,000. The idea was to take the expertise BPG had gained in running Berkeley’s largest medical marijuana dispensary and use it to set up new dispensaries in Maine, according to the lawsuit.

DeKeuster started traveling regularly to Maine in the winter of 2010 to advise the state’s medical marijuana task force on how to implement its new law. Later that year, she moved to Maine permanently and set up the nonprofit Northeast Patients Group, serving as its first chief executive officer. DeKeuster worked closely with Tim Schick, its chief executive officer and a Maine native, to create an organization that closely resembled BPG, but with a Maine board of directors.

The Northeast Patients Group applied to operate five of Maine’s eight licensed dispensaries. In July 2010, Maine awarded Northeast Patients Group the right to open facilities in its three biggest markets — in Portland, Augusta, and Bangor, along with another dispensary in Thomaston.

During this period, BPG advanced the Northeast Patients Group $632,195 in loans, according to the lawsuit, in the expectation it would be a partner in the Maine activities. The funds were used to pay for permit applications, staff salaries, a licensing fee for the use of its business model, and a $300,000 line of credit, according to the Kennebec Journal.

The Northeast Patients Group also hired BPG to consult with it on where to locate the dispensaries and how to handle media outreach, Brad Senesac, director of communications for BPG, told Berkeleyside in July 2010, although he denied at the time that BPG had actually invested in the Maine operation.

Front entrance to Berkeley Patients Group on San Pablo Avenue

“BPG was instrumental in the formation and initial funding of NPG… and provided significant expertise, specialized knowledge and confidential information to NPG,” reads the lawsuit, which was filed July 6 in Cumberland County Superior Court in Maine. “Among assistance BPG provided was services of its key executive employee and members of its Board of Directors” …. DeKeuster “was to perform activities in Maine for the benefit of BPG and not engage in any practice that competed with BPG’s.”

On July 7, 2010, two days before Maine announced which groups would be awarded permits to open a dispensary, BPG signed a new employment agreement with DeKeuster, making its terms retroactive to Nov. 1, 2009.  Among the terms of the agreement was a non-compete clause, in which DeKeuster agreed not to discuss or use any confidential information without written permission. The contract also prohibited DeKeuster from competing directly or indirectly with BPG for two years after she leaves the organization’s employ.

But on February 24, 2011, DeKeuster abruptly quit the Berkeley Patients Group, according to the lawsuit. That same day, the Northeast Patients Group had signed a letter of intent with a new investor, Mobley Pain Management and Wellness Center, founded by former NBA basketball player Cuttino Mobley, according to the suit. Mobley, who is also trying to open a dispensary in Rhode Island, pledged to loan Northeast $2 million to get its Maine dispensaries up and running, according to the Portland Daily Sun. Northeast was to pay back the funds at 18% interest over seven years.

The lawsuit asks the court to order DeKeuster to sever ties with Northeast Patients Group.

The Northeast Patients Group has not yet opened a single dispensary in the year since it got its permits, although it expects to do so soon, according to Walker, the group’s attorney.

Papers filed with the lawsuit reveal the enormous amount of money at stake in the medical marijuana industry. The Northeast Patients Group expected to gross more than $2 million serving 691 patients at its four dispensaries in the first year, selling medical cannabis for $340 an ounce, according to court documents. It projected gross revenues of almost $7.4 million in its second year of operation, serving 1,159 patients. That works out to revenues of $5,500 to $7,500 per patient, depending on the location.

The four dispensaries in Maine were projected to create healthy surpluses at the end of its first year of operation. The dispensary in Portland, for example, would create a surplus equaling 19% of its revenues, according to court documents. That was after it made $1 million in donations to community groups.

The Berkeley Patients Group, which has 13,000 members, does not reveal its revenues. But in February, the California Board of Equalization slapped the group with a $6.4 million bill for back taxes and accrued interest. BPG plans to work out a payment plan with the state. The organization also gives away at least $300,000 annually to community groups, according to the Oakland Tribune.

As the lawsuit works its way through the courts, members of Berkeley’s medical cannabis community still remember when the Berkeley Patients Group and DeKeuster seemed one and the same.

“Berkeley Patients Group has been around for a long time,” said Raudel Wilson, a former member of Berkeley’s medical cannabis commission and the community liaison director for Americans for Safe Access. “When people hear BPG they think of Becky immediately. Her name is synonymous with that group.”

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  • Lucas Warmfrog

    The lawsuit may reveal even more. 
    I’m intrigued by BPG’s assertion of “Territory”:  “…including all of the states of New England and the Mid-Atantic states, and any other state in which Company maintains a …”  and am LMAO surprised that BPG operationalized thes ambitions in part through the postion of New England Expansion Director.
    I’m no lawyer, so my efforts to accommodate (i.e., “understand”) the formal fictions are stretched thin.
    Remind me please, How are such disputes handled in neighboring countries’ highly regulated medical marijuane industry?

  • lauramenard

    “Remind me please, How are such disputes handled in neighboring countries’ highly regulated medical marijuana industry?”

    are you referring to Juarez Mexico?

  • Bruce Love

    This is slightly (but only slightly) off topic.   See that Berkeley Patient’s Group picture up there — the entrance tot he parking lot?  The one with the helpful “slow down” sign?  The one with the rude uniformed guards keeping the parking lot safe from unemployment?

    A couple of us have noticed that, when bicycling around there, all too often there are cars that behave very badly.   Badly towards cyclists.  Badly towards other drivers.  Badly towards pedestrians.    Here is the pattern:

    They speed like mad.  They often have music playing so loudly they couldn’t hear a siren if it bit them in the ass.  They tailgate.  They weave wildly and cut people off.  They often menace with apparent intent.  More than once we’ve had to take extraordinary action to avoid being hurt by them.

    And almost all of them pull into that parking lot entrance and, indeed, dutifully slow down right there.  As if to signal how cool and reasonable they are to the rude uniformed guards.

    That works out to revenues of $5,500 to $7,500 per patient [per year], depending on the location.

    Legalize, regulate and tax.   It’ll take the wind right of those sails (and others) and none too soon.

    Meanwhile, the “vibe” the proprietors are creating at that outlet has some problems.   They’ll have to forgive me if I don’t give a crap about whether or not they got screwed in Maine.

  • GPO

    Bruce, you raise some excellent points here.  I once got to talking with a young woman who was staffing Lhasa Karnik and I jokingly suggested that adding “medicinal pot” to their potpourri of herbs and other concoctions might be an excellent boost to their bottom line.    She told me that per previous job was at a local medical marijuana dispensary and that she was really glad to leave that job behind because the atmosphere was really “thuggish” and many of the regulars were really “creepy” people.  I guess this segment of society needs its meds too!

  • 0ldman

    Are you trying to imply medical marijuana patients drive like assholes ? Bullshit ! Don’t purposely try to make these people look bad, giving the public ammunition to shut down dispensaries. Do you suffer from chronic pain ? Do you know what its like to wake up in the morning feeling like you just got done working a 12 hour shift ? Find something else to bash, like maybe how many people get killed each year by drunk drivers !

  • Osama Obama

    These folks really need to get busted so they can cool their heels in the slammer for a long time. It would be good for everyone.

  • Osama Obama

    These folks really need to get busted so they can cool their heels in the slammer for a long time. It would be good for everyone.

  • Peter Moore

    I bicycle by here regularly as well and have never noticed the behavior you describe. Though I’m not quite sure what you mean by “menace with apparent intent”, I’m pretty sure it hasn’t happened to me. Perhaps if you could let me know who “they” are I’ll be able to look for “them” in the future.

  • Axisoflovesf

    ive known becky as a very solid and sweet -and compassionate person – who cares about patient services and supporting the inclusion of radical women in the medical cannabis comunity like myself – i wish becky the best during hard times and its sad to see what commerical industry brings with it – a sad culture of ownership vs.comunity medicine

  • Einstein

    Non-Profits are supposed to help other non-profits.  Why would a true non-profit have trade secrets?  Non-profits aren’t supposed to be in competition.  This is nothing but GREED, not COMPASSION!  If BPG really cared about safe-access for all, there really shouldn’t be an issue here.  What is BPG doing with these millions of dollars?

  • Bruce Love

    I bike there daily.  It’s not a constant phenomenon but I’d say it has happened to us about once a month for the past couple of years.   It’s a street where, mostly, in spite of it being fairly heavy traffic much of the day, most drivers are great — so the bad ones really stand out.   More than a year ago we started a macbre game:  someone cuts us off too closely, tailgates, speeds like crazy, is oblivious to sounds outside of their car, etc…. and whoever first spots it calls it:  “And guess where they’re going….”   And, 9 out of 10 times, that’s where they pull in.

    Anonymous “0ldman” asked if I am trying to smear medical marijuana patients as this kind of driver.  Nope.  I’m talking about a subset of the customers of that dispensary, particularly in light of the ironically guarded walled garden parking lot.

  • Anonymous

    Just as I feared – the greedy capitalists are going to ruin the pot trade.

  • Berkeley Mom

    Isn’t $340/oz kind of expensive?  I am not a pot smoker, but I checked ‘priceofweed.com’ which shows a CA average price of about $300 for ‘high quality’ pot.  I assume this is a mix of street and MM dispensary prices.

  • Bruce Love

    It’s probably a question of buying in bulk vs. paying more for smaller quantities.  As a guess, $340 is probably what they expect in revenue per ounce sold … not their price for an ounce.   For example, if an ounce is priced at $300, then 1/8 (for example) could easily be priced at $40 (which is $320 an ounce), or a dime bag (call it 1/28th of a “dealers ounce” – so one gram) at $15 (which amounts to $420 an ounce).  Hehe.  See what I did there?  “420″.   Anyway,  in the mix of quantities sold, plus breakage, it apparently works out to an average $340 / 28g

    A quick glance at the yelp reviews suggests that BPG does in fact price in the way I’ve described, perhaps being even more aggressive about the premium price of smaller quantities.   (I wouldn’t know for sure, other than that, though.)

  • lauramenard

    I found it interesting to compare the composition of the Maine dispensaries board of directors with the Berkeley board.  The Maine group appears to be more patient centered and responsive to public safety requirements. There is a public health technologist and a law enforcement professional on the Maine board.

    My experiences with BPG are mixed. I did not find them nearly as supportive as they claim with ACTUAL sick people living on a low fixed income. In Santa Cruz the city ordinance mandates low income sick folks receive free medicine, not the case in Berkeley.

  • http://twitter.com/JimiDevine Jimi Devine

    ZING!!!

  • Aenar

    I’m so sick of that pot club. Can’t some developer come in and blast it into the stratosphere. The people there are on the edge, the drivers and bikers are rude and medicated, the facility looks like a Nazi prison camp with flowers and its a bad influence in a public area. Can’t these people just grow their own stupid weed? How hard is it?? The potclubs need to be slammed down. The whole concept of medical pot is absurd and people should just grow it in private and get it out of the public domain-including the idiotic billboard advertising it next door. People really pay 300 bucks an ounce for weed? That’s 2 bottles of GREAT scotch

  • ColoradoMidnightRider

    You GO Rebecca!
    BPG heads have gotten too big of an EGO, to not respect you and treat you how you deserve. In public, they foljs act Elitist and, just like ASA, NORML and other organizations, their agenda is NOT easily seen or understood.

    QUESTION: RICO is Federal for cross state violations, so why is a multi-million dollar non-profit being allowed to provide development all the way across the country? I helped consult on a sucessful Maine license approval, but don’t believe for a minute that there weren’t a large number of local business/non-profit folks who could have developed a Maine model MUCH BETTER.

    We DO NOT need the CA model developed in other states, just like we DO NOT need the Colorado model pushed nationwide as “THE ANSWER” for Legalization! CO’s mmj industry is ready to Fold onto itself, and GREED & COMPLIANCE will be the downfall. Keep Government OUT of your medicine cabinet and keep the real focus on medical, today.

    In Colorado, due to government over-regulation, thousands of patients are now opting-OUT of the state system to embrace the pure constitutional Patients assisting Patients collective model. See thecollectiveadvantage.org for more info. Soon to be available in your own state, to develop your own reasonable access logistics without fear of government intervention. Greed Mongers BEWARE!

  • common $en$e

    Those are some serious $$$$ for a non-profit.  

  • Nolasusan

    Money corrupts all. Bottom line. Patients should own the darn place and hire real professionals. Seriously, more professional. I was a patient there and frankly, it could have been better. There was an illusion of professionalism, but I always felt that something was missing. Maybe if everyone wore suits and ties and looked like FBI agents, they probably would have fared better. Feds are afraid of those who look like them. But, they stigmatize the tatooed, pierced, far out folks that BPG had on their staff regularly. And, it didn’t help that all those folks sat in there puffing away all day. The smoke used to bother me a lot. It was just spiraling downward. Sad,but true.

  • Nolasusan

    Money corrupts all. Bottom line. Patients should own the darn place and hire real professionals. Seriously, more professional. I was a patient there and frankly, it could have been better. There was an illusion of professionalism, but I always felt that something was missing. Maybe if everyone wore suits and ties and looked like FBI agents, they probably would have fared better. Feds are afraid of those who look like them. But, they stigmatize the tatooed, pierced, far out folks that BPG had on their staff regularly. And, it didn’t help that all those folks sat in there puffing away all day. The smoke used to bother me a lot. It was just spiraling downward. Sad,but true.