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.
“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.”