Cannabis Dispensery

For his role in an illicit kickback scheme, the founder of a Baltimore County marijuana store has been sentenced to one year in federal prison and one day of house arrest.

Matthew Edward Blair, the 48-year-old proprietor of the Blair Wellness medical cannabis dispensary, was sentenced to 18 months of supervised release and forced to pay more than $3.1 million in restitution, according to a press statement from the U.S. Attorney’s Office.

At Blair Pharmacy, Blair pleaded guilty to paying unlawful payments in December for the purpose of bringing in more customers. According to federal authorities, the pharmacy was known for its complex pain creams.

In his guilty deal, Blair confirmed that the marketers targeted members of the military and their families, which prosecutors claimed constituted a significant portion of Blair Pharmacy’s client base.

Cannabis Kickbacks

Matthew Edward Blair
Matthew Edward Blair

Prosecutors allege that the TRICARE insurance program reimbursed Blair’s business for more than $6.3 million during a seven-month period from 2014 to 2015 that was “tainted” by the scheme, despite the fact that paying marketers commission for referrals to a federal health insurance program is against the law.

In an emailed statement, Blair said that he has “accepted my responsibility for the payment of commissions to an independent marketing professional beginning in 2014 during the time that I was responsible for the operations of Blair Pharmacy.”

According to Blair’s reading of a legal opinion from the Office of the Inspector General and conversations he had at the time, his agreement with the marketing professional was legitimate.

An experienced marketing representative who had already been working for a compound pharmacy under an agreement that paid him commissions was introduced to me,” Blair wrote in his blog. “He assured me that his attorneys had verified that this conduct was legal and he confirmed my understanding that such agreements were in wide use in the compound pharmacy business at the time.”
Even though his wife has taken over the firm that is now known as Blair Wellness, Matthew Blair is still actively involved in it. In his plea agreement, Blair admitted to a kickback scheme that took place prior to the establishment of the dispensary.

An unknown sum was paid by Chicago-based Cresco Labs to acquire the dispensary in August, pending regulatory clearance. But in January, Cresco called off the deal due to “the failure of certain closing conditions to be met prior to our specified termination date.”

As part of the plea bargain Blair signed with the U.S. Attorney’s Office in December, prosecutors recommended that he be sentenced accordingly.

Cresco Labs

When a military doctor had a long day of back-to-back operations, one of Blair’s marketers would wait outside the operating room with a stack of pre-printed prescription forms, according to the agreement. The agreement states that the marketer “took advantage of [the doctor’s] grueling work schedule” and that Blair Pharmacy would sometimes mail his patients bottles of cream in the mail.

It was “the first time they heard that a prescription for a cream or vitamin had been issued for them,” according to the agreement when those consumers received those products in the mail.

Prosecutors said that Blair allegedly tinkered with prescription formulae based on the ingredient’s reimbursement value. According to the plea agreement, Blair emailed one of the marketers he hired, saying that reimbursements at Blair Pharmacy are “the highest in the industry due to our formulations.”

Prosecutors claim that payments for one month’s supply of his medicine components cost thousands of dollars, including:

More than $4,000 for a vitamin formulation; $9,000 for a pain cream; $14,000 for a migraine treatment; and $17,000 for a scar cream.
In his guilty plea, Blair stated that he had previously reimbursed the government for the illicit payments he had made.

As part of the bargain, the government agreed to drop the wire fraud accusations against him, he said, calling the offenses “technical.”

Source: BizJournals