The state has stubbed out potential new business line for a co-owner Michigan's largest tobacco retailer.

A co-owner of Troy-based Wild Bill's Tobacco, with more than 100 shops in Michigan and Ohio, sought to enter and dominate Michigan's marijuana dispensary market, but regulators denied all of the group's applications last month.

In another blow last week, Gov. Gretchen Whitmer blanket order banned the sale of flavored electronic cigarettes — Wild Bill's operates 10 vape shops called Mr. Vapor and uses the Mr. Vapor branding inside other Wild Bill's locations.

The company is likely to see sales impacted by the ban, which is expected to take effect in the next few weeks.

And pot isn't going to make up the difference.

The Michigan Marijuana Regulatory Agency in August denied 18 applications for 38 licenses filed by president and co-owner of the tobacco chain, Mazin Samona, and his in-house attorney Paul Weisberger. It's the second attempt by the group to get approval for dispensaries in Battle Creek, Bangor, Lansing, Sturgis, Walled Lake, Bay City, Kalamazoo, Adrian and growing operations in Lansing and Bangor.

Samona and Weisberger played at least a minor role in defining Michigan's regulated marijuana industry. Samona and Weisberger were both active in discussions with legislators about making licenses difficult to obtain. Weisberger was even appointed by then-Gov. Rick Snyder in 2018 to serve on the 17-member Michigan Marihuana Advisory Panel to make recommendations on how to implement the state's marijuana laws.

The duo went on to form Oasis LLC, doing business as Oasis Wellness Centers, and sought to become one of Michigan's largest marijuana retail chains. But their plans went awry in September 2018 when the board they were advising denied their applications.

According to records obtained by Crain's through the Freedom of Information Act, the now-disbanded Bureau of Medical Marijuana Regulation board denied Oasis' applications on the grounds of "consideration of the integrity, moral character and reputation of the applicant" and because the applicant the group failed to disclose Samona's criminal history. Samona holds a 95 percent interest in Oasis and Weisberger controls the remaining 5 percent.

Samona, Weisberger and other executives from Wild Bill's did not respond to several requests for comment.

The agency has approved applications for other co-owners of Wild Bill's as well as two prequalification applications from Weisberger for a dispensary in Ferndale.

Oasis appealed that decision to the Department of Licensing and Regulatory Affairs and an investigation into that decision by an administrative law judge began last December.

The criminal conduct from more than 30 years ago includes pleading guilty to assault by physical menace — a disorderly person-type charge — in New Jersey in 1988, a misdemeanor guilty plea for attempted fourth-degree criminal sexual conduct north of Detroit in 1981 and another misdemeanor for falsifying a birth certificate under a fictitious name to obtain a driver's license, according to the administrative law judge's opinion.

Some of those cases have since been expunged, according to state records.

The board alleged Weisberger reported on the group's application that Samona's first 1988 charge was larceny, not assault by physical menace.

Doug Mains, a partner at Honigman Miller Schwartz and Cohn LLP in Lansing who helped draft the Michigan proposal, said this type of error was almost guaranteed to get a denial from the board — which was disbanded by Whitmer earlier this year and moved all licensing to the Marijuana Regulatory Agency under Executive Director Andrew Brisbo.

"We saw a lot of this with the board initially," Mains said. "Nondisclosure is something they took a hard stance on. If you didn't disclose a criminal arrest or misstated it, even if it was 35 years ago, they thought you were misleading them. We learned early on that it wasn't what you disclose that's going to hurt you, but what you didn't disclose."

But the administrative judge in the appeal didn't agree with the board. The judge determined this mischaracterization didn't negatively impact the "moral character" of Weisberger or Samona, according to the state records.

Samona's criminal record didn't end there, however, as the judge commented in a proposal for decision filed July 2.

"If the above 3 offenses were the only brushes Mr. Mazin Samona had with the law, the undersigned administrative law judge would likely find that Mr. Samona had obviously matured over the ensuing 35 years ... and would find Mr. Samona qualified and suitable for licensing under the Michigan medical marijuana act. However, that is not the situation at hand," the judge said in the decision.

The application also omitted a misdemeanor charge for violating the Michigan Tobacco Products Act, which Samona pleaded guilty to in 2004. The application only mentioned that Samona, who at least co-owns more than 100 tobacco shops in Michigan and Ohio, was charged for violating the Michigan Tobacco Products Act in 1997 along with 22 other individuals, according to the state's records, but that those charges were ultimately dropped.

Samona did not reveal on Oasis' application that he served 18 months probation and paid a restitution of $500,000 as part of the misdemeanor guilty plea, state records say.

During the appeal, Samona testified that the group would never have filed so many applications had it considered a denial possible.

"If a person knew that they had the risk of being denied a license, a businessman with any common sense would pay the $6,000 fee and file one application for a medical marijuana license to test the waters and access the chances of obtaining a license ...," the records said Samona testified.

Oasis' 38 applications cost $228,000 in nonrefundable fees and likely much more in investigative fees.

Alex Leonowicz, COO and general counsel for cannabis grower and retailer Redbud Roots LLC, said the state hit the company with a $63,000 investigative fee and that Oasis likely had similar costs.

Despite the application errors, the administrative judge agreed with Samona and ruled in favor of Oasis stating the group "is clearly and convincingly qualified and suitable for licensing" on the grounds that the offenses were many years ago and Samona has operated Wild Bill's with no issues for more than 15 years.

Unfortunately for Oasis, the judge's decision isn't binding, and the Marijuana Regulatory Agency denied Oasis' licenses for a second time anyway.

Oasis has the option to appeal the decision again through the traditional court system, but as of Sept. 6 had yet to do so.

Denials are relatively uncommon, especially after an administrative judge rules in your favor, Mains said.

"Honestly, I've never had an application denied. We're like 125 or 130 for 125 or 130," Mains said. "It's really uncommon, but it's certainly within the agency's power to do so."

Mains and Leonowicz agree that the regulatory agency is wary of oversaturating the market by approving too many licenses, which could lower marijuana prices to a point where businesses would shutter, and Oasis' denial could be a sign of things to come.

"(The state) doesn't want a flooded market. They are wary of it," Leonowicz said. "I don't think we're at a stage where we'd see a lot more denials yet, but theoretically, (the agency) can approve the cream of the crop. They can have a lot of leeway on who they approve because there's no shortage of applicants."

Without commenting directly on Oasis, Leonowicz said the stringent rules for preventing any malfeasance is a wanted protection for operators like Redbud.

"It's not like we're selling candy bars; it's a controlled substance," he said. "One or two bad apples could have serious consequences."

Editor's note: This article has been to correct the number of applications the group filed, the number of dedicated Mr. Vapor shops and the description of one of the charges. The current version is accurate.