When New Jersey lawmakers authorized the state's first medical marijuana dispensaries in 2010, they assured a skeptical public that the new law "will not do anything but help sick people," in the words of its lead sponsor, Sen. Nicholas Scutari. The six dispensaries were required to operate as nonprofits to alleviate concerns that legal weed would become a cash grab.

Eight years later, medical marijuana has indeed become big business in the Garden State, with some of the dispensaries pushing the limits of the nonprofit law. Two of the dispensaries have struck agreements with out-of-state, for-profit corporations to manage operations, while leaders of a third formed a pair of for-profit businesses affiliated with the dispensary. Another dispensary pays rent for a building owned by its chief executive.

"The nonprofit idea of the dispensaries is a canard," said Bill Thomas, the former chief operating officer of the Compassionate Care Foundation medical dispensary in Egg Harbor Township. "The only thing that made them not-for-profit was the name."

Thomas left his job in 2014 after complaining that state regulations made it nearly impossible to make money in the medical marijuana business. Still, he said, some operators found ways around those regulations by setting up for-profit businesses that were paid to manage the dispensaries or provide other services.

Such arrangements aren't illegal unless the payments are exorbitant and are intended to circumvent the nonprofit requirement. The state has never cited a dispensary for skirting the law, said Jeff Brown, who manages the New Jersey Health Department's medical marijuana program.

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Secret nonprofits

Unlike most nonprofits, New Jersey's medical marijuana dispensaries are allowed to operate in near-total secrecy. Details of their finances and business relationships, including for-profit companies that manage marijuana growing and other operations, were redacted by the Health Department in response to an Open Public Records Request from the USA TODAY NETWORK New Jersey. The marijuana shops also don't fall under the state attorney general's regulations governing charities.

Federally recognized nonprofits, by contrast, must publicly disclose their finances, including compensation of key executives, rent and other business relationships. None of the six medical marijuana dispensaries in New Jersey has federal nonprofit status, as marijuana remains illegal under U.S. law, even as medicine.

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Using business records from New Jersey, Florida and elsewhere, the Network was able to document a constellation of for-profit businesses set up by operators of the state's nonprofit dispensaries to serve them. And in two cases, the dispensaries themselves have publicized agreements with multi-state, for-profit management companies to take over their operations.

The changes are coming as New Jersey regulators prepare to shed the last vestiges of what was initially billed as a not-for-profit enterprise catering solely to the needs of thousands of New Jerseyans with chronic pain and other medical conditions.

Regulators are now reviewing 146 applications to open six new for-profit medical marijuana dispensaries as soon as next year, and the Health Department also wants to allow the existing six medical retailers to switch to for-profit status. Lawmakers have also started work to boost the program by allowing patients to possess more marijuana and access to edible forms now outlawed.

That would require a vote of the Legislature. Several of the dispensaries have proven adept at manipulating the levers of power in Trenton, pouring tens of thousands of dollars into lobbying and into the election campaigns of friendly lawmakers, including Scutari and Senate President Stephen Sweeney. The two Democrats have been working with Gov. Phil Murphy to expand the state's medical marijuana program while permitting anyone 21 or older to use the drug for any reason.

Scutari, who has gotten campaign donations from marijuana interests including the chief executive of the Breakwater medical marijuana dispensary in Cranbury, said the law needs to catch up with the reality of legal weed in New Jersey.

"I don't think any of them have been making money," Scutari said of the dispensaries, which the state calls alternative treatment centers. "They've been staying afloat hoping they'll get more patients, and with the changes we're making, they should be able to do that."

New Jersey's secrecy is unusual among states that regulate nonprofit medical dispensaries. Connecticut, where operators of Cranbury's Breakwater medical dispensary operate another shop, discloses their backgrounds, business relationships and financial backing on a public website. California, where medical shops do not need to operate as nonprofits, has a downloadable public database that shows the corporate structures of the businesses.

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Creative approaches

The Breakwater Alternative Treatment Center illustrates the creative business approaches taken by leaders of some of the nonprofits, as well as the difficulty for the public to untangle the relationships between the various for-profit and nonprofit enterprises.

Visitors to the low-slung brick building in an office park off the New Jersey Turnpike are greeted by signage for Breakwater and the pungent aroma of marijuana in the lobby. The same office houses two for-profit businesses owned by Breakwater board members: GrowTech LLC and M&P Commercial Group LLC, although there are no signs for either company.

Filings with the Division of Revenue and Enterprise Services show that both companies were set up by Alex Zaleski, the Breakwater chief executive, and other board members also have ownership stakes. The filings are vague as to the nature of both businesses. A website run by GrowTech lists job openings for Breakwater.

Zaleski and the other Breakwater board members who own the for-profit businesses at the same address — Walter Edelstein, Jonathan Fisher, Richard Lefkowitz and Andrew Zaleski, who is Alex Zaleski's son — did not respond to messages left by telephone and email. After a Network reporter visited the Cranbury dispensary, its chief of staff, James Froehlich, responded by email but did not answer questions about its business operations.

Another medical marijuana dispensary, the Compassionate Care Research Institute in Woodbridge, is headed by a father-son duo with for-profit businesses that serve the nonprofit. Although neither Chief Executive Officer Michael Weisser nor his son, Chief Operating Officer David Weisser, lives in New Jersey, Compassionate Care is New Jersey's most politically connected marijuana business.

The nonprofit has donated $157,700 to candidates including Murphy, records show, and spent $90,000 on lobbying last year — even before Murphy took office and began making good on his vow to liberalize access to marijuana. Michael Weisser also donated to Scutari's 2011 state Senate campaign.

One of Compassionate Care's top agents in New Jersey is state Assemblyman Raj Mukherji, D-Hudson, who has abstained from voting on marijuana-related bills.

In his financial disclosure form for 2017, Mukherji lists more than $50,000 in income as chief strategic officer of the Compassionate Care Research Institute as well as less than $10,000 in dividends from CannaPharmacy Inc., an Aventura, Florida-based multistate marijuana-related holding company headed by Michael Weisser. Through a separate Florida for-profit company, Weisser also owns the building in which the Woodbridge dispensary operates, according to Florida business filings.

Weisser did not return calls left at his Florida real-estate management company.

David Weisser, his son, is paid as chief operating officer of the dispensary through his for-profit AJJA Management Inc. in Aventura, according to New Jersey and Florida corporate records. He also did not return calls.

Mukherji declined to comment on the record, other than to say he isn't involved in marijuana policy in the Legislature.

Brown, New Jersey's top medical marijuana regulator since April, said both the Garden State and Breakwater dispensaries comply with state law.

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Big weed arrives

The Compassionate Care Research Institute is unrelated to the Compassionate Care Foundation, which operates an Egg Harbor Township medical marijuana outlet.

In May, New York-based Acreage Holdings, a for-profit operator whose advisory board includes Republican former U.S. House Speaker John Boehner, announced that it had reached an agreement with the Compassionate Care Foundation to "assist with the expansion and operations" of the Egg Harbor Township dispensary and marijuana farm. Terms of the agreement, which is pending approval by New Jersey regulators, were not disclosed.

Also in May, Massachusetts-based Curaleaf Inc., a for-profit company traded on the stock exchange in Canada, where marijuana is now legal, opened a store in Bellmawr that the company billed as the largest medical marijuana outlet on the East Coast. Curaleaf took over the operations of what had been the Compassionate Sciences Alternative Treatment Center, which opened in 2015. The company retained a nonprofit structure in New Jersey, said Matthew Harrell, its vice president of government relations, although he said he did not have details.

Even as New Jersey's medical marijuana dispensaries morph from unassuming neighborhood clinics to sleek corporate franchises, they're still technically nonprofits. That hinders their ability to raise capital to expand or open new locations because they can't offer dividends to investors, said Marc Press, a lawyer with Cole Schotz in Hackensack who has represented medical marijuana investors. And because of the federal ban on marijuana, the dispensaries also don't realize the federal tax benefits that go to nonprofits.

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In July, Murphy's administration dropped the nonprofit requirement as it solicited applications to run six new medical marijuana dispensaries. That likely means the six existing dispensaries will also seek to drop the requirement, said Julio Valentin, a retired Newark cop who heads Greenleaf Compassion Center.

"If you're a nonprofit, there's no way you can compete with a for-profit business," he said.

Ken Wolski, who heads the Coalition for Medical Marijuana in New Jersey, which itself is a nonprofit, said the state's requirement has neither kept prices down nor made it easier for lower-income people to participate in the marijuana industry.

"Why not allow profits in this industry?" Wolski asked.

As New Jersey strips away restrictions on marijuana for both medical and non-medical use, the drug has been sold as an elixir for the state's economic woes, especially in its larger cities. More than 250 people attended a forum in downtown Trenton in October called Cannagather that was part business expo, part religious revival for the marijuana faithful.

Trenton Mayor Reed Gusciora, formerly one of the Legislature's foremost champions of legal weed, said the drug has the potential to supercharge economic development. In an interview, Gusciora recalled the origins of New Jersey's medical marijuana program in 2010.

"The main motive was to remove the profit motive and make sure medical marijuana was being done for all the right reasons," he said. "Times have changed. We're going to move toward the California model."