Boston marijuana shop opens with construction workers unpaid
Rooted In trumpets social justice, but subcontractors say they were stiffed
ON ITS WEBSITE, Newbury Street marijuana retailer Rooted In touts its commitment to social justice, equity, and the Boston area community. It boasts of profit sharing with employees and a commitment to building generational wealth for people of color.
“Our mission is to build a community-conscious cannabis business committed to engaging, serving, and benefiting members of our communities through financial success and social responsibility,” the dispensary writes on its site.
But behind the scenes, the just-opened dispensary leaves a trail of unpaid and disgruntled subcontractors – many of them local workers, like those the company claims it is trying to help.
“They’re taking small investments from people in marginalized communities, and then they’re coming in and screwing over all these immigrant contractors,” said Tony Corbett, whose company Corbett Plastering was hired to frame and install sheetrock on the dispensary.
The problem of construction companies stiffing their subcontractors is a perennial one. The situation also highlights the financial challenges faced by marijuana companies, which often have large expenses up front before they start earning any revenue.
“As you may know, the cannabis industry is heavy on upfront costs and that creates challenges to commence operations,” Chowdhury said in his email. “As an equity candidate, this burden is even more cumbersome. We can assure you that we are wholeheartedly committed to getting all subcontractors paid for all the work they have done with us.”
CommonWealth profiled Rooted In in August 2021 as a nascent business started by two Roxbury couples – Chowdhury and his wife Rokeya Begum, and Brian Keith and his wife Joanne Keith – with the intention of having a business owned and invested in by people of color as a way to build community wealth. The business opened December 5, with a ribbon-cutting planned for some time in the future. Chowdhury and Begum are experienced real estate developers and restaurant owners who own the real estate company Shanti Acquisition and Development.
Rooted In hired a limited liability company called SBM Construction to build the dispensary. SBM Construction was formed in July 2021, and Begum is the sole manager listed on paperwork filed with the secretary of the commonwealth’s office.
Multiple subcontractors say they were never paid by SBM Construction.
Corbett placed a lien on the Newbury Street property. According to paperwork filed with the Suffolk Register of Deeds, SBM Construction paid Corbett’s Dorchester-based company $75,000, but still owes Corbett Plastering another $51,700 for materials and labor.
“I just want to know, where did the investors’ money go?” Corbett said. “The money never made it to the subcontractors.”
Daylin Dominguez runs a small Lynn-based family carpentry business, working with his father, uncle, and other relatives. W&R Carpentry was hired by SBM Construction to do the shop’s woodwork, which cost $43,240. The firm was paid $15,000 soon after starting the job, then finished in September and still hasn’t gotten the rest of its money, Dominguez said.
“I employ eight people with me and obviously they depend on the salary they get from my company,” Dominguez said. “We worked there for a few months and not having this money, really it almost drowned my company.”
David Deras, of the Everett-based Deras Painting Services, said he is owed almost $13,000 for painting work he completed in August. Deras said he would contact a supervisor at SBM Construction regularly, and she kept stalling. He would call the company and get no response. He is reluctant to pay a lawyer to get his money back. “I sent email asking for payments and everything, but I don’t have any answer,” Deras said. “I’m waiting and waiting.”
The Newbury Street marijuana dispensary is one of several projects SBM Construction is involved with, generally under the auspices of Chowdhury and Begum’s real estate development firm, Shanti Development and Acquisition. The company has failed to pay subcontractors for those projects as well.
Timberline Enterprises, a building materials supplier, put a lien on a small apartment building constructed by SBM Construction at 8 Ashton Street in Boston in October, claiming the company was owed $312,400. The lien was lifted November 29. Chris Alexander, director of business development and installed sales for Timberline, said Timberline reached a deal with the company financing the project to get paid out of the proceeds when a unit is sold.
HVAC installer Tim Kerins said he is owed money for three projects run by SBM Construction, including $5,000 for the marijuana dispensary and $110,000 combined for the Ashton Street apartment building and offices in Roxbury. “I’m a good judge of character, but I wasn’t on this one,” Kerins said of taking the jobs.
Elevator installer Kevin Swansen, who worked on the marijuana dispensary and the apartment building, said he has had “bounced checks on multiple occasions” from SBM Construction.
Brian McElligot, a former head of construction for Shanti Development who oversaw the Rooted In project, said he left Shanti Development a couple of months ago because he saw that the subcontractors – some of whom he recommended for the job – were not getting paid. “If you want to run a successful company, you have to pay your subcontractors,” he said.
Kevin McCaughey, an attorney with Ganick, O’Brien & Sarin who represents SBM Construction, said the claims of subcontractors that they completed the work are “not entirely accurate.” McCaughey said he would not get into specifics because the company is in the process of trying to resolve the matter, but he suggested that some work was not done satisfactorily. “As is quite common with construction projects, there’s work that’s done, there’s work that’s not done, then there’s discussion of payment based on the work that’s done and the work that’s not done,” McCaughey said.
Dot Joyce, a spokesperson for Rooted In, said additional financing is in the works, and Rooted In’s payment of its outstanding balance to SBM Construction “will hopefully be imminent.” SBM Construction will then be responsible for paying its subcontractors.
“It’s inherently expensive to get to opening when you don’t have any business coming in,” Joyce said. She said that is why many marijuana companies get provisional licenses from state regulators but never open.
David Wilson, a partner at law firm Corwin and Corwin who practices construction law and is counsel for the Associated Subcontractors of Massachusetts, said the problem of subcontractors not getting paid is a perennial one. Wilson said when a company is short on cash, subcontractors often “end up basically being the bank” and financing a project. The subcontractors shell out money for materials and labor, and the company waits to pay them until it has money coming in.Massachusetts has prompt pay laws, which set deadlines by which an owner has to pay a contractor, who has to pay subcontractors. According to those laws, an owner has 15 days to approve a contractor’s invoice and 60 days to submit payments, then a general contractor has 22 days to approve a subcontractor’s invoice, and another 45 days to pay it. Someone who pays late could face financial penalties, but Wilson said a subcontractor would be required to go to court to enforce the law.
Wilson said he has seen several cases involving marijuana companies where payments were withheld, but he does not know if there is a higher rate of delinquent payments with marijuana companies compared to other industries. “It may be that they’re not properly financed to begin with. It may be that the people who are developing them are not necessarily knowledgeable about construction projects, so they may run into issues they don’t know how to deal with,” Wilson said.