Baez, who currently faces six felony charges of illegally selling marijuana, denied any wrongdoing Thursday. But his legal troubles could worsen considerably if the allegations contained in a Santa Clara County Superior Court affidavit are proved true. Baez co-founded about a year ago, said in the affidavit the center's check register contained numerous questionable payments. He also wrote that about a quarter of the center's 270 clients had no apparent recommendation from a doctor. Pharmaceuticals are normally sold at high multiples of direct costs to cover research expenses.
Many manufacturers try to double material costs.
Pharmacists mark-up is usually narrower because of high volumes. The club has a low volume. Most restaurants charge high multiples of direct food cost because overhead is high in relation to cost of goods. The club has to cover its overhead. But Baez and his lawyer said Thursday that many of Savage's contentions were exaggerated.