"I think Bill ran out of patience," Knowlton said Thursday, calling him a "dear friend."
He said Thomas and the board disagreed on whether the dispensary was a "sustainable model" that could succeed.
"You have to adjust your expectations based on realities," he said, adding that the dispensary would likely lay off some of its 20 employees and reduce its marijuana-growing operation.
The dispensary, in a warehouse just outside Atlantic City, is one of three that opened in the state more than four years after New Jersey legalized medical marijuana. Three others are awaiting approvals to open.
In an interview this month, Thomas said he was frustrated with the state's marijuana program, saying it was "so restrictive that it's almost nonexistent."
While the dispensaries had anticipated they would be serving 50,000 patients, only 2,300 have enrolled statewide. He said the Egg Harbor dispensary has only 250 repeat clients, which Thomas said was not enough to make ends meet.
He said he recently had to abandon plans to begin manufacturing marijuana capsules and lotions despite patients' demand for such products.
Thomas was scheduled to testify Tuesday in Pennsylvania at a hearing on a pending medical-marijuana bill there. But shortly before the hearing started, he notified the Senate committee that he would not speak and asked that the written testimony he had submitted be stricken from the record, committee staff said.
Knowlton said he had discussed the testimony Thomas was prepared to deliver and asked him to refrain, saying it was not reflective of the board's position. Knowlton said Thomas had planned to discuss the pitfalls of New Jersey's program, but Knowlton told him the board believed the problems could be overcome.
Donna Leusner, spokeswoman for the New Jersey Department of Health, declined to comment.
The Egg Harbor dispensary put its first seeds in the ground one year ago. Plans to expand the growing area using a $357,000 loan from the state Economic Development Authority have been put on hold.