In a five-count lawsuit filed September 8 against the Pennsylvania Department of Health, Office of Medical Marijuana (PDHOMM) dispensary license applicant Keystone Releaf, LLC, is seeking to review the department’s “systemically flawed, inequitable and unconstitutional process” for accepting, reviewing and scoring medical marijuana growers and processors, and medical marijuana dispensary permit applications, adding that the “continued administration of the flawed permitting process creates a hardship” for all license applicants in the state.
The suit also pointed out that some permits were issued without asking for or following up on the same due diligence that Keystone was required to do.
For this and other reasons, the lawsuit seeks to have the process ended for now, and rescind the awarded licenses it says were granted unlawfully.
The suit comes from just one of at least 140 other applicants who have filed administrative appeals challenging the denial of their grower/processor and/or dispensary permit applications.
According to the suit, the PDHOMM office received 457 applications when they opened up the application process period from February 20th to March 20th, that included 177 for growers/processors and 280 for dispensaries.
Permits for 12 grower/processors and 27 dispensary permits were issued by the end of June.
But this process of awarding licenses, according to the suit, was “secretive,” and “illusory” that “denies all medical marijuana permit applicants their constitutional rights of due process” to challenge the denial of their permit by administrative review.
The process was therefore deemed unlawful, “arbitrary, capricious and unreasonable.” The lawsuit stated that the department waived certain legislative requirements for some applicants, made exceptions for others, inconsistently scored and reviewed applications, and ultimately “treated like applicants differently, due to bias, favoritism or otherwise rending the permitting process..lacking the force of law.”
The PDHOMM also refused to release the identities of the the people who scored the applications, or explained what qualified them to do that, which could have led to conflict of interests issues with an applicant that led to “widespread confusion and suspicion amongst applicants.”
According to John Collins, the director of the PDHOMM, this “secrecy was essential,” and the regulations they were following required the “anonymity of team members to avoid any interference with their work or influence from outside parties.” (A CBE confidential source said that the department will soon be revealing who those evaluators were.)
As proof of the flawed process, the lawsuit discussed the personal identification part of the application, revealing that some applicants who provided the same information in that section of the application got different scores. The department has “done nothing to explain this and other bizarre scoring issues, claiming only that the entire scoring process is within their sole discretion to run and their decisions unchallengeable.”
In another example offered in the lawsuit, an applicant submitted two identical dispensary applications which were scored differently, calling it illogical and inconsistent. That has also been disputed by those close to the process because the scoring was done through a blind evaluation process, meaning that there should have logically been different scores, and the differential in score totals noted in the Keystone Relief complaint was just one or two points.
The department has affirmed its position relative to the other 140 administrative appeals, saying it doesn’t have to tell anyone why applicants won licenses while others were denied, claiming that selecting applicants was its “sole and exclusive responsibility” and that it didn’t need a “rational and lawful basis” for selecting winning applications.
The lawsuit called for the department to invalidate the permiting process, and rescind any of the licenses awarded because they were “awarded pursuant to an unlawful process.”
But the lawsuit didn’t really demonstrate that the scoring process was wrong, nor did the suing dispensary show evidence of why the process is unconstitutional.
Based on the complaint and petition, The Hoban Law Group’s Pennsylvania Practice Chair Steve Schain said, “At best, Keystone ReLeaf, LLC’s claims and allegations are premature. At worst, they’re flat wrong.”
In the end, the licensing process in Pennsylvania continues as the department is working on awarding 23 more dispensary licenses (the state says no more than 50, with each dispensary having no more than three separate locations), and 13 more grow licenses (that state says no more than 25, with no more than five dispensary owners also eligible for a grow license).