Medical marijuana appeals expose flaws in application scoring

The competition for 39 permits to grow, process and dispense medical marijuana in Pennsylvania was bound to leave many applicants speed-dialing their lawyers to complain about unfair evaluations.

Sure enough, this month a Bethlehem applicant sued the state Department of Health to shut down the new medical marijuana program because of what it considered a bungled permitting process. Advocates decried that company, Keystone ReLeaf, as self-serving and inconsiderate of the ailing children and adults who have long sought relief.

But a Morning Call review of more than 130 administrative appeals filed against the state Department of Health’s Office of Medical Marijuana reveals a broader scope of the complaints that threaten to plunge the nascent industry into a legal morass over an evaluation committee’s handling of applications.

Seemingly cut-and-dried application requirements such as photo IDs and resumes were expected to be scored for completion. Instead, many were graded on a sliding scale — and to the hundredth decimal point. One yes-or-no question worth 50 points yielded a score of 41.38 for one applicant and 6.30 points for another, though both answered in the affirmative.

And nearly every appeal took issue with how the committee quantified diversity initiatives and community impact pitches.

The state received about one administrative challenge for every three denied applications. The Morning Call obtained most of them, as well as scoring rubrics, through an open records request.

Some advocates say Pennsylvania is stumbling down the same litigious path as other state bureaucracies that micro-managed the issuance of a limited number of permits. The Keystone ReLeaf lawsuit, they say, will only be the beginning.

Others say the issues are ultimately procedural molehills that are not remotely serious enough to delay patients access to medical cannabis.

“The process used by the Department of Health was extremely well-vetted, and the appeals seem like a natural part of the process,” said Michael Bronstein, co-founder of the American Trade Association of Cannabis and Hemp and the director of a coalition made up of the successful Pennsylvania applicants. “Patients who have been waiting for years need access as quickly as possible.”

The law is the law?

Companies paid nonrefundable application fees of $10,000 and $5,000 for grower/processor and dispensary applications, respectively.

At least two dozen applicants challenged the Health Department’s decision to not even score applications that were deemed incomplete.

Jill Lamoureux, CEO of Pittsburgh Pure Keystone LLC in Pittsburgh, submitted two growing applications and one dispensary application, each exceeding 400 pages. According to Pure Keystone’s appeal, she experienced formatting glitches while transferring 12 required application attachments between computers.

In the process of fixing broken forms before sending them, she inadvertently included one attachment twice, omitting another. She submitted the missing attachment March 23, according to the appeal.

After not hearing back from the Health Department, Lamoureux emailed Eric Hagarty, one of Gov. Wolf’s deputy chiefs of staff, asking if he had heard of other applicants experiencing similar issues.

According to an email included in the appeal, Hagarty responded, “There were a couple folks who seemed to have issues with the formatting, but DOH was never able to re-create the issues on their end. I don’t think there’s any cause for concern that DOH would disqualify an applicant over something like that.”

Two months later, all three Pure Keystone applications were rejected as incomplete.

In its appeal, Keystone ReLeaf also claimed Hagarty said the state would not disqualify its grower/processor application because of a USB drive glitch.

Hagarty did not respond to a request for comment.

The disqualifications were not just overly severe, but also illegal, other appeals claim. The Medical Marijuana Act includes a paragraph that says the department “shall notify” applicants if further documentation is required, and that applicants have 30 days to provide the additional material.

Plus, several appeals point out that the Health Department did allow one Pittsburgh-area applicant to resubmit after its application was destroyed in the mail.

In its three appeals, Pure Keystone attorney Ansley Westbrook II argued that rejection based on technical glitches “would be an abuse of discretion, would have no reasonable relation to any governmental interest and would be in violation of substantive and procedural due process and equal protection.”

He added, “The impact of this issue … cannot support the basis for the rejection of the application.”

John M. Cascioli of Bangor, owner of CannaMed Green Inc., also had two applications rejected for one missing attachment. He insists the attachment was on a USB drive mailed to the department, but said that whatever happened, it did not warrant disqualification.

“We literally spent $2 million preparing for this,” he said. “I can’t believe it. I just don’t understand.”

Consistent inconsistencies

Applicants who at least received a scorecard found other reasons to express incredulity.

Though some application sections were evaluated on a pass/fail basis, the evaluation committee mainly used a five-level scoring scale. For example, a response to a 50-point question that “meets expectations” earned 21 to 30 points.

Denied applicants claim the department should have explained which sections the review panel would score using the scale. They also say the scale never should have been used to score certain elements.