Suit that tried to blow up Pa.'s medical marijuana program fizzles

A lawsuit that aimed to dismantle the state’s medical marijuana program was thrown out of court Friday in Harrisburg.

Keystone ReLeaf LLC of Bethlehem failed to win a permit to sell cannabis last year after it submitted an incomplete application. It filed a complaint in Commonwealth Court in September seeking an injunction against the state Department of Health.

Releaf asked the court to cancel every permit the Department of Health had awarded to marijuana growers and dispensary owners and start again from scratch.

The suit made several points: The applications were scored haphazardly. A question that asked for a response of “yes” or “no” had a maximum of 50 points, but inexplicably, scores ranged from 5 to 41. Applicants were required to submit photo identification and resumes, but no applicant received a full 50 points. ReLeaf filed identical applications for two separate dispensary permits but each received a different score.

The suit also claimed the permitting had been “infected by bias and favoritism” because the Department of Health had kept the panelists who picked the winners secret.

Releaf called the permitting process “arbitrary, capricious and unreasonable… and therefore, invalid.”

But in an opinion penned by Judge Michael H. Wojcik, the court dismissed Releaf’s case because the company had not taken its complaints to the Department of Health first.

“Having failed to go through the administrative appeal process, petitioner’s allegations regarding the process are speculative at best,” write Judge Wojcik.

ReLeaf’s attorney, Seth Tipton, said testimony in court had uncovered “disturbing facts” and “astounding revelations” and that the company would appeal the decision.

“For example, 100 points of the entire score (10% of the overall score) for every application in the Commonwealth was left to a single employee’s absolute discretion, with no review.  In other testimony, a Commonwealth employee admitted to creating scoring criteria that contravened legislative requirements,” Tipton said in a statement to the Inquirer and Daily News.

“Moreover, the schedule adopted by the Department of Health was untenable, and required the scoring committee members to read, evaluate and score thousands of pages every week for almost three months straight, in some cases while continuing to handle existing job duties,” Tipton wrote. (Full comment here.)

If the case had been successful, it would have delayed Pennsylvania patients the access to marijuana medicines for years.

Justin Moriconi, a partner in Elkins Park’s Moriconi/Flowers law firm, praised the court’s decision to throw out the Releaf case.

“It’s a ‘Thank God’ moment,” said Moriconi, who represents several Pennsylvania marijuana endeavors. “It paves the way for cases with a little more credence. It almost feels like it was filed out of anger and frustration, it wasn’t rooted in the law.”

In a statement, the Department of Health said it was pleased with the court’s decision which it said  “reinforces that the department’s medical marijuana permitting process is fair and consistent.”

Twelve companies are currently cultivating marijuana in the state. Two of them — Cresco Yeltrah and Standard Farms — successfully have harvested crops. Of the 51 dispensaries that are scheduled to open this year under Phase 1 of the program, nine retailers are open and serving patients.

Camera icon Handout
Cover of the Medical Marijuana Organization Grower / Processor Application submitted by Keystone Releaf LLC, which sought an injunction against the state Department of Health. The company has asked the court to rescind all previously awarded permits and start again from scratch.

Later this year, the state will award 13 more commercial cultivation permits and dozens more dispensary permits.

The state also plans to award 8 super-licenses — each allowing for a growing facility and six dispensaries — to companies that pair to do research with the state’s teaching hospitals. A suit was filed last week to stop those licenses from being issued, claiming that it would “flood” the state with medical marijuana and give the hospital-affliated companies an unfair advantage.

Chicago attorney Jeremy Unruh said the points raised in the Releaf case are common in other states with medical marijuana programs.

“We see these suits, with the same issues, pop up all the time,” said Unruh, who represents the national grower and dispensary owner doing business in Pennsylvania as PharmaCann. “I have yet to see a state blow up its program based on these garden-variety complaints.”