Pubdate: Sat, 23 Sep 2017
Source: Morning Call (Allentown, PA)
Copyright: 2017 The Morning Call Inc.
Author: Andrew Wagaman


More than 130 administrative appeals have been filed against the state
Department of Health's Office of Medical Marijuana over a secret
evaluation committee's handling of applications to grow, process and
dispense medical marijuana in Pennsylvania.

More than 130 administrative appeals have been filed against the state
Department of Health's Office of Medical Marijuana over a secret
evaluation committee's handling of applications to grow, process and
dispense medical marijuana in Pennsylvania. (HARRY FISHER / THE

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

Sure enough, this month a Bethlehem-based 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
have decried that company, Keystone ReLeaf, as self-serving and
inconsiderate of the ailing children and adults who have long sought

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

More than two dozen applications, usually comprising several hundred
pages, were disqualified for apparent technical glitches or clerical
oversights, and applicants were offered no chance to make what would
have been easy fixes, according to the appeals.

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.

"It's Groundhog Day," said Chris Goldstein, a Philadelphia-based
cannabis legalization advocate. "States that have attempted to do
limited permits have been fraught with the most lawsuits, regulatory
delays and problems with implementation. This was so

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 new 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 on March 23, according to the appeal.

After not hearing back from the Health Department, Lamoureux emailed
Eric Hagarty, one of Gov. Tom 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 aE& 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."

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.

Take the capital requirements section. The Medical Marijuana Act
required grow facilities to have at least $2 million and dispensaries
to have at least $150,000 in financial backing, and the application
simply instructed companies to summarize their available capital.
During the submission period, multiple applicants asked if they could
score more points if they demonstrated they had more than the minimum
capital, but the Health Department said it "could not provide a
response" to this specific question.

Sure enough, the more financial backing an applicant said it had, the
closer it came to getting all 75 points, according to the appeals.
Some appellants said they would have demonstrated a greater war chest
had they known the question was not pass/fail.

For the "personal identification" attachment, applicants were supposed
to provide resumes and photo IDs of each financial backer, operator
and employee. The Health Department did not state in its instructions
and pre-deadline Q&As that it would grade resumes (or photos, for that
matter) on quality.

Nevertheless, the committee scored the section using the sliding
scale. Mission Pennsylvania, which earned a Lehigh County dispensary
permit but was denied a growing permit, scored 37.11 points.

Despite identical responses, Keystone ReLeaf scored 36.40 on one
dispensary application and 31.40 on another.

"It is inconceivable that there is some subjective or holistic scoring
approach to determining whether the application did or did not include
the required photo identification and resumes," wrote Seth Tipton,
Keystone ReLeaf's attorney.

Companies such as Keystone that submitted applications in multiple
regions of the state caught inconsistencies across their multiple
scorecards, according to their appeals. Take PharmaCann LLC, an
Illinois company that wanted to open one of two potential grow
facilities in Lackawanna County. Nineteen identical sections in
PharmaCann LLC's two applications received different scores from the
evaluation committee.

All those decimal points apparently proved challenging to add up. An
appeal by Columbia Care LLC, which earned a dispensary permit but not
a growing permit, claimed that half of the application's total scores
were miscalculated. The miscalculations usually amounted to less than
a tenth of a point, but some of the scores were indeed wrong.

Ari Molovinsky, a principal of Mission Pennsylvania, wrote in its
appeal that random, unpredictable scoring is exactly what launched
challenges to various state-licensed medical marijuana programs. This
"only serves to delay rollout and harm patients who are eagerly
awaiting medication."

'Shroud of secrecy'

Numerous companies lambasted the appeals process itself as an exercise
in futility, given the scope of information that remained

Many winning applications were almost entirely redacted by the
companies themselves as part of the initial submission process.

Many losing applicants did the same thing. But they say the department
is violating the rejected applicants' right to due process by not
publishing the winners' unredacted versions.

"Columbia Care's ability to appeal on the grounds that the
department's evaluation and scoring may be contrary to the evidence
has been arbitrarily and unreasonably restricted," attorney Richard
Limburg wrote.

Others noted that the health department continues to conceal the
identities of the evaluation committee members and has failed to make
grading criteria widely available.

"The shroud of secrecy with which the application process and grading
was performed allowed for no transparency, review or critique," wrote
Mary Parker, CEO of Global Resource Operations LLC.

The department faces another problem: It's given winning applicants
six months to get up and running. They keep barreling forward as the
department slogs through a mountain of appeals. Any suspension or
revocation of specific permits would come at a significant cost to the
winners as they invest in business operations.

Now what?

Health Department spokeswoman April Hutcheson did not answer a list of
questions from The Morning Call about the permitting process. But in
legal responses to administrative appeals, the department has insisted
that "the evaluation of the content of the application for compliance
with the Act aE& is the sole and exclusive responsibility of the
[Office of Medical Marijuana] and is accomplished in the sole exercise
of the discretion of the Office.

"Appellant's self-serving declarations of compliance with the
requirements for application criteria aE& attempts to usurp the
discretion afforded the Office by the General Assembly to interpret
and implement the Act."

Becky Dansky, legislative counsel for the Marijuana Policy Project, a
pro-legalization group, said the scoring discrepancies for identical
sections of applications do raise questions. She hoped the department
would clarify whether multiple members of the evaluation panel
reviewed each application.

"One of the purposes of having people from different agencies is that
they brought different areas of expertise," she said. "Hopefully more
than one set of eyes was on each application."

Still, the most concerning issues raised in the appeals don't seem to
reach the "alarming or catastrophic" level that would warrant
"shutting down the program and starting over again," she said.

Peter Schweyer, an Allentown state representative who helped write the
medical marijuana legislation, also acknowledged the scoring
discrepancies were disconcerting and need to be investigated.

"But I think the idea of halting a hugely popular program over certain
questions about procedure is a tough one to swallow," he said. "If I
were a parent of a child who's going to get relief because of this
program, I wouldn't give two seconds of thought about a few procedural

MORE ONLINE: Visit to see which companies appealed
in the northeast region, and take a look at the application scoring
worksheet and point allocation guide.

* 73 total northeast region applications (including the Lehigh Valley)
- ---
MAP posted-by: Matt