A New Jersey court on Wednesday ruled that the state wrongly rejected medical marijuana licenses for several companies and said the system used to rate applicants lacks transparency and creates confusion in the small and competitive marijuana industry.
A three-judge appellate court vacated the 2018 decision to award six licenses for new medical marijuana companies and remanded it to the health department to come up with a new rating system.
While the decision does not necessarily overturn the current medical marijuana license holders who have invested millions in building and opening dispensaries, it could give others a second shot down the road. And it could lay the groundwork for a more transparent licensing process.
It comes as many have criticized the state’s licensing system as too restrictive, resulting in just 12 medical marijuana licenses to serve some 97,000 patients.
“We hope that the department will follow what the governor has said, in terms of, we need to get more of these places out there,” said Stuart Lederman, an attorney who represented Bloom Medicinals of PA.
Jeff Brown, assistant commissioner for the health department who oversees the medical marijuana program, declined to comment on the decision Wednesday.
The health department opened a small medical marijuana licensing round in 2018 for six licenses; two in North Jersey, two in central and two in the south.
Following the highly competitive process, seven rejected applicants sued over the scoring of applicants. An existing medical marijuana company, Compassionate Care Foundation, also filed suit, taking issue with the decision to license a new operator, MPX-NJ, to operate so close to its Atlantic County dispensaries when the goal of licensing new businesses was to expand access for patients.
The appeals were filed by GGB NJ LLC, Academy Medical LLC, Harvest NJ LLC, Altus NJ LLC, Pangaea Health and Wellness, Bloom Medicinals of PA LLC and Liberty Plant Sciences, LLC.
In the nearly two-years since, four of the operators who did receive licenses have opened their doors, and the two others have made significant progress. The court denied a stay in the process in the spring of 2019 that would have halted the opening of the new dispensaries.
At issue in the appeal was the scoring process to award the limited number of licenses and a lack of transparency.
The health “department’s processes and the results produced that – without further agency proceedings and explanation – would leave us to conclude that the decisions in question are arbitrary, capricious and unreasonable,” the decision stated.
“It’s exactly what we asked for,” said Joshua Bauchner, an attorney representing GGB New Jersey, LLC.. “I think the remand is significant relief. One possible remedy is the issue of new licenses.”
The court noted it did not have the authority to issue licenses to those rejected applicants when the health department had intended to issue only six licenses at the time.
“Granting appellants relief in the form of awarding them additional positions without depriving the successful applicants of their positions may be tempting, but it is too facile a result even when considering that voters just approved the legalization of recreational marijuana use…
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