Med­i­cal mar­i­juana se­lec­tion draws suit

Re­jected com­pany’s ac­tion could mean more de­lays

Baltimore Sun - - FRONT PAGE - By Michael Dresser and Erin Cox

A com­pany that was bumped out of the run­ning for one of Mary­land’s lu­cra­tive med­i­cal mar­i­juana grower li­censes is su­ing the state com­mis­sion that is­sues the per­mits, throw­ing the al­ready de­layed pro­gram into fur­ther un­cer­tainty.

Bethesda-based GTI Mary­land con­tends that the Mary­land Med­i­cal Cannabis Com­mis­sion broke its own rules last month when it granted pre­lim­i­nary li­censes to two com­pa­nies that were ranked lower by an­a­lysts who were charged with as­sess­ing the ap­pli­cants.

The com­mis­sion said it was try­ing to achieve more ge­o­graphic di­ver­sity, as re­quired by law.

GTI, one of two higher-rank­ing com­pa­nies not se­lected, ar­gues the com­mis­sion’s de­ci­sion-mak­ing process was “il­log­i­cal, opaque and fa­tally flawed.” The com­pany is ask­ing the court to is­sue an in­junc­tion re­vers­ing it.

“This is a case about a state com­mis­sion set­ting rules and then in­ex­pli­ca­bly

fail­ing to fol­low them,” said Philip M. An­drews, a Bal­ti­more lawyer who rep­re­sents GTI.

GTI filed the law­suit in Bal­ti­more Cir­cuit Court on Mon­day.

The com­pany con­tends that the grower li­censes are “by all ac­counts val­ued at tens of mil­lions of dol­lars” and urges the court to swiftly find that the com­mis­sion’s ac­tion was il­le­gal.

“Any fur­ther de­lay in award­ing GTI its grower li­cense will be dev­as­tat­ing for GTI and will un­fairly de­lay and pre­vent GTI’s en­try into the mar­ket­place and de­prive it of crit­i­cal mar­ket share,” the com­pany says.

A com­mis­sion spokes­woman said Mon­day night that the panel had re­ceived no no­ti­fi­ca­tion of the law­suit. A spokes­woman for the state at­tor­ney gen­eral’s of­fice, which would rep­re­sent the com­mis­sion, said the state’s lawyers had not yet seen the law­suit.

The law­suit fur­ther com­pli­cates a pro­gram that al­ready has taken more than three years to get off the ground.

Pre­lim­i­nary li­censes to grow, process and sell mar­i­juana to treat med­i­cal con­di­tions such as seizure dis­or­ders and the side­ef­fects of chemo­ther­apy for can­cer were granted last month af­ter months of de­lays caused by a greater-than-ex­pected num­ber of ap­pli­cants.

Other los­ing ap­pli­cants com­plained that most of the 30 pre­lim­i­nary li­censes to grow or process mar­i­juana went to com­pa­nies led by white men.

The law autho­riz­ing the pro­gram re­quired the com­mis­sion to con­sider ra­cial di­ver­sity when award­ing li­censes, but the panel said it did not fol­low the re­quire­ment be­cause it re­ceived le­gal ad­vice that such pref­er­ences would not hold up in court.

The Leg­isla­tive Black Cau­cus has pledged to find a way to stop the pro­gram from mov­ing for­ward with­out mi­nor­i­ty­owned busi­nesses.

GTI, which pro­posed a grow­ing op­er­a­tion in Hager­stown, was dropped from the top 15 con­tenders for li­censes. So was Mary­land Cul­ti­va­tion and Pro­cess­ing LLC, which hoped to pro­duce med­i­cal mar­i­juana in Fred­er­ick County.

Ap­pli­cants were ranked by Tow­son Uni­ver­sity’s Re­gional Eco­nomic Stud­ies In­sti­tute. The in­sti­tute was brought in to han­dle the painstak­ing work of re­view­ing more than 1,000 ap­pli­ca­tions, in­clud­ing 145 to grow cannabis plants.

Mary­land Cul­ti­va­tion came in eighth statewide but was third in Fred­er­ick County. GTI ranked 12th statewide but was third in Wash­ing­ton County.

They were re­placed in the top 15 by Holis­tic In­dus­tries LLC, which plans a grow­ing op­er­a­tion in Prince Ge­orge’s County, and Shore Nat­u­ral Rx LLC, which pro­posed cul­ti­vat­ing cannabis in Worces­ter County.

The two ap­pli­cants had been ranked No. 20 and No. 21, but they pro­posed oper­a­tions in re­gions that wouldn’t oth­er­wise have made the list.

GTI says the com­mis­sion’s grower sub­com­mit­tee voted unan­i­mously to award li­censes to the 15 ap­pli­cants rated high­est by the Re­gional Eco­nomic Stud­ies In­sti­tute.

But the five-mem­ber sub­com­mit­tee re­versed it­self dur­ing a con­fer­ence call two days later, GTI says. Mem­bers voted 4-1 to drop GTI and Mary­land Cul­ti­va­tion and to el­e­vate the con­tenders from South­ern Mary­land and the Lower East­ern Shore.

The full com­mis­sion ap­proved the plan Aug. 5.

GTI says the ac­tion “ef­fec­tively re­moved merit” as a ba­sis for award­ing the li­censes. The com­pany says the com­mis­sion’s use of “ge­o­graphic di­ver­sity” as a ba­sis for leapfrog­ging lower-ranked ap­pli­cants over higher-scor­ing con­tenders goes against the panel’s own as­sur­ances that the lo­ca­tion of a pro­posed op­er­a­tion was not rel­e­vant for pre­lim­i­nary ap­proval.

If the com­mis­sion wanted to in­crease ge­o­graphic di­ver­sity, GTI says, it should have given high-rank­ing ap­pli­cants an op­por­tu­nity to change lo­ca­tions rather than move them down the list. The com­pany says the com­mis­sion gave two ap­pli­cants who fin­ished in the top 15 for li­censes to process med­i­cal mar­i­juana the op­por­tu­nity to change their pro­posed lo­ca­tions, and both groups did.

Of­fi­cials say the Tow­son in­sti­tute ranked the ap­pli­ca­tions us­ing a “dou­ble-blind” process in which the eval­u­a­tors did not know the iden­ti­ties of the ap­pli­cants.

“The com­mis­sion must fol­low all of the li­cens­ing se­lec­tion rules it set, and it’s un­fair and il­le­gal to change any rule af­ter the process was over,” An­drews said.

Ed­win Wei­den­feld, the lead­ing part­ner for Mary­land Cul­ti­va­tion, said he be­lieves that what started out as a “clean process” was “cor­rupted” by the com­mis­sion’s de­ci­sion to over­ride the rank­ings. He said he has left open the op­tions of join­ing GTI’s suit or fil­ing his own.

“I want to give them a chance to clean up their own mess be­cause I have con­cerns that a law­suit will end up de­lay­ing this,” he said. “But bet­ter it be de­layed than cor­rupted.”

The state faces other hur­dles in get­ting med­i­cal cannabis into the hands of pa­tients.

African-Amer­i­can law­mak­ers vowed this month to halt the process of is­su­ing li­censes un­til mi­nor­ity-owned busi­nesses, none of which made the cut in the se­lec­tion of grow­ers, get a share of the li­censes.

The cau­cus has tried to en­list the sup­port of Gov. Larry Ho­gan, who has ex­pressed sym­pa­thy but has no power to over­rule the com­mis­sion.

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