Judge throws out minority set-asides
A Franklin County judge has declared minority setasides in the state’s medical-marijuana law to be unconstitutional.
In the ruling, Franklin County Common Pleas Judge Charles A. Schneider said that one of the bidders for a cultivation license, Greenleaf Gardens, was deprived of its rights because two lower-rated, minority-owned firms were chosen for licenses ahead of it.
Ohio initially awarded 12 level 1 cultivation licenses and in the original scoring, Greenleaf Gardens placed 12th, but was passed over by the provision calling for 15 percent of licenses to go to minority-owned firms. The company that originally filed the lawsuit because it too had been passed over, Pharmacann, was later awarded a license, becoming the 13th level 1 cultivator, when the state updated the score for Pharmacann’s application.
Pharmacann dropped out of the lawsuit earlier this year and is in the process of building a cultivation facility at Buckeye Lake.
The decision may be appealed, but it marks another headache for a program that was supposed to be up and running months ago.
Ohio’s Department of Commerce, which oversees the medical marijuana program, said in a statement, “We are reviewing the ruling and determining our next steps.”
That state originally hoped to have medical marijuana available to patients by September, but it looks like only tiny amounts will be available at the end of December. Consistent quantities of product will come on line early next year.
Greenleaf hopes to be awarded a cultivation at some point, but is now focusing on its five dispensary licenses and a processing license. The company would locate a future cultivation facility beside its processing facility in Geauga County.
“We are obviously pleased with the Court’s ruling in this case, and we value the relationships that our team has built with the Ohio Department of Commerce and Board of Pharmacy,” Greenleaf ’s CEO, David Neundorfer said in a statement. “We remain committed to working with the Department and the Board to ensure that Ohio’s patients have access to the safest and most effective medical marijuana as soon as possible.”
Ohio’s medical marijuana law, which was passed in 2016, required businesses whose majority owners are black, Hispanic, American Indian or Asian to receive preference in awarding licenses for marijuana growers, processors and testing laboratories. But Schneider said two minority firms that received grow licenses could not demonstrate that the General Assembly adequately considered what social ills the set-asides would remedy in exchange for passing over more-qualified, white-owned businesses.
Representatives of the two firms that were defendants in the suit, Harvest Grows LLC, of Tempe, Arizona, and Parma Wellness LLC, of Akron, couldn’t be reached Friday for comment. Neither company has been scheduled for inspection by the state or received a certificate of operation.
Most of the evidence the defendants provided, Schneider said, related to higher arrest rates of blacks on marijuana charges in Ohio. They cited a 2013 ACLU study that “found that black Ohioans were arrested 41 times more often for marijuana possession than white Ohioans in 2010.”
However, such arguments aren’t relevant to giving preference to minority-owned medical marijuana businesses, Schneider wrote.
“If the legislature sought to rectify the elevated arrest rates for African Americans and Latinos/Hispanics possessing marijuana, the correction should have been giving preference to those companies owned by former arrestees and convicts, not a range of economically disadvantaged individuals, including preferences for unrelated races like Native Americans and Asians,” the judge wrote.