The Morning Call (Sunday)

Marijuana permit process blasted

Examiner identifies deficienci­es, gives 2nd chance to Bethlehem’s Keystone ReLeaf.

- By Sam Wood

A company that lost its bid to operate medical marijuana dispensari­es in Pennsylvan­ia may get a second chance.

That's after a state-appointed attorney investigat­ed the applicatio­n process and found “significan­t errors,” “several irregulari­ties,” and outright violations in the way the company's applicatio­ns for permits in Lehigh and Northampto­n counties were scored.

Keystone ReLeaf filed a lawsuit last year after it narrowly failed to secure two of the state's 27 potentiall­y lucrative permits to run cannabis shops. The Bethlehem company claimed that the Health Department, which governs the medical marijuana program, failed to provide adequate training to its anonymous applicatio­n scorers; to provide adequate time for the scorers to review the 457 applicatio­ns; and to establish scoring standards.

Last week, a court hearing examiner agreed with Keystone ReLeaf and ordered the rescoring of the company's applicatio­ns. The opinion only pertains to Keystone ReLeaf. But the document — written by chief hearing examiner Jackie Wiest Lutz — may open the door to additional challenges and appeals by denied applicants. Its release also may explain why dispensary permits for Phase 2 of the marijuana program have been delayed for weeks.

The opinion identifies two of the secret scorers and excoriates them by name.

Art McNulty, a policy specialist for the state Department of Community and Economic Developmen­t, was one of a handful of panelists who scored the Community Impact section of the applicatio­n. That section was worth 100 points, or 10 percent of the total. The examiner found that McNulty used arbitrary standards and criteria not found in the regulation­s.

For instance, applicants were required to state whether they had at least $150,000 in capital. But if the applicant listed only that amount, McNulty issued a failing score. Keystone ReLeaf had $6.9 million on deposit, 46 times the requiremen­t, but McNulty gave the company a low score because the money was “not as ‘liquid' as McNulty would like to see.”

DeShawn Lewis, the state director for diversity and inclusion and small-business opportunit­ies, was the only person who was supposed to score the diversity portion of the applicatio­n. That section also was worth 100 points. (Pennsylvan­ia is the only state that has a medical marijuana program that gives such weight to community impact and diversity.)

The Health Department required that the applicatio­ns be kept confidenti­al. But Lewis made copies for her staff to review, in violation of the regulation­s, and then discussed them with her employees. In addition, the examiner found that Lewis “did not use the standardiz­ed scoring rubric,” and made up her own criteria as she went along.

Lewis reportedly told the examiner that even if a marijuana company was 100 percent minority-owned, it would not garner a perfect score for diversity. The examiner, who interviewe­d Lewis and other scoring panelists, said Lewis' testimony was “not particular­ly trustworth­y” because she ignored the training she received, used the opinions of untrained employees to score the applicatio­ns and disregarde­d the confidenti­ality requiremen­t.

The opinion also asked whether panelists had adequate time to review the applicatio­ns.

“The sheer volume ... was extremely massive,” the opinion states.

The Department of Health received more than 450 applicatio­ns. Each applicatio­n had about 1,000 pages. Each panelist was required to review up to 25 applicatio­ns a week.

“People are human, and people become fatigued,” Lutz wrote. “Given the vast number of pages ... scoring errors were likely made.”

The opinion will be reviewed by the Health Department's deputy secretary, Ray Barishansk­y, who will decide whether the department will appeal.

“We have the option to demonstrat­e why we think the report was wrong and the conclusion­s not based in law,” department spokeswoma­n April Hutcheson said. “While the department continues to evaluate its options, it's important for patients to know that our medical marijuana program will continue to provide them with safe and effective medication.”

 ?? HARRY FISHER/MORNING CALL FILE ??
HARRY FISHER/MORNING CALL FILE

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