On Wednesday last week, a judge in Baltimore ruled that a high profile case, with the potential of disrupting Maryland’ fledgling weed industry, should go to trial. According to Circuit Judge Barry Williams, a trial would establish whether state regulators acted unlawfully when deciding which companies would win lucrative licenses to cultivate medical marijuana in the state.
Lawyers for the state, who want the case thrown out of court, have a tough battle ahead. Williams dismissed their arguments and explained that, should the court determine that regulators awarded licenses improperly, it has the authority to order the Maryland Medical Cannabis Commission to re-review issued licenses and fix the situation accordingly.
From the bench, Williams stated, “It is not something that can be determined at this juncture.” He has yet to set a date for the trial. Two of the 15 medical marijuana cultivation licenses issued by the state is now in question. The state granted them to firms that did not rank in the top 15 applicants. However, regulators claim they adhered to state law when choosing whom to award licenses to grow pot.
They say they granted the licenses to two low-ranking companies, in Southern Maryland and the lower Eastern Shore, to widen the geographic diversity of cultivators, as state law requires. That action directly displaced two of the top-15 companies, who responded by suing the state, claiming unfair treatment as regulators never told firms that their proposed locations would affect whether they got a license or not.
Arguing for those firms, GTI Maryland and Maryland Cultivation and Processing, lawyers say that, in denying licenses to them, the state acted capriciously and arbitrarily. Representing Maryland Cultivation and Processing, Attorney Alfred F. Belcuore said, “All of what was conveyed by the commission was they would pick the best, the cream of the crop.”
Belcuore explained the gist of the case, “If we would have been asked to move from Frederick County into Prince George’s County, we would have said yes.” Lawyers arguing for the state and for Holistic Industries, one of the low-ranking firms to receive a license, say that regulators had the authority to factor geographic diversity into their final decision, and they were methodical about the way they did so.
An attorney for Holistic Industries, Bruce Marcus, said, “There is nothing that anyone can point to that said they did not stay within the lines.” During the trial, lawyers will call on state regulators to provide a detailed explanation for why they granted these coveted licenses to low-ranking pot growers. The process used by the commission to grant cultivation licenses has been a source of controversy since the announcement of preliminary winners back in August last year.
Under state law, the commission must prioritize racial diversity in its choice of winners. However, despite African-Americans making up a third of the state’s population, no African-Americans are leading any of the chosen companies. To include firms led by minority groups, the Legislative Black Caucus has vowed to expand the marijuana industry.
Leaders of the caucus threatened to use its considerable power to sabotage business next year in the General Assembly unless lawmakers fix the issue swiftly. Alternative Medicine Maryland, another losing company, is suing the state for not considering race in its license-awarding process. Lawyers arguing for the state cite several reasons why the court should throw the case out.
One of these reasons, they say, is that there is no evidence that the state would have awarded a license to Alternative Medicine Maryland even if it had considered race. Representing the company, Byron B. Warnken said that losing companies “should be commended for shining a light on this dark corner of the governmental decision-making.”
Representing the state’s medical marijuana commission, Assistant Attorney General Heather Nelson explained that the system of ranking growers numerically created an “unacceptable concentration” of cultivation licenses located in the center of the state. Of the top 15 companies, 10 were in just one area, with three in each of two adjoining counties.
According to Nelson, the commissioners chose to remove the lowest-ranking companies in those two counties, which were Maryland Cultivation and Processing, which ranked eighth overall, and GTI ranking in 12th place. They chose Holistic Industries, which ranked 20th, to ensure Southern Maryland has a second company servicing it.
The state also elevated Shore Naturals Rx, which had a 21st place ranking, to secure a firm for the Lower Eastern Shore. Lawyers for the two displaced companies argued that state regulators should have made the process clear to applicants from the outset and in advance, instead of creating its own process ad hoc. Since its filing in September 2016, officials for the state have been objecting the lawsuit.
They claim that the commission was under no obligation to reveal how it chose to select winners, as the privilege of their positions protects their decision-making processes. Additionally, they argue that the court should not have to second-guess the authority of regulators or undermine their choices, and the firms should have initiated an administrative hearing for their objections instead.
According to Williams, both of those arguments are irrelevant, and Lanny Davis, GTI’s lawyer, agrees, saying that his clients were satisfied their day in court would come. As Davis said, “Now the state must operate with sunshine on all of the facts instead of their continuing effort, up to now, to keep the lights out about what really happened.”