Lawsuits Could Put Pennsylvania's Medical Pot Program Into Question

Keystone ReLeaf and Brightstar Biomedics filed two different petitions in Commonwealth Court alleging that the Department of Health’s permitting process for dispensaries and grow sites was inherently flawed and biased

With just six months remaining until Pennsylvania’s inaugural medical marijuana program is scheduled to debut, two petitions could throw the state’s nascent cannabis industry into question.

Earlier this month, Keystone ReLeaf and Brightstar Biomedics filed two different petitions in Commonwealth Court alleging that the Department of Health’s permitting process for dispensaries and grow sites was inherently flawed and biased.

Scranton-based Brightstar asked for an injunction to prevent Pennsylvania Medical Solutions from moving forward as a grower and processor. PMS is a subsidiary of Vireo Health, which has been under criminal investigation for illegally transporting marijuana from Minnesota to New York. PMS violated Pennsylvania regulations by not disclosing their legal problems, Brightstar alleged in court documents.

While medical cannabis is legal is 30 states, it remains a Schedule 1 drug akin to heroin or LSD. Transporting it across state lines, even states that recognize medicinal or recreational pot, is against federal law.

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Meanwhile, Bethlehem-based Keystone ReLeaf has asked for a full stop of the statewide program, which is slated to start in April. The company said the Office of Medical Marijuana and Department of Health lacked transparency in its permitting process by keeping secret the identities of panelists who reviewed and ultimately granted licenses to potential growers and dispensaries. Regulators also made it difficult to appeal permit rejections, the company said in court documents.

"Simply put, no applicant understands how or why they scored a certain score in any category, and when challenged by way of administrative appeal, the (state) has, to date, utterly refused to explain or defend its scoring decisions," the company said in court papers.

State Sen. Daylin Leach, a Democrat who represents portions of Delaware and Montgomery counties and co-sponsored the medical marijuana legislation, said that veil of secrecy was intentional.

"The problem is if you publish [those names] … there will be opportunity for people to influence them," he said, adding that he is in favor of releasing those names after scoring has been completed.

"There is tension between being totally transparent and having a system that was not subject to even the appearance of outside influence. From my perspective, the Department of Health has worked very hard to get things done."

Some of the state’s wealthiest and most connected applicants did not, in fact, receive permits in this first round of licensing. That included Lindy Snider, the daughter of former Flyers owner Ed Snider, who was widely considered a favorite to win at least one permit. Snider was an early investor in the cannabis industry, and hoped to break into Pennsylvania’s market after years working with companies in other states.

But the state’s scoring system was blind. Judges did not know the identities of the applicants they were judging and the applicants did not know who judged them.

“We’re very proud of that. The richest applicants were not the most successful applicants. That’s as it should be.”

A vocal proponent for medical marijuana, Leach issued a public letter to Keystone ReLeaf asking the company to withdraw its injunction request against the state. If granted, dispensaries and grow sites currently under construction would have to stop. Restricting access to medication for debilitating conditions such as cancer, PTSD and Crohn's “would be cruel” and “heartless,” Leach said.

"Whenever you have a competitive process to award licenses, there will always be winners and losers and there will always be people who feel they were wronged in some way," he said. "But how can you have concern for the patients if you’re asking their medicine be taken away?"

Leach himself has been called into question after his dealings as a private cannabis industry attorney surfaced last week. He reportedly “moonlighted” as a medical marijuana legal consultant despite a prohibition against elected officials holding a financial stake in medical marijuana, The Morning Call reported.

Anticipating a conflict, Leach sent letter to state ethics commission in December 2016 asking whether the Public Official and Employee Ethics Act would restrict or prohibit him from acting as an attorney on matters related to the medical marijuana program.

The ethics commission ruled that a conflict did not exist unless Leach were “consciously aware of a private pecuniary benefit for himself, member of his immediate family or a business with which he or his immediate family is associated.” He would not be prohibited from acting as a legal consultant for clients applying to the medical marijuana program or advising permit awardees on compliance issues.

“The ethics commission approved everything I could have done,” he said. “Once the law was signed, I had no power. I had no power to award or deny licenses.”

Despite the legal wrangling, the Department of Health anticipates Pennsylvania's first dispensaries will be open by April.

"We continue to move forward with a patient-focused medical marijuana program for those suffering from one of the 17 serious medical conditions outlined in the law," a spokesperson said in an email statement.  

Keystone ReLeaf did not return requests for comment at the time of publication. Please check back for updates.

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