Florio Perrucci Steinhardt Cappelli Tipton & Taylor wins order requiring rescoring of Pennsylvania Medical Marijuana Permit Application

Seth R. Tipton and Robert M. Donchez of Florio Perrucci Steinhardt Cappelli Tipton & Taylor LLC (FPSC) secured a major victory against the Pennsylvania Department of Health, Office of Medical Marijuana (the Department) in an appeal of the denial of a medical marijuana dispensary license for applicant Keystone ReLeaf LLC (Keystone). The decision issued by the Pennsylvania Chief Hearing Examiner ordered a re-scoring of Keystone’s two dispensary applications, and vindicated arguments raised by Keystone in its earlier case before the Commonwealth Court of Pennsylvania alleging deprivation of constitutional, statutory, and regulatory rights in connection with the licensing process.

In Keystone’s appeal, Mr. Donchez and Mr. Tipton argued that the Department failed to lawfully apply the Medical Marijuana Act (Act) and the Department’s own temporary regulations, and further exercised unreasonable and unlawful judgment by: (i) failing to provide adequate training to application scorers; (ii) failing to provide adequate time for scorers to read and score all applications; and (iii) failing to establish uniform scoring standards. FPSC further objected to the Department’s unwavering commitment to secrecy and a lack of transparency, with respect to both the scoring and the administrative appeal process itself. Keystone also challenged the adequacy of the Department’s proposed administrative remedy of a rescore of Keystone’s applications when all Phase I permits have already been awarded.

The Hearing Examiner agreed with many of these arguments. In a comprehensive 42-page opinion, the Hearing Examiner concluded: “[s]ignificant errors and irregularities, contrary to the Act and the Department’s temporary regulations, occurred during the scoring of [Keystone’s] dispensary permit Applications…” The Hearing Examiner also found “genuine concerns” specific to Keystone’s applications that call into question the integrity, adequacy, accuracy, and soundness of the Department’s scoring process. Finally, as argued by Mr. Donchez earlier this year before the Commonwealth Court, the Hearing Examiner questioned the Department’s ability to remedy the scoring errors, after having issued all available Phase I permits.

“While we are thrilled with today’s victory and the ordered rescoring, we would expect the Department to appeal this decision given the gravity of the findings. In that appeal, the larger issue may be that the findings in this decision imply that the entirety of the scoring and permitting process was fundamentally flawed,” said Seth R. Tipton, a partner in FPSC’s Bethlehem, Pennsylvania office. “The Hearing Examiner correctly found significant errors with respect to the Department’s scoring of Keystone’s applications, such as the Department’s scorers’ failure to adhere to their training and disregard for the requirements of the Medical Marijuana Act and temporary regulations. There is reason to think that these same errors plagued the entire scoring process, as the scorers sped through thousands and thousands of application pages over only a handful of weeks. Keystone, other applicants and Pennsylvania citizens deserve better than the rushed and fatally-flawed process employed by the Department for the selection of companies to provide medication for patients in need.”

The Florio Perrucci Steinhardt Cappelli Tipton & Taylor LLC team is led by Robert A. Freedberg, Seth R. Tipton, Robert M. Donchez, Stephen J. Boraske, and Elizabeth M. Marcon from the firm’s Bethlehem, Pennsylvania and Cherry Hill, New Jersey offices.