Oral arguments took place last week in a court case arising from the 2018 Medical Marijuana Program Request for Applications, which has had the Department of Health wrapped in litigation with seven appellants since announcing the winners of six medical cannabis licenses nearly two years ago. Six appellants allege that scoring of the medical cannabis license applications was flawed and inconsistent, and therefore not credible; and that the reviewers hastily completed reviews due to a lack of sufficient time to complete substantive examinations.

Florio Perrucci Steinhardt Cappelli Tipton & Taylor Partner Seth Tipton argued on behalf of Liberty Plant Sciences LLC; Murphy Orlando Partner John Bartlett represented Pangaea Health and Wellness; Riker Danzig Scherer Hyland & Perretti Partner Stuart Lederman argued on behalf of Bloom Medicinals; Stevens & Lee Shareholder Maeve Ellen Cannon represented Harvest of NJ LLC; Hawke Mckeon & Sniscak Partner Kevin McKeon appeared on behalf of Altus; and Ansell Grimm & Aaron Partner Joshua Bauchner represented GGB New Jersey LLC.

One additional appellant, Compassionate Care Foundation, represented by Pashman Stein Walder Hayden PC Partner Sean Mack, alleges that the DOH failed to honor a geographic diversity standard when allowing multistate operator MPX International Corp. to begin work on a dispensary near the Atlantic City Boardwalk, where CCF (now The Botanist, a banner of Acreage Holdings Inc.) had previously planned a satellite dispensary.

Jacqueline D’Alessandro handled the arguments for Office of the Attorney General; Sills Cummis & Gross Member George Hirsch represented MPX; De Cotiis Fitzpatrick Cole & Giblin Equity Partner Benjamin Clarke appeared on behalf of Verano; Archer & Greiner Partner Patrick Flynn represented Columbia Care New Jersey; Hill Wallack Partner Eric Abraham argued for GTI New Jersey; Stone & Magnanini Managing Partner Robert Magnanini appeared on behalf of Justice Grown New Jersey; and Lowenstein Sandler Partner A. Matthew Boxer represented NETA NJ.

In addressing a disparities in scoring, such as when one reviewer gave a perfect score on a criterion and another gave a zero, or when two identical applications for different regions received different scores, Judge Clarkson Fisher asked D’Alessandro, “If you have well-trained, well-instructed capable judges who have been instructed on how to understand each criterion, how could you ever have a situation where one of those judges says zero and the other says perfect? Doesn’t that bespeak arbitrariness?”

“Not necessarily, your honor… there is expertise and experience that goes into reviewing those narrative responses, and its anticipated and indeed, it was anticipated by the Department, that that kind of variance in scoring would occur because not every panel member was necessarily an expert in every single subject matter area that was on the RFA. There were financial questions and financial statements that were to be provided, and tax and financing principles that needed to be reviewed,” D’Alessandro replied. “And there was more scientific narrative responses about phytochemistry and the ability to fight plant disease, etc. that necessarily some panel members have more experience with than the other.”

Inexperience in a certain area did not preclude a reviewer from answering a question, however, as the scoring panel was required to score all measures. They were permitted to seek guidance from Assistant Commissioner to the Medical Marijuana Program Jeff Brown, D’Alessandro said.

Fisher was one of three on the panel of judges hearing the arguments, alongside Judge Scott Moynihan and Judge Katie Gummer.

Bauchner called into question the reviewers’ merits as well. The reviewers’ identities have not been made public.

“We know they were provided training on diversity. We have no understanding as to what other trainings were provided … how does the [Department of Agriculture] scorer know anything about finances? And how does the Department of Treasury scorer know anything about horticulture? We don’t know. We don’t know what they were told. We don’t even know who they are. They remain anonymous,” Bauchner said. “The DOH has said over and over and over again that they have the requisite experience. How do we know? For all we know, one could have been a janitor, and another could’ve been a PhD.”

The variability in scoring for Bauchner’s client GGB was 313 points out of 1,000, meaning one reviewer scored GGB 313 points higher or lower than the reviewer beside him or her. A relative variability of 40% or more was observed in nearly half of GGB’s category scores, he said; and eight applicants had a more than 600-point difference in their scores from one reviewer to another.

Reviewers were required to submit a short written description to justify the scores they gave each applicant, but those descriptions weren’t in the record, noted Moynihan.

D’Alessandro said that “those internal notes were just that, internal notes,” and were confidential.
“Wouldn’t it benefit our review if we had the reasons for the actual scores that were given and instead of just the raw score?” Moynihan asked.

D’Alessandro responded that it’s the department’s decision that the raw score was sufficient, and that the numerical scores—not the reasoning behind the scores—were what were ultimately considered by the DOH when selecting the award winners.

“With respect to remedies … there are numerous remedies available to the appellants in this matter. It’s important to note that at the outset …the appellants [except CCF in respect to MPX] do not wish to strip licenses from those that won licenses,” Tipton said.

The appellants seek to instead have the RFA scoring matrix corrected and the applications rescored, and then have licenses awarded thereafter to those who come out on top of the rescoring.

Nothing in the statute or otherwise would prohibit the DOH from awarding additional licenses, the appellants said.

Regarding the case between CCF and MPX, in response to an attorney’s claim that geographic diversity isn’t a specific requirement laid out by the state’s medical cannabis program, Judge Fisher suggested, “Even if it isn’t a specific requirement, isn’t it a common sense requirement that there be geographic diversity?”

The court reserved decision on the matter.