Authored By:  William F. McDevitt, Esq.

The Pennsylvania Commonwealth Court was established in 1968 to hear cases involving state and local governments and state agencies. It possesses original jurisdiction for cases filed against the Commonwealth of Pennsylvania and may hear cases filed by the Commonwealth. It also acts as an appellate court with respect to a wide variety of matters, including cases to which the Commonwealth (or a local subdivision thereof) is a party, appeals of decisions by Commonwealth agencies, cases involving the operation of nonprofit companies and election disputes.

Cases challenging Pennsylvania’s Medical Marijuana Act (MMA) and associated (temporary) regulations fall within the purview of the Commonwealth Court. Although the MMA was passed in May 2016, and Phase I grower/processor and dispensary licenses were issued in June 2017, in April 2018 the Commonwealth Court issued its first MMA-related ruling and received filings in a second case.

Ruling

On April 20, 2018, the Commonwealth Court dismissed the case of Keystone ReLeaf, LLC v. Pennsylvania Department of Health, et al., 399 M.D. 2017. The claimant argued that the Department of Health (DOH) acted inconsistently and arbitrarily when awarding licenses for growing, processing and dispensing cannabis and further alleged the DOH’s violated its own regulations, Pennsylvania’s Right to Know Law and due process protections. The claimant requested the rescission of all DOH-issued cannabis permits. The Commonwealth Court held that the DOH had not been afforded an appropriate opportunity to hear the claimant’s administrative appeals, which are still pending before the DOH, and the case could not yet be heard. This decision relieves some of the pressure on current licenses holders, who had faced the possibility of losing their current investments of time and capital.

Filings

On April 10, 2018, a number of license holders, including four “dual-licenses” entities holding both grower/processor and dispensary licenses, filed suit in the Commonwealth Court against the Acting Secretary of the DOH based on the “Chapter 20” temporary regulations governing “Clinical Registrants.” Under Chapter 20, entities holding Clinical Registrant licenses may grow, process and dispense cannabis, as part of clinical trials administered by a qualifying Pennsylvania medical school and as a commercial concern. Clinical Registrants can operate twice as many dispensaries as “standard” licensees. No Clinical Registrant licenses have been granted, but applications will be made available on May 24, 2018, and accepted by the DOH until July 12, 2018.

In AES Compassionate Care, LLC v. Rachel L. Levine, 233 MD 2018, the claimants argue that the Chapter 20 regulations go beyond the original intent of the MMA and prior proposed regulations that were meant to facilitate medical research. It is argued that Clinical Registrants should be limited to entities that separately obtain grower/processor and dispensary licenses and should not be awarded in the form of a single, separate “super-license.” Allowing “super-licensees” to both conduct clinical studies and compete commercially will allegedly dilute the value of all current licenses.

To use a Parker Brothers analogy, claimants assert that you can’t build a hotel (Clinical Registrant facility) until you purchase both Boardwalk (grower/license license) and Park Place (dispensary license). Claimants seek to block the award of any Clinical Registrant licensees.

In response to this suit, several qualifying medical schools along with corporations with which they have entered into contracts jointly filed an amicus curiae (friend of court) brief arguing that they have independently vetted and contracted with entities that they believe possess sufficient, and superior, means of producing and distributing cannabis consistent with the best practices of clinical research. These medical schools support the awarding of Clinical Registrant licenses to companies other than those presently licensed.

It remains to be seen whether the Commonwealth Court will entertain this case prior to the award of Clinical Registrant licenses or any administrative challenges filed with DOH. If Clinical Registrant licenses are issued, those groups will face some uncertainty in their status until the case is resolved.

About the Author

William F. McDevitt is a partner in the Philadelphia office of national law firm Wilson Elser, where he is a member of the firm’s Cannabis Law practice. He can be reached at william.mcdevitt@wilsonelser.com.