Maryland medical marijuana regulators sued for not considering racial diversity of license winners

Erin Cox
Contact ReporterThe Baltimore Sun
Another lawsuit has been filed against Maryland's medical marijuana commission.

A third losing applicant for a coveted medical marijuana license has sued the Maryland Medical Cannabis Commission, this one arguing the regulators illegally ignored racial diversity when selecting applicants.

A lawsuit filed Monday by Alternative Medicine Maryland in Baltimore Circuit Court asks a judge to prevent the issuance of any final licenses and start the process anew. The company, led by New York-based doctor Greg Daniels, also alleges regulators unconstitutionally favored in-state companies and failed to make sure winning bidders would have the money to execute their plans.

The lawsuit is the second to challenge the way the commission picked 15 companies in August to grow the drug. Two other companies joined to sue regulators for excluding their high-ranked applications and elevating two lower-ranked competitors in an effort to enhance geographic diversity.

Elected officials are concerned. Members of the Legislative Black Caucus have pledged to prevent the preliminary winners from getting final licenses unless more minorities are included. Gov. Larry Hogan has promised to do what he can to help, but he has stopped short of calling for a halt to the process.

Already, Maryland's medical marijuana program — first authorized in 2014 — is one of the slowest in the country to launch. The cannabis commission is required to issue licenses by the summer of 2018. Unless stopped by a judge or a new law, commissioners are expected to issue final licenses early next year.

Law requires the commission to "actively seek to achieve racial, ethnic, and geographic diversity" when issuing licenses, but the regulators decided only to consider the latter. None of the companies given preliminary approval to grow the drug are owned by minorities.

Alternative Medicine Maryland, which said 80 percent of its ownership is African-American, alleged the commission acted "arbitrarily, capriciously and unreasonably" in awarding the licenses, which the suing companies estimate are worth tens of millions of dollars each.

Alternative Medicine Maryland hoped to convert an old factory in Easton into a growing and processing facility. They have also applied to set up a dispensary near BWI-Marshall Airport. The company was not among the top 20 grower applications, as ranked in a "double-blind" scoring process conducted by Towson University's Regional Economic Studies Institute.

The commission has not revealed rankings for the remaining 125 companies that applied to grow marijuana.

A spokeswoman for the cannabis commission said its lawyer advised commissioners not to comment on the matter. A spokeswoman for Maryland Attorney General Brian E. Frosh, who will defend the commission, said her office had not yet been served the complaint.

In the lawsuit, the company said the Maryland General Assembly clearly required the commission to seek minority applicants and to attempt to achieve racial and ethnic diversity in awarding the limited number of licenses.

Commission leaders have said they relied on advice from the attorney general's office when they abandoned draft regulations and did not inquire about, nor consider, race while weighing the applications.

An advisory letter from the attorney general's office said the commission could not legally consider race unless there had been evidence of disparity in the industry. Later, a spokeswoman from the attorney general's office said the commission could have chosen to arrange for such a study if none existed, as other agencies had when new industries came to the state.

Commission chairman Paul Davies has publicly criticized the attorney general's office for issuing conflicting advice. Commission leaders have met with Frosh and Annapolis lawmakers to discuss possible solutions, but none have been offered publicly.

The Legislative Black Caucus, furious with the lack of minorities among the preliminary winners, has promised to make sure the process does not move forward without companies owned by African-Americans.

Baltimore Del. Cheryl Glenn, an architect of the medical marijuana program and leader of the caucus, said emergency legislation will be introduced when the General Assembly reconvenes in January. She is weighing whether to strip authority from the commission, authorize more licenses or upend the licensing process.

Last month, two other companies initially ranked among the top 15 applicants filed a lawsuit against the commission because they were not among the 15 finalists who won preliminary approval.

GTI Maryland had hoped to grow in Hagerstown, and Maryland Cultivation and Processing LLC hoped to produce medical marijuana in Frederick County. Each was the third company to suggest growing in those jurisdictions, and commissioners bumped them from top contention in order to make sure applicants from Southern Maryland and the lower Eastern Shore got licenses.

Unlike the lawsuit filed Monday, GTI Maryland and Maryland Cultivation and Processing LLC want the judge to intervene and reinstate them, not to restart the process.

The lawsuit filed by Alternative Medicine Maryland also alleges that some of the winning companies do not have enough money to execute their plans, and blames the commission for not finding a way to ensure companies had adequate capital.

ecox@baltsun.com

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