Maryland Dels. Cheryl Glenn, left, and Darryl Barnes discuss the Maryland Medical Cannabis Commission's delay in granting new licenses for growing and processing cannabis on Thursday, Sept. 26, 2019. The Legislative Black Caucus, which Barnes chairs, has raised concerns about the licensing process.
Maryland Dels. Cheryl Glenn, left, and Darryl Barnes discuss the Maryland Medical Cannabis Commission's delay in granting new licenses for growing and processing cannabis on Thursday, Sept. 26, 2019. The Legislative Black Caucus, which Barnes chairs, has raised concerns about the licensing process. (Pamela Wood)

The Maryland Medical Cannabis Commission delayed issuing more licenses to companies to grow and process medical marijuana on Thursday after a state judge prohibited the granting of the licenses because one company claimed the application process was botched.

The Legislative Black Caucus also asked the commission to postpone granting the licenses over concerns about whether minority-owned firms had a fair shot in this round of licenses, which was created by a state law meant to improve diversity in the fledgling industry.

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The commission had been scheduled to announce the winners of four growing and 10 processing licenses during a public meeting Thursday in Annapolis. Instead, Chairman Brian Lopez said it would take more time to review the veracity of the applications for the coveted licenses. During the meeting, Lopez did not mention the order by the judge in Montgomery County, but acknowledged the concerns of the black caucus.

“We appreciate their comments and the feedback, and we will certainly look into the relevant issues and make sure we have resolution on those, as well,” said Lopez.

Letter from Legislative Black Caucus of Maryland

Judge Ronald B. Rubin’s temporary restraining order, issued Wednesday night, stemmed from a complaint by Remileaf, a company that applied for growing and processing licenses to establish an operation in Allegany County. The commission removed the company’s applications from consideration because it missed a deadline.

In requesting the order, Remileaf contended the commission botched the application process. The company said it submitted an online application by the May 24 deadline. But other applicants had problems with the online system, and the commission extended the deadline and required Remileaf to re-apply. A Remileaf representative arrived at the commission office at 4:55 p.m. on the day of the new deadline to re-submit its application on paper, the company said. But the representative “was denied admission into the offices at 5:05 p.m.," the company wrote in its filing. Remileaf’s application ultimately was not accepted.

Rubin barred the state from granting cannabis licenses until Oct. 7, pending further hearings on Remileaf’s complaint.

Megan A. Benevento, a Greenbelt attorney representing Remileaf, declined to comment Thursday.

Temporary Restraining Order

The additional licenses were mandated by a 2018 state law with a goal of bringing more racial and gender diversity to the industry.

Del. Darryl Barnes, chairman of the Legislative Black Caucus, suggested the commission rejected some well-qualified applications from Maryland-based minority firms. He questioned whether some of the applicants poised to receive new licenses were from outside the state or had used minorities merely as the face of a company. He did not offer any evidence Thursday that that was the case.

“We wanted to stop this process” in order to investigate further, said Barnes, a Prince George’s County Democrat. “We want to ensure the process was done fairly.”

Barnes sent a letter Wednesday to the commission asking for the delay in awarding the licenses.

While the licenses were not announced as planned at Thursday’s commission meeting, several applicants said the commission’s staff had notified them in recent days whether they were selected or not.

Del. Cheryl Glenn, a Baltimore Democrat who was a chief proponent of legalizing medical marijuana, said she’s concerned about out-of-state companies winning licenses.

“Maryland state residency means something" in the state’s regulations, she said. The General Assembly’s intent was not, she said, to “expand the footprint to hedge fund companies” outside Maryland.

More than 200 applications were submitted for the 14 licenses.

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Lopez said the commission would work with the black caucus members on the additional review. However, it’s not clear how that process will work, as the commission members’ terms expire at the end of September. A new commission is supposed to be appointed Tuesday.

After the commission worked through the items on its agenda, members went into a closed session to discuss legal issues.

In an interview after the meeting, Lopez said the commission already was considering delaying the license announcement when the temporary restraining order was being argued in court late Wednesday. The decision to delay and the judge’s order came “almost simultaneously," he said.

Lopez said the commission had an ambitious goal to award the preliminary licenses before Oct. 1, when the commission is scheduled to turn over.

“It was a very aggressive timeline to try and beat the clock,” he said.

Lopez could not say how much longer the commission will take before publicly announcing the winners. He noted that if the commission asks a firm for more information about part of their application, the firm has two weeks to respond — an indication that the decisions may not come for some time.

“Our intention is to get the process right,” Lopez said.

State lawmakers passed the 2018 bill — and Republican Gov. Larry Hogan signed it into law — after concerns were raised about the industry’s lack of diversity in Maryland. No African-American-owned firms were among the 15 companies that won the initial state licenses for growing medical marijuana. That spurred legal challenges, as well as the legislative remedy.

A consultant’s study ordered by Hogan found that minority firms were disadvantaged in the state’s medical cannabis industry.

While the 2018 law does not explicitly designate the additional licenses for minority-owned firms, it directs the commission to “actively seek to achieve racial, ethnic, gender and geographic diversity" when awarding them.

The commission’s delay left applicants unsure of what happens next.

Darrell Carrington, a consultant who helped four clients develop their applications, said he felt “a mixture of relief and frustration" at the postponement.

None of his clients had been notified that they had been picked for licenses. He hoped the commission would release the scores that were assigned to applications by reviewers from Morgan State University, a historically black school in Baltimore. Without those scores, and without knowing who was in line for licenses, it would be hard to know whether the process was flawed, Carrington said.

Annie Palmisano, founder and CEO of a cannabis company called Matriarch, hoped to win both growing and processing licenses. She hadn’t heard whether her company was picked, so she went into Thursday’s meeting with high hopes.

“We are so ready to go,” said Palmisano, who wants to open her business in Havre de Grace in Harford County.

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Though Palmisano is white, she said her company’s ownership and investment is entirely female. She said having female ownership earns some points in the evaluation process, though not as much as being a racial or ethnic minority.

Maryland’s medical cannabis industry has grown significantly since sales began at the end of 2017. Marijuana dispensaries in Maryland generated $96 million in gross revenue for the 12 months ending Nov. 30, 2018, according to a commission report to the legislature.

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