Ohio Sued Over Medical Marijuana Grow Licenses

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Six unsuccessful applicants to grow medical marijuana in Ohio claim in a new lawsuit that state regulators failed to follow their own rules while scoring cultivator applications, made several scoring errors and hired scoring consultants who had blatant conflicts of interest.

Several groups led by Jimmy Gould of CannAscend Ohio LLC filed a lawsuit Tuesday in Franklin County Common Pleas court challenging the Ohio Department of Commerce’s process for awarding the highly sought after licenses. They are seeking a permanent injunction from awarding operating licenses to the 12 companies awarded provisional licenses for large-scale growing facilities.

Joining CannAscend in the lawsuit are Appalachian Pharm Products LLC, CannaMed Therapeutics LLC, Palliatech Ohio LLC, Trillium Holdings Inc. and Schottenstein Aphria LLC.

The lawsuit names as defendants Ohio Department of Commerce Director Jacqueline Williams, three scoring consultants and the 12 companies awarded large-scale grow licenses.

The complaint alleges the department made several mistakes including the following:

•Five licenses were awarded to companies that should have been disqualified for failing to meet pass-fail criteria or misrepresenting compliance with those requirements.

•The two minority-owned companies that received licenses aren’t actually owned and operated by individuals meeting the law’s definition for the set-aside.

•Scores for 14 of 17 applications reviewed by attorneys were calculated incorrectly.

•Scoring consultants, including two who had knowledge of the scoring rubric in advance of the application deadline, had blatant conflicts of interest with companies awarded licenses.

These mistakes lead “to a fundamentally arbitrary, capricious, unfair, and flawed scoring process at the expense of the Plaintiffs, who in the aggregate expended millions of dollars complying with rules the Department did not properly enforce or follow,” attorneys for the plaintiffs wrote.

Each applicant submitted a nonrefundable $20,000 application fee and spent hundreds of thousands of dollars more to prepare their applications.

The department declined to comment Tuesday and does not comment on pending litigation. Department officials have fiercely defended the scoring process and pledged to continue establishing the program to meet the law’s Sept. 8 deadline to be up and running.

Gould threatened a lawsuit back in November, when the department awarded provisional licenses for 12 grows up to 3,000 square feet and 12 grows up to 25,000 square feet.

Since then, questions have been raised about consultants hired to help score applications and security around the department’s online portal where applications and scores were stored for reviewers. Last week, cleveland.com reported four applicants’ proposed grow sites did not meet the requirement they be 500 feet from the nearest school, church, playground, child care center or other prohibited facility at the time of application.

The department was sued in December over state law requiring that 15 percent of all marijuana business licenses go to minority-owned businesses.

Of the 185 applications, 131 were disqualified, mostly for not meeting a minimum score in one or several parts of the application. Sixty-nine applicants have filed appeals with the department.