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NJ CRC Denies 2018 Medical Cannabis RFA Lawsuit Winners Licenses

The New Jersey Cannabis Regulatory Commission (NJ CRC) denied the winners of the 2018 medical cannabis RFA lawsuit against the Department of Health (DOH) the licenses they expected.

NJ CRC Executive Director Jeff Brown explained the process started July 16, 2018. A Request for Application (RFA) for six permits with two in each region, was opened. The rules at the time only allowed for vertical integration licenses to be rewarded under the Compassionate Use of Medical Marijuana Act (CUMMA) of 2010.

Brown noted a pre-application conference they held saw 900 people attend.

“It was the first RFA in seven years and a new opportunity for many applicants and the start of a new industry,” Brown said.

Brown said the DOH faced unprecedented expansion, a new environment for the program. He said the department pushed the scoring committee aggressively to avoid supply shortages and delays.

Brown said the DOH recognized that the licensing process in place that was used highly valued large companies that were corporations that were Multi-State Operators (MSOs) and experience operating elsewhere. He noted it was a comprehensive application with a 300-page limit.

Dealing with the 2018 Medical Cannabis RFA

Brown noted they awarded the six licenses on December 7, 2018. Appeals filed were then filed on January 31, 2019. The case was decided on November 25, 2020, in favor of the plaintiffs. He noted a specific process was not outlined by the judge in the case.

Brown explained after they lost the case in 2020, a Quality Control (QC) committee was set up to review the process and make recommendations thoroughly.

He then described an intricate process between the DOH and the applicants. Brown noted five of the six applicants again took the DOH to court, which favored the DOH the second time. The NJ CRC then assumed the issue from the DOH in April 2021.

NJ Medical Cannabis License Grading Issues

He said the two measures responsible for variation in scoring were financial suitability and diversity.

Brown said the composite scores worked out pretty well ultimately.

“They found no evidence to suggest they were arbitrary, capricious, or unreasonable,” he said about the scores.

He noted the scores were not inconsistent between the reviewers. They found the rationale for the different scores included different expertise on issues among reviewers, ambivalent or convoluted answers, noncompliance with the 2018 medical cannabis RFA specifications, and contradictory information on the application.

Brown said some provided non-compliant information, too many pages, did not submit electronically, and plans were far larger than the specified size.

Brown noted that many said while they had dispensaries in other states, they had no history of finances.

“There is no evidence the scores should be amended in the 2018 RFA,” he said.

Brown recommended the applicants should be denied after being scored and review

The NJ CRC voted unanimously to accept the report and denial described by Brown.

A lawyer for one of the 2018 companies said they would likely pursue litigation soon during the public comment period.

Another one of the applicants, Peter Barsoom of Liberty Plant Sciences, said the CRC would not meet with them in the past to discuss the issues during their back and forth. He also threatened more litigation and noted they won the suit.

A lawyer from the applicant Harvest also said there would be more “needless litigation.”

NJ CRC Denies Request for Stay from 2019 Loser Curio Wellness

CRC Chief Counsel Christopher Riggs explained the Maryland-based company Curio Wellness applied to be a vertically integrated license in Central Jersey and were denied. Then they appealed the decision.

They alleged Altus and Holistics were not Women-owned which granted them 30 points necessary to win. Curio complained they would have been awarded if not a bonus others received.

“The CRC offered Altus and Holistics the opportunity to respond,” Riggs said.

They took the opportunity to do so.

Riggs recommended the CRC deny the request for stay did not think it had merits. The denial was approved unanimously by the CRC.

iAnthus and Opening the Adult-use Market Progress

The CRC then approved the transfer of ownership from MPX to iAnthus of the license MPX won in 2018.

“The marriage… has not been a harmonious one,” Brown said of the two companies. He noted the problem had been covered in the press.

He said they could only deny the request if they failed to pass whether the permit holder requested it and submitted complete materials. Brown added the CRC investigated iAnthus thoroughly, and they complied with everything required.

“The recommendation from staff is to approve this transfer of ownership,” he said.

Nash moved to adopt. Commissioner Charles Barker voted nay in a 4-1 one vote in favor of the transfer.

Brown noted in his monthly report that 1500 accounts have been created in the CRC’s portal for cannabis license application. While there have been short outages, he said it has been working consistently. The portal opened on December 15, with cultivation and manufacturing licenses and testing labs open for application.

He said 300 complete applications have already been received thus far. Brown said of the applications received, 87 percent were conditional while 13 percent were annual. He noted 109 were Social Equity applicants, and 140 were Diversely Owned.

“Which we like to see,” Brown said.

There were also 31 Impact Zone business applications. Some were awarded bonus points for having Project Labor Agreements that said they would not interfere if their workers sought to form a labor union.

2019 Implementation Process

Brown said the 2019 winners are being vetted to certify they have municipal approval if they’re indeed minority or women-owned and can pass a criminal background check. Dispensaries had time to submit their information due yesterday, and has not been reviewed.

He said the existing medical dispensaries need to prove they have adequate supply, can expand without impacting their ability to serve patients, and receive municipal approval to sell adult-use cannabis.

It has yet to be publicly determined how much cannabis supply would be sufficient.

Brown added they need to confirm they can commit to the CRC’s policies of safety and equity.

Four certifications from the ten companies with open dispensaries of the 12 licensed companies have been received, but none have been approved. There is no date for when they will a decision will be announced on them.

Seed to Sale Control

Brown said they want to establish an inventory management system so that no cannabis is diverted to the underground market from licensed establishments managed from seed to sale. He described a thorough system that licensees would be mandated to use. Brown said it would help speed up the process.

Vice Chair Sam Delgado requested that the CRC “update on the regular basis as far as the project is going would be helpful.”

“That is not a problem at all,” Brown said.

It was approved unanimously.

The CRC also passed a motion to keep COVID precautions like curbside service for patients, telemedicine appointments, and reduced caregiver fees. The next NJ CRC meeting is on January 27th.

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