Lawsuit Seeks to Shut Down Pennsylvania’s Medical Marijuana Program Before It Even Sets Up Shop 

Cannabis Industry Alert

December 6, 2017

A lawsuit accusing Pennsylvania’s fledgling medical marijuana program of running a faulty permitting process could stonewall patients looking for relief. Keystone ReLeaf (Keystone), a Bethlehem-based medical marijuana applicant, asked a Commonwealth Court to issue an injunction against the state’s program in September after it was denied one of 12 coveted grower/processor permits granted by the Pennsylvania Department of Health. The company has asked the court to revoke all of the awarded permits and reopen the bidding. The Department of Health’s Office of Medical Marijuana has denied that any bias or favoritism tainted the competition and that secrecy was a necessary precaution to keep evaluators from being influenced, although the state Office of Open Records recently ruled that the panelists must be identified. Senator Daylin Leach, a lead sponsor of the legislation, wrote a letter to counsel for Keystone on September 11, 2017, urging Keystone not to seek an order staying the entire Pennsylvania Medical Marijuana program. On September 19, 2017, Senator Leach held a press conference urging Keystone to put patients first and refrain from interfering in the implementation of the program, which is scheduled to debut in April 2018.

Keystone’s lawsuit claims that the state’s lack of transparency has made it impossible to deduce how applications were scored and ranked in the highly competitive contest. Another lawsuit by an applicant to have a rival applicant’s permit rescinded has been dropped, and numerous other applicants have complained about how their applications were handled. The Morning Call, a daily newspaper based in Allentown, Pa., reported a range of alleged flaws in reviewing 130 administrative appeals that were filed against the Office of Medical Marijuana (Office).

The Office’s scoring system used a sliding scale to grade questions that were expected to be scored for completion — for instance, the inclusion of photo IDs. Scores were carried out to the hundredth decimal point. At least one applicant found its scores were miscalculated, and other applicants allegedly identified scoring inconsistencies in sections that contained identical content. Several more complained about submissions being judged as incomplete for minor formatting and clerical errors, which they were not permitted to amend. They have claimed this was illegal, highlighting a paragraph in the state’s Medical Marijuana Act that says the Department of Health “shall notify” applicants if further documentation is required, and that applicants have 30 days to provide the additional material. The state received about approximately 140 administrative appeals, or roughly one challenge for every three denied applications, according to The Morning Call.

In the pending Keystone litigation, Keystone amended its petition for preliminary injunction in early November to join as parties 39 successful applicants awarded medical marijuana grower/processor and dispensary permits. Pennsylvania approved 27 companies to operate up to three medical marijuana dispensaries, with approximately 54 total dispensaries in the current pipeline. In the meantime, the court postponed the injunction hearing and imposed a deadline for filing responsive pleadings in late December. The Department of Health has already filed a brief opposing the request for injunction. No hearing on the injunction has been scheduled. In the meantime, the Department of Health is moving forward with implementing the program. Recently the Department of Health added a physician registry and patient and caregiver registration forms, along with an instructional video for participants, on its website. Patient registration opened on November 1, 2017, and more than 6,000 patients already have completed some portion of the required forms, and more than 320 safe harbor letters have been issued to legal guardians or caregivers of persons under age 18 who suffer from one or more of the 17 medical conditions for which medical marijuana is an approved treatment. The Department of Health also has a growing physician registry of licensed physicians who will be authorized to certify patients to participate in the program. Approved patients and caregivers are to receive a medical marijuana ID card for a fee of $50.

A recent complication is that some winning bidders expressed interest in placing their approved permits up for sale to the highest bidder. One permit attached to a large former beverage warehouse in Reading, Pa., was advertised on the market for $20 million. The Department of Health has, however, announced that no permit may be sold or transferred without its approval.

On the national front, 29 states plus the District of Columbia have legalized medical marijuana, but Attorney General Jeff Sessions, a consistent opponent of legalization in any form, has, in the past, publicly opposed a further extension of the current law that blocks the Department of Justice from using money to prosecute medical marijuana in states where it is legal. Congress has until December 8 to decide whether to include the Rohrabacher-Blumenauer Amendment in a bill that will fund the government through the next fiscal year. On November 29, the attorney general announced that he remains opposed to a hands-off approach to marijuana enforcement, but may not stand in the way of an extension of the existing federal policy in some form. It remains to be seen how this Congress will navigate the divide between the many states with robust medical marijuana programs and the attorney general’s objections to any restriction on federal marijuana prosecutions.

Notwithstanding the foregoing challenges, the commonwealth’s target date for product to be available at dispensaries remains January 1, 2018. 

Marijuana is still classified as a Schedule I controlled substance by the U.S. Drug Enforcement Agency, and as such it remains a federal crime to grow, sell and/or use marijuana. Any content contained herein is not intended to provide legal advice to assist with violation of any state or federal law.


Thomas G. Wilkinson, Jr.


(215) 665-3737

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