Maryland Medical Cannabis Commission wasted over two years on grower licensing.

It now appears that Maryland’s Natalie M. LaPrade Maryland Medical Cannabis Commission wasted over two years crafting and implementing a process intended to result in the issuance of licenses to grow medical marijuana in Maryland.  The process is flawed and the results of the process should be thrown out and a new process designed.  Starting over may be the best hope for avoiding litigation that could delay the issuance of grower licenses for years.  A mind-boggling series of missteps led to this unfortunate situation.

When it enacted the Maryland Medical Cannabis Law in 2014 the General Assembly decided that state government, rather than market forces, would determine the number and location of grower and processor licenses to be issued.  It is a model used primarily for industries requiring close regulation such as the gambling and alcoholic beverage industries.  Having chosen that model the state had to do two things in order to protect its process for selecting licensed growers and processors from successful legal challenge.  At least as to grower licenses it accomplished neither.

The first requirement was to design a selection process that is fair and transparent.  The decisions must be based on predetermined objective criteria and result from procedures that limit to the extent possible subjective bias of any nature.  The  second requirement was to stick to the process decided upon. After-the-fact “adjustments” to the process are anathema to that standard, but that is precisely what occurred in August.

Only 15 grower licenses may be issued under Maryland’s law.  After the initial selection of 15 finalists for licenses to grow marijuana the grower selection subcommittee of the commission reconsidered its findings and dropped two of the original finalists and replaced them with lower-scoring applicants in order to achieve the legislature’s goal of “geographic diversity” among the licensees.  The subcommittee’s recommendations were then approved by the full commission.

The replacement finalists were not the next highest-scoring applicants; they were ranked 20th and 21st. According to the vice chairman of the commission the displaced applicants were selected by looking “at the places that had the most density of pre-approved applications and take the lowest rank from there so that we could move them down.”

The method used to revise the list of finalists to achieve geographic diversity was not devised until after the chairman of the grower selection subcommittee decided that the 15 finalists selected by his subcommittee for recommendation to the full commission were not geographically diverse.  The criteria that he used to arrive at that decision were not written, nor are they altogether clear.

As pointed out by medical marijuana industry consultant Rebecca S. Gasca such after-the-fact decisions have led to lawsuits in other states.  Gasca suggested that another option would have been to ask the two higher-ranking applicants who were bumped and replaced whether they would be willing to relocate in order to get a license.  That may have been the fairer option because the application instructions led applicants to believe that the location of their growing operations was not even relevant to the selection process.

To make matters worse the commission used as its basis for measuring geographic diversity a map of Maryland’s “agricultural regions” that is more relevant to growing conditions and types of  agricultural activities than to achieving geographic diversity within the ordinary meaning of that term as intended by the General Assembly.  Although the use of agricultural regions may seem at first blush to have some relevance to the growing of marijuana, closer examination demonstrates that any relevance is only superficial, especially because medical marijuana frequently is grown indoors.

The map divides the state into five agricultural regions, with one region (the North Central) including a broad swath of the state from Baltimore City and County to Washington County that contains 61% of the state’s population.  It defies common sense to use a metric that equates Middle River with Hagerstown for purposes of achieving “geographic diversity” within Maryland.

In fact, commission members at some point must have reached a similar conclusion when they decided that Anne Arundel County should not be considered to be in southern Maryland for purposes of geographic diversity.  The commission decided that having a grower license issued to an operation in Anne Arundel County did not satisfy the need under its geographic diversity mandate to have a licensed operation in southern Maryland despite the fact that Anne Arundel County is in the Southern Region on the agricultural map.

The commission, however, did appear to use the agricultural map as justification for taking a license from an applicant from the North Central region and awarding it to an applicant in Prince George’s County, which also is in the Southern Region, in order to achieve geographic diversity.  It remains unclear why a licensed grower in Anne Arundel County did not satisfy the requirement for a grower license in southern Maryland but a licensed grower in Prince George’s County did, given that both counties are in the Southern Region of Maryland according to the map purportedly used by the commission to determine geographic diversity.  In common parlance “southern Maryland” usually refers to Calvert, Charles, and St. Mary’s Counties, not to Anne Arundel or Prince George’s County.

According to The Sun what we do know is that the beneficiary of that adjustment was a company with very close ties to Prince George’s County politics.   The chairman of the grower selection subcommittee was from Prince George’s County, and he was the person who persuaded the other members of the subcommittee to change their initial votes based on his conclusion that selection of finalists lacked geographic diversity.  As described above the applicant that benefited from the “adjustment” would not have made the final list except for the change.

There is no allegation that the chairman or other members of the subcommittee were aware of the identity of the company that benefited from subcommittee’s recommendation, although that has done little to eliminate suspicions.  Lawsuits already have been filed over the switch and I am sure that the subject of what subcommittee members knew and when they knew it will be broached during the litigation.

It is bad enough that 1) the outcome of the grower selection processed was altered after it appeared to be final based on a vague requirement for geographic diversity, 2) there was a subjective determination that the requirement had not been satisfied after the selection of the 15 finalists, and 3) the method for reallocating the licenses to achieve the requirement was crafted only after initial selection of the 15 finalists.  Throw in the fact that the method settled upon to reallocate to the licenses to achieve geographic does not appear to be consistently applied and you have a selection process that is unlikely to survive judicial scrutiny.

Any experienced government attorney or regulator would have known that for the “geographic diversity” requirement to be applied the requirement would have to be defined and the means for applying it to the selection process placed in writing and provided to applicants before they submitted their applications.  The fact that this did not occur tells you everything you need to know about the lack of professional support provided to the commission.

It is no surprise that the commission fumbled the ball during its work – it was never properly equipped to do the job in the first place.  The commission was a group of untrained volunteers provided with few resources and limited oversight.  Commission members themselves have openly expressed frustration with being given the responsibility for writing regulations without guidance on how to do so.

The commission’s vice chairman, Buddy Robshaw, had no experience writing regulations when appointed to his position.  “I went to my first meeting, and I told everyone that I didn’t know what they were talking about,” Robshaw recalled. “Some classes or training on how to write regulations might have been helpful. . . Even just a primer on writing regulations would have been really helpful in getting this done.  Once the regulations were written, though, was when we began to realize that we were a regulatory agency.  We didn’t hire any consultants at all. We used the resources that were available. . . We had to figure it all out ourselves as we went along.”

Former commission member Deborah Miran described members’ surprise at being tasked with drafting regulations.  “We were like, ‘holy [expletive],’ we have to write regulations. We had no help. We had one-tenth of an assistant attorney general’s time. … The six of us sat around a table with a blank piece of paper, and we started writing regulations. It was literally from scratch.”

Patrick Jameson, who took over as the executive director of the commission this spring, lamented to the commission in July that he had inherited a mess.  He told the commission that there were “layers of internal deficiencies and weaknesses,” “poor business planning,” “no long-term financial planning,” and no enforcement, regulatory or compliance structure in place. Even though the state budget allowed for up to nine people to be employed by the commission, he said there was “a very limited and inadequate staffing plan.”

Del. Cheryl Glenn is a Baltimore Democrat and a driving force behind the efforts to legalize marijuana for medical use in Maryland.  The commission is named after her mother.  This week Del. Glenn told The Sun:

“This should have been done completely different.  There was never any thought given to the idea that this commission would end up with the huge responsibility of issuing these licenses.

Exactly whose fault is that?

Del. Glenn also has been a driving force behind the efforts to get the results of the grower licensing process set aside because of the failure to achieve racial diversity in the selection of grower licensees, efforts I discussed in an op ed published in The Sun.  If she gets her way and the process is revised to assure racial diversity the state will simply be adding more grist to the litigation mill.

Veteran Assistant Attorney General Kathryn Rowe advised the commission that it could not use “race-conscious” measures to achieve racial diversity in the absence of a “disparity study” showing past discrimination in similar programs administered by the state.  No such study exists and she expressed doubts that any such study of licensing programs run by the state would produce evidence of racial discrimination warranting race-conscious measures.

Rowe’s advice meant that the commission could not use race-conscious measures such as minority set-asides, which appear to be what Glenn and the Legislative Black Caucus want.  According to Rowe efforts to achieve racial diversity had to be race-neutral and therefore “limited to broad publicity given the availability of the licenses and encouragement of those from various groups” to apply.

After the criticism levied by Glenn and others, Maryland Attorney General Brian Frosh suggested that perhaps the commission had drawn the wrong conclusions from Rowe’s advice.  I don’t know where he is headed with that because Rowe’s advice is absolutely sound and based on decades of settled law.  If Frosh bows to political pressure and walks back Rowe’s admonition against race-conscious measures he is planting yet another legal time bomb in the process.

It already has taken Maryland longer to get a program up and running than almost every other state that has approved the use of medical marijuana.  Lengthy further delays appear inevitable.  Only three years after the Maryland Health Benefits Exchange debacle our state government again is attracting national attention for its ineptitude.  It is embarrassing and a disservice to the patients and their families that medical cannabis is intended to help.

October 14, 2016

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