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The Importance of an Administrative Hearing for the Medical Marijuana Control Program

Published: May 22, 2018 by John Izzo

At the beginning of last week, the Medical Marijuana Control Program defended its actions in three separate cases in the Franklin County Court of Common Pleas. In each case, the Plaintiff(s) wanted the Court to prevent the Ohio Department of Commerce from issuing certificates of operation to the provisional medical marijuana cultivator licensees.

The three judges issued decisions at the end last week, and none of them shut down the Program. John Izzo of Graff & McGovern represented Defendants in two of the three cases.

The PharmaCann Ohio case was filed on December 13, 2017. PharmaCann had one of the top twelve scores for awarding a Level I medical marijuana cultivator provisional license. However, the Department of Commerce limited the number of provisional licenses to twelve. In the end, PharmaCann was displaced because the law requires 15% of the Level I provisional licenses (2 of the 12) to be awarded to a minority owned, minority controlled business. PharmaCann had the 11th highest score but did not receive a provisional PharmaCann sued, claiming the minority set aside was unconstitutional. During the course of litigation, PharmaCann discovered its score was miscalculated. Instead of the 11th highest score, PharmaCann had the 8th highest score and should not have been displaced. Rather than pursuing this in an administrative hearing, PharmaCann and Commerce resolved this matter through private settlement. PharmaCann received a provisional license last week. PharmaCann has dismissed their case, and the third-party complaint will be dismissed as well. If PharmaCann had not requested an administrative hearing, they may not have been able to obtain its provisional license.

The CannAscend Ohio case was filed on February 20, 2018. CannAscend Ohio and the five other plaintiffs did not receive provisional medical marijuana cultivator licenses. Defendants included the Department of Commerce, the Department’s consultants, and several provisional license holders. The Plaintiffs alleged public record violations as well as tortious interference with prospective contractual and business relationships. On May 17, 2018, Judge Kim Brown dismissed the non-state defendants from the case. Judge Brown opined that the Plaintiffs needed to pursue their claims through the administrative process and that it would not be a futile or vain act. More importantly, Judge Brown determined the administrative hearing process was not untimely. All of the Plaintiffs’ claims could be addressed at an administrative hearing, and the Plaintiffs could appeal Commerce’s decisions if it went against them. Unfortunately for one of the Plaintiffs, it failed to request an administrative hearing, so Commerce’s determination it did not meet the requirements for a provisional license is final. In this action, two counts remain: failure to produce public records in violation of the Public Records Act and the failure to timely produce public records in violation of the Public Records Act.

Finally, the Court issued its Decision and Entry in the Ohio Releaf case on May 17, 2018. This case dealt with public records, but also argued that the Department of Commerce failed to timely give Ohio Releaf an administrative hearing. Ohio Releaf was not awarded a provisional license, and asked for a hearing to challenge that decision. Ohio Releaf was told it was the 57th applicant to request a hearing, so it would be the 57th applicant to receive an administrative hearing. Ohio Releaf demanded a hearing immediately and not wait the projected year before having its administrative hearing. Prior to this case, Ohio law did not provide a speedy trial requirement in the administrative process as one may find in criminal matters.

Judge Frye, however, determined Ohio Releaf is entitled to a prompt hearing. Judge Frye based his decision on language found in Chapter 119. and Chapter 3796. Judge Frye ordered Commerce to give Ohio Releaf an administrative hearing in the next 7 to 15 days, as required by statute, unless Ohio Releaf agreed otherwise. Judge Frye’s reasoning should equally apply to cases involving unsuccessful processor and dispensary applicants.

The three decisions issued last week show the important role the administrative hearing process plays in determining whether or not a provisional license should be issued. The Court will not grant relief to any applicant who fails to request an administrative hearing or fails to participate in the administrative hearing process.

If you have any questions about the Medical Marijuana Control Program or administrative hearings, you should contact an attorney who has been certified as an expert in administrative agency law by the Ohio State Bar Association. John Izzo of Graff & McGovern is an expert in administrative law. He can be reached at 614-228-5800, extension 5, or