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N.J. can resume issuing new medical marijuana licenses after court ruling settles lawsuit

The state can resume its review of nearly 150 medical marijuana license applications that have sat untouched for more than a year, thanks to a ruling from a state appellate court Thursday.

The court ruled against all but one medical marijuana license applicant rejected by the Department of Health in 2019. It upheld the department’s denial of seven other applications.

The case, which consolidated eight applicants rejected in an initial review, halted the expansion of New Jersey’s strained medical marijuana program in late 2019 when the court granted a stay in the process. Now, with the stay lifted, the Health Department can reopen its review of 146 applications the state put on hold and resume the process of issuing as many as 24 new licenses.

 

No matter the ruling, these paused applicants were always going to see victory in a decision that gets the process restarted and inches them closer to attaining a license.

 

The new licenses will not only ease burdens to medical marijuana for the state’s 100,000 registered patients, but also set New Jersey up for the 21 and older marijuana market. Medically-licensed facilities are slated to get the first shot at selling to the public.

 

But they will likely take months to a year to open, even after the health department makes its final decisions.

 

The applicants sued in late 2019 and claimed the Health Department wrongly rejected them during a first round of cuts because reviewers could not open corrupt PDF files.

 

But the court decision noted applicants were given clear instructions about deadlines, and that the department even held a webinar to help them prepare for submission.

 

Others sued over the denials based on a lack of local approval to operate in the town and argued that the letters they submitted did constitute approval.

 

In its decision published Thursday, the appellate court sided only with ZY Labs, which included three letters of support from prominent Hillside community members, but not a letter directly from the municipality. The court remanded the application to the Health Department for further consideration after saying the letters constituted community approval under the department guidance.

“This was a significant victory for ZY Labs,” said Lee Vartan, an attorney that represented the applicant. “ZY Labs is confident in the strength of its application and looks forward to being awarded a license to cultivate medical marijuana in the central region.”

 

Others are not celebrating.

“We are disappointed in the Court’s decision as it anachronistically relied on an agency investigation occurring after the disqualification decision – confirming the decision, itself, was baseless,” Joshua Bauchner, an attorney who represented several of the appellants, said in a statement. “Nevertheless, we remain hopeful that the [state Health Department] will finally adhere to its mandate to serve New Jersey’s ever growing medical marijuana patient population without further delay.”

 

Another attorney in the case, Craig Provorny, said the health department conducted an insufficient investigation into the technical problem and maintains his client was wrongfully rejected.

 

“Community Wellness of New Jersey is very disappointed in the decision,” he said. “Community Wellness is a 100% minority-owned business that is the type of operation you would think the state would like to participate in this program. We believe the appellate division ignored the facts about the system crashing, and other mismanagement on behalf of the Department of Health.”

 

A spokesperson for the Health Department declined to comment for this story.

 

It’s not the first time the health department has faced legal challenges to its licensing process. Another group of rejected applicants sued over a 2018 licensing round, arguing the scoring methods for selecting six license winners lacked a clear methodology.

 

A court ruled in November that the Health Department must change its “unreasonable” system for awarding licenses and offer more transparency going forward.

 

But this ruling largely favors the Health Department’s review process. Bill Caruso, an attorney and managing director for Archer Public Affairs and a founding member of New Jersey United for Marijuana Reform, hailed the decision as a win for the health department and said it helps to clarify rules for future rounds of licensing.

“I think this is great win for the state, and it upholds the state’s review and regulatory requirements that they have put in place, therefore breaking gridlock” he said.

 
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