Judge temporarily halts Maryland medical marijuana industry

A Baltimore judge halted Maryland's medical marijuana industry Thursday, granting the request of a company that alleged state regulators illegally ignored racial diversity when picking firms to grow the drug.

Circuit Judge Barry Williams said the Maryland Medical Cannabis Commission is not permitted to grant any additional marijuana licenses for 10 days. He will decide after a June 2 hearing whether to extend that ban until the conclusion of a lawsuit that asks for the entire application process to begin anew.

The case has been watched closely by medical marijuana firms, regulators and patients because it has potential to upend the entire industry before it gets off the ground.

In his brief ruling, Williams said the 15 preliminary licenses to grow the drug could have been awarded in a manner that was "potentially arbitrary and capricious and possibly unconstitutional."

The lawyer representing the commission, Assistant Attorney General Heather Nelson, declined to comment. Commission chairman Paul Davies said the ruling only applies to growers licenses and the commission will continue its work.

ForwardGro, the only company to secure a final cultivation license, will be allowed to keep growing marijuana during the temporary ban, but the company will have to argue in court next week why it should be allowed to continue.

ForwardGro won final approval last week to grow the drug, more than four years after Maryland first legalized a medical marijuana program. More than 6,500 patients have registered to receive the drug when it's available.

The industry has been beset by delays and disputes, including allegations that the commission broke the law in failing to seek racial diversity and in not following its own rules as it sought geographic diversity among medical marijuana growers. Those licenses are estimated to be worth millions.

A state law required the commission to "encourage" participation by minorities and to "actively seek to achieve racial, ethnic and geographic diversity when licensing medical cannabis growers."

Although the commission used geographic diversity as a selection criteria — albeit in a way that's subject to another lawsuit — the commission did not inquire about, nor consider, the racial or ethnic identity of applicants.

None of the 15 companies granted preliminary approval to grow the drug are led by African-Americans. Alternative Medicine Maryland, which is led by an African-American doctor from New York, was not ranked by the cannabis commission among the top 15 companies seeking a growing license and filed a lawsuit last fall challenging the award process.

Nelson, who represents the commission, argued in court that the law never expressly required racial diversity to be a selection criteria and that the commission satisfied the requirement to seek diversity by broadly advertising the program. She said Alternative Medicine Maryland's application was evidence the commission successfully reached a diverse pool of candidates.

"What they did was sufficient," Nelson said.

The Legislative Black Caucus disagrees, and has accused the commission of unfairly excluding African-Americans, who make up about a third of Maryland's population, from the industry.

Black lawmakers are lobbying the governor and presiding officers to recall the General Assembly to Annapolis to expand the industry to include more minority-owned firms.

Earlier this month, Gov. Larry Hogan issued an executive order to conduct a disparity study that examines whether minorities face a disadvantage getting into the lucrative medical marijuana business. Such a study is a prerequisite to legally considering race when awarding state licenses.

A lawyer for ForwardGro said the company will present their case in court next week.

"The key for us is to continue to focus on getting medicine to patients in Maryland," said Gail Rand, a spokeswoman for ForwardGro.

Brian Brown, an attorney for Alternative Medicine Maryland, said the company doesn't wish to delay the industry.

"It's our hope that this gets resolved quickly and expeditiously," he said.

The trade group representing growers and processors who have won preliminary licenses called the ruling "incredibly disappointing."

"Maryland's patients and families have waited nearly four years for access to these important medicines," said Jake Van Wingerden, the group's chairman. "We are hopeful that the Circuit Court will rule against Alternative Medicine Maryland's frivolous legal filing when all the evidence is heard on June 2."

The trade association questioned whether Alternative Medicine Maryland would even qualify for a license if race had been considered, citing a redacted document filed by the state.

That document shows none of the top 60 firms proposed locating in Talbot County, where Alternative Medicine Maryland proposed starting a growing operation in a former Black and Decker plant in Easton. The document does not identify any of the top companies by name.

The commission has argued it should not have to reveal any details about the ranking process that led to the selection of the 15 companies that won preliminary licenses to grow the drug in August 2016, citing deliberative privilege.