Suit questions scoring discrepancies among Pa. medical marijuana applicants

David Weissman
York Dispatch

A failed medical marijuana business applicant has sued the Pennsylvania Department of Health, in part because of "inconsistent, arbitrary and mysterious application scores."

Keystone ReLeaf filed its lawsuit against the department in early September in an effort to halt implementation of the state's new medical marijuana program.

The Bethlehem-based company was one of hundreds of applicants that applied for a limited number of grower/processor and dispensary permits. The department awarded 12 grower/processor permits and 27 dispensary permits in late June.

Five-Leaf Remedies grows vegetables in a hydroponic growing area while vying for a permit to be one of the first medical marijuana grower/processors in the state, in York City, Thursday, June 8, 2017. Dawn J. Sagert photo

The department scored each applicant based on a variety of factors — including capital requirements, security and community impact — and posted each applicant's score on its website. The maximum score was 1,000.

Keystone ReLeaf alleges that the department's scoring system was flawed, pointing to several irregularities in its own scores compared to other applicants.

Specifics: The lawsuit specifically cites the capital requirements scores as an example.

State law required dispensary applicants to have at least $150,000 in capital deposited in a financial institution. Though Keystone ReLeaf vastly exceeded this amount, the suit claims, they did not receive all the available points for this section.

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In fact, no applicant received all the available points in the capital requirements, meaning that the department was "inexplicably ... not satisfied with the capital commitments of any single applicant," according to the suit.

Keystone ReLeaf wasn't the only applicant that took issue with its scores, as the state received 141 total appeals, according to April Hutcheson, spokeswoman for the Health Department.

Some also have been critical of the department for refusing to release the names or backgrounds of its selection committee members, which scored the applicants.

The state Office of Open Records has ordered the department to release those names based on a Right-to-Know request by PennLive, but Hutcheson wrote in an email that the department will be  appealing that decision.

Locally: Not all failed applicants are pursuing action against the department, though.

Members of Five-Leaf Remedies, which had applied for a grower/processor permit in York City, did not file an appeal, according to spokeswoman Christina Kauffman.

Kauffman said the group's overarching goal is to ensure that the state's residents who need this medicine get it as soon as possible.

Sen. Mike Folmer yells, "We won," as he speaks before Gov. Tom Wolf signs the medical cannabis bill into law in the rotunda of the Capitol in Harrisburg, Sunday, April 17, 2016. Dawn J. Sagert photo

"This is so much more than a business endeavor," she said. "Human lives are at stake. It's already taken so long for Pennsylvania to implement (a medical marijuana program)."

After reading through Keystone ReLeaf's lawsuit, Kauffman said she understood the company's qualms with the secretive scoring system.

"In reviewing our own scores, we were surprised we hadn't scored better in several categories," she said.

In particular, she pointed to the sections awarding points for diversity and community impact.

Investors incorporated Five-Leaf as a benefit corporation, which is a for-profit company that structures nonprofit giving into its bylaws, and Kauffman said they took input from all members of the York City community.

However, the department only awarded the corporation 58 out of a possible 100 points for diversity and 43.25 out of 100 for community impact.

"That was difficult for us to conceive," Kauffman said. "We were arguably the most community-centered applicant."

She said, in hindsight, it appears the department favored businesses with more financial resources and experience in the field, the latter of which would've been impossible for Five-Leaf's investors to have since they were all from Pennsylvania, where medical marijuana has been illegal until now.

"It would've been helpful for us to know (what the department was looking for) from the beginning," Kauffman said.

The department received about $4 million in nonrefundable application fees.

Patients should be able to get medical marijuana in Pennsylvania beginning at some point in 2018, after permittees are deemed operational, according to Hutcheson.

— Reach Dispatch politics reporter David Weissman at or on Twitter at @DispatchDavid. Like the blog on Facebook at The CannaBiz Kid.