Diversity Concerns Threaten Current Medical Cannabis License Awards

Several Washington Post articles reported that concerns over the Natalie M. LaPrade Maryland Medical Cannabis Commission’s handling of geographic and racial diversity issues during its review of grower applicants could result in both legislation and litigation, potentially jeopardizing the current application progress.

Racial Diversity

Washington Post article (2016-09-10) discussed the recent concerns raised by some legislators and minority stakeholders that the Commission process used by the Natalie M. LaPrade Maryland Medical Cannabis Commission did not properly take into account racial diversity issues, with none of the 15 preliminary grower licenses going to African-American owned businesses. The concerns have called into question the application process and could result in both legislation and litigation.

According to the article, the Commission did not give extra weight to minority-owned businesses based on a letter from the Maryland Attorney General’s Office stating that it would be illegal absent a showing of discrimination in the medical cannabis industry. However, the AG’s office subsequently clarified that the Commission could have orderd a study of disparities in similar industries, such as pharmaceutical manufacturing, to justify giving a preference to minority-owned applicants. From the article:

Del. Cheryl D. Glenn (D-Baltimore) announced the plans [to introduce emergency legislation during the 2017 Session] at a Friday meeting of the Legislative Black Caucus aimed at addressing diversity in the burgeoning and potentially lucrative medical cannabis industry. …

Paul W. Davies, chairman of the cannabis commission, met with Attorney General Brian E. Frosh (D) on Tuesday and said their offices will work together to come up with ways to achieve diversity. …

The ideas floated at Friday’s meeting included eliminating caps on marijuana growing licenses to allow all minority companies to compete, conducting another round of licensing exclusively for minority-owned businesses and even starting the entire application process over, with race taken into account. …

Gov. Larry Hogan (R) has dispatched two top staff members to work with black lawmakers on the issue.

House Speaker Michael E. Busch (D-Anne Arundel) pulled Glenn out of Friday’s meeting for a private conversation, later telling meeting attendees that the diversity issue was “getting thoroughly vetted.”

The article also noted that litigation by certain African-American growers was a strong possibility.

Geographic Diversity

A 2016-09-12 Washington Post article discussed the controversy generated by the Commission’s decision to pass over the two lowest scoring grower applicants who otherwise would have qualified for one of the 15 grower’s licenses in favor of two slightly lower ranked applicants in order to ensure geographic diversity. Litigation is also being considered by the two rejected growers. From the article:

“We wanted everybody who would substantially look at this to come back and say ‘you know what, the commission did create geographic diversity when we licensed marijuana,’” [Commissioner Buddy] Robshaw told prospective marijuana entrepreneurs at the meeting. …

“We were dismayed by the outcome, and believe the commission’s decision and process were improper and fundamentally flawed,” said Pete Kadens, chief executive of Green Thumb Industries-Maryland, which initially was ranked in the top 15 but was denied a license in order to make room for Prince George’s-based Holistic Industries and Shore Natural Rx, of Worchester County.

GTI had planned to grow in Washington County, west of Frederick, and was the lowest-scoring of three applicants from that county that were originally in the top 15. The other demoted company was Maryland Cultivation and Processing, the lowest-ranked of three top-tier Frederick County applicants.

“This isn’t a game like ‘Jeopardy,’ ” said Ed Weidenfeld, a partner in Cultivation and Processing. “This is a very, very valuable award from the state that was promised to go to the most suitable [applicants].”

Both GTI and Maryland Cultivation and Processing have asked the commission to preserve documents related to the licensing decision, a preliminary step for litigation, and have joined a legislative push to expand the cap on grower’s licenses from 15 to 20.