RoundTable Wellness, LLC v. Natalie M. Laprade Md. Med. Cannabis Comm'n

ROUNDTABLE WELLNESS, LLC v. NATALIE M. LAPRADE MARYLAND MEDICAL CANNABIS COMMISSION

No. 0116-2021

Court of Special Appeals of Maryland

May 10, 2022

Circuit Court for Anne Arundel County Case No C-02-CV-20-001928

Nazarian, Leahy, Harrell, Glenn T. (Senior Judge, Specially Assigned), JJ.

OPINION ^[*]

Nazarian, J. Roundtable Wellness, LLC ("Roundtable") applied for grower and processor medical cannabis licenses from the Natalie M. Laprade Maryland Medical Cannabis Commission (the "Commission"). After the Commission informed Roundtable that it was not among the top tier of applicants, Roundtable filed suit against the Commission and individual commissioners in the Circuit Court for Charles County, seeking a writ of administrative mandamus, an injunction, and a declaratory judgment. The case eventually was transferred to the Circuit Court for Anne Arundel County, the individual commissioners were dismissed, and the Commission moved to dismiss. At the close of a hearing, the circuit court dismissed the petition for writ of administrative mandamus and declaratory judgment and granted summary judgment in favor of the Commission, denying the request for an injunction. Roundtable appeals and we affirm.

I. BACKGROUND

A. The Commission.

Before delving into the details of the case, we start with some background on Maryland's medical cannabis industry and the Commission's application process.

The Commission is an independent agency within the Maryland Department of Health responsible for developing policies and regulations to implement programs to make medical cannabis available to qualifying patients. Md. Code (1982, 2019 Rep. Vol., 2018 Cum. Supp.), § 13-3302(c) of the Health - General ("HG") Article. Among other things, the Commission is authorized to license medical cannabis dispensaries and to issue medical cannabis grower and processer licenses. Id. HG §§ 13-3307(a)(1), 13-3309(c)(3), 13-3306(a)(2)(iv).

In line with the General Assembly's recent legislative efforts to promote diversity in the Maryland cannabis industry, the Commission formed a race and gender-conscious submission process for medical cannabis grower and processor licenses.^[1] In October 2019, the Commission developed and submitted emergency regulations that addressed the criteria for assessing license applications. Among other things, these amended regulations defined the term Disadvantaged Equity Applicant ("DEA") under COMAR 10.62.01.01B and provided that applicant entities could qualify for DEA status by demonstrating that a certain percentage of their ownership interest was held by people from disadvantaged communities. COMAR 10.62.08.05I(6)(b)(d), 10.62.19.04I(6)(b)-(d).

The Commission is authorized by statute to award a number of licenses to medical cannabis growers, processors, and dispensaries. HG §§ 13-3306, 13-3309. The Commission may issue no more than twenty-two grower licenses and no more than twenty-eight processor licenses. HG §§ 13-3306(2)(i), 13-3309(c)(1)(i). Before the 2019 application process, the Commission issued seventeen grower licenses, one grower license preapproval, and eighteen processor licenses. In March 2019, the Commission opened a new application process to seek qualified candidates for up to four additional grower licenses and ten additional processer licenses. HG§§ 13-3306(a)(2)(i), 13-3309(c)(1)(i).

B. The 2019 Application Process.

The new application process directed applicants to submit redacted documents to the Commission by May 24, 2019. The Commission then led an "initial sift" of all applications to determine whether the applicants met the minimum requirements or included disqualifying information.

The application period was open from March 25, 2019 to May 24, 2019. Candidates submitted application packets through an online platform. On June 10, 2019, the grower and processor license applications were reopened for an additional fourteen days due to technical issues with the submission platform and widespread errors with redaction. All candidates, including those who had submitted applications previously, were required to hand-deliver application packets to the Commission offices by June 24, 2019.

Before the application period, the Commission solicited proposals for independent evaluators to review, score, and rank the applicants. The Commission collaborated with Morgan State University ("MSU") to evaluate the applications in a two-part blinded review.^[2] MSU evaluators were responsible for evaluating operational factors, among other things, ^[3] while questions about the engagement of owners, employees, or contractors from Economically Disadvantaged Areas ("EDAs") were reviewed by the Commission. MSU evaluated, scored, and ranked the applications and submitted a comprehensive evaluation report to the Commission on August 31, 2019. The Commission then combined the MSU scores (90 out of 100) with its own (10 out of 100) and shared the blinded application materials with the Commission members. After reviewing them, the Commission voted to approve the rankings. But this vote wasn't pre-approval for a license itself-it enabled the Commission to verify the information contained in the application materials of the high-ranking applicants.

After the rankings were announced, on October 8, 2019, the Commission wrote to Governor Larry Hogan, President of the Senate, Mike Miller, and Maryland Speaker of the House, Adrienne Jones, to explain the Commission's decision to delay the award of pre-approvals for the new grower and processer licenses. The Commission explained that it needed time to investigate the highest-ranking applications, and the Legislative Black Caucus of Maryland asked the Commission to delay the award due to concerns about the process. Zuckerman Spaeder conducted an independent investigation into the allegations challenging the impartiality and integrity of the process, and those allegations were found to be unsubstantiated. Stage-one preapprovals were announced on October 1, 2020.

C. The Lawsuit.

Roundtable is a proposed cannabis wellness company. It submitted online application materials for a grower and processor license on May 24, 2019 and submitted them again in person before the June 24, 2019 deadline. On September 24, 2019, Roundtable was informed that it was not among the highest-scoring applications for a medical processor (and seemingly a grower) license. Two days later, on September 26, 2019, the Commission announced and released a copy of the scoring criteria and the full rankings for both the grower and processor licenses.

On October 24, 2019, Roundtable filed an initial complaint for writ of administrative mandamus and sought preliminary and permanent injunctive relief in the Circuit Court for Charles County. After a lengthy procedural history, the case was eventually transferred to the Circuit Court for Anne Arundel County. On July 10, 2020, Roundtable filed an amended complaint that contained three counts: (1) Count I - Writ of Mandamus, (2) Count II - Injunctive Relief, and (3) Count III - Declaratory Judgment.

Roundtable's amended complaint challenged the scoring process and methodology implemented by the Commission, but not the scoring of its individual application:

41. The [Commission] acted arbitrarily, capriciously, and unreasonably when it failed to ensure that [MSU] had the proper subject matter experts to properly apply the methodology established by state law.

42.On information and belief, Roundtable Wellness proffers that the Commission acted arbitrarily, capriciously, and unreasonably when it failed to ensure that no current or former employee, independent contractor or person otherwise associated with [MSU] applied for and/or received a license.

43. The [Commission] acted arbitrarily, capriciously, and unreasonably when it failed to ensure that all the medical cannabis processor license applications received the exact same review.

44. The [Commission] acted arbitrarily, capriciously, and unreasonably when it allowed one of its members to participate in deliberation or even sit on the Commission, when one of the Commissioner's close relatives was a member of a group seeking a license.

45. The [Commission] acted unreasonably, arbitrarily, and capriciously when the Commission reserved unto its staff the ability to award 10% of the total application score for "evaluating questions relating to [DEA] status and [EDAs]."

46. The [Commission's] decision that Roundtable Wellness was not one of the highest ranked applications must be "supported by competent, material, and substantial evidence in light of the entire record as submitted."

Roundtable sought multiple forms of relief, including that: (1) the Commission void the grower and processor rankings, (2) the Commission fulfill its statutory duty to review all applications in a manner that is not arbitrary, capricious, or unreasonable, (3) the Commission award Roundtable a stage-one preapproval, (4) the Commission cease issuing the licenses until the applications have been rescored, and (5) the court issue an injunction prohibiting the Commission from announcing the awards for preapproval licenses or take any other steps under Stage two of the licensing scheme.

D. Circuit Court Ruling.

The Commission filed a motion to dismiss Roundtable's amended complaint on October 20, 2020 and the parties appeared for a hearing on February 11, 2021. The Commission argued that none of the allegations in Roundtable's complaint, even if true, could properly support a mandamus claim because they attacked the "process as a whole[, ]" and thus their allegations "g[o] to quasi-legislative actions undertaken by the Commission." Put another way, the allegations "at their core attacked the larger process the same process...