EDITOR’S NOTE: On Jan. 15, NJ Cannabis Insider hosts a newsmakers networking event in Red Bank, featuring a legislator and business leaders in the hemp and legal cannabis industries. Tickets are limited.

Briefly, last week, it seemed the state Health Department could continue its review to license up to 24 new marijuana businesses.

But a two-judge appellate court panel made it clear the state must cease all action on the licenses as several applicants rejected for a technical issue appeal the decision.

That means those who applied for a medical pot license last summer will have to keep waiting.

Last month, the court granted a stay in the 2019 application process for new medical marijuana businesses, launching the appeals process and ultimately delaying the award of licenses. That came after the health department rejected nine applicants because it could not open some PDF files submitted.

But the health department sent notice to Joshua Bauchner, an attorney for several of the groups, last week, saying it had interpreted the court’s order differently: It did not have to cease scoring the applications that have already passed an initial review of completeness.

In its response, health officials said, "because applications are scored independently on their own merit and not in reference to one another, the Department should be permitted to continue its review of the applications while this appeal is pending.”

But the court told the health department Monday it was mistaken. The stay touched on all administrative proceedings for all applicants, including the "ranking of applications, scoring of applications, awarding permits and publishing results.”

“This is yet another win for our clients, all of which have properly followed the [health department’s] procedures and have systematically and unfairly been disqualified from receiving permits for medical marijuana ATCs,” Bauchner said in a statement.

“The [health department], whose duty is to protect the health and welfare of New Jersey citizens, is consciously causing qualified patients to lack access to needed medical treatments, not to mention tying up millions of dollars of our clients’ and other applicants’ money and holding up hundreds of potential new jobs in New Jersey,” he continued.

A technical expert report of one of the appellants obtained by NJ Cannabis Insider found the PDF files submitted were complete, intact and free of malware and viruses, and not corrupt at the time of submission to the state.

The report also said possible causes of the files becoming corrupt "are numerous and can be as simple as an electronic fail anywhere along the wire to potential cyber-attacks.”

A hearing on the matter likely won’t take place until March 2 or later. But the appellants and the Health Department agree on one thing: Delays to the licensing process will harm the state’s growing medical cannabis patient population, which includes more than 60,000 people accessing just seven dispensaries.

They aren’t the only ones affected. Now, the roughly 150 remaining applicants must wait out the appeals process, and some stand to lose the properties they have held under conditional leases or purchase agreements. Many have leveraged deposits.

“Most of these entities are not multi-state giants, but hungry entrepreneurs striving to break into the industry,” said Mike McQueeny, co-chair of Genova Burns cannabis law practice. "These entrepreneurs have taken a calculated risk and oftentimes staked their nest egg on the chance of winning, and now run the risk of being bled broke because five entities want a second shot to do what they couldn’t do in the first instance.”

This story has been updated to show that a total of nine applicants were rejected for corrupted files.

A version of this story first appeared in NJ Cannabis Insider.

Amanda Hoover can be reached at ahoover@njadvancemedia.com. Follow her on Twitter @amandahoovernj. Find NJ.com on Facebook.

Justin Zaremba may be reached at jzaremba@njadvancemedia.com. Follow him on Twitter @JustinZarembaNJ. Find NJ.com on Facebook.

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