Ohio's medical marijuana program could be blunted by judge's ruling

An Ohio judge is set to hear final arguments Monday morning in a lawsuit that could delay some medical marijuana growers from getting their product to market in Ohio.

The lawsuit, filed in March, seeks an injunction banning the state commerce department from issuing certificates of operation to 12 businesses that have already received provisional licenses to grow weed in Ohio.

But the companies must have their grow operations inspected and be certified to operate in the state before they can begin cultivating marijuana for sale to people with chronic illnesses through licensed dispensaries.

Under the law, the marijuana program is mandated to go live by Sept. 8.

But the lawsuit would prevent Level 1 growers — large growers with operations up to 25,000 square feet — from even having marijuana on site until the state hears appeals from unsuccessful applicants contesting how the provisional licenses were awarded.

­­The plaintiff, Ohio Releaf, is one of 53 unsuccessful applicants for Level 1 licensees who have requested Chapter 119 administrative hearings with the state commerce department, which awarded the licenses.

Ohio Releaf’s attorney, Jeff Lipps, told the court Friday that his client would suffer irreparable harm if the state were allowed to proceed with the certification process because once the provisional licenses were certified they would “begin to evaporate’’ and “could never be retrieved.’’

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By law, the state was limited to issuing 12 Level 1 licenses and 12 Level II licenses for small growers with up to 3,000-square-foot operations before Sept. 8.

The small growers would not be included in the injunction and could proceed to certification. But the small growers don’t have sufficient capacity to meet the anticipated needs of the medical marijuana program on their own.

The law allows for additional licenses to be issued after Sept. 8, based on the as yet unknown size of the population seeking recommendations for medical marijuana from their doctors, in addition to other factors.

By then, however, the damage would already have been done, according to Ohio Releaf CEO Randy Smith, who testified Friday before Franklin County Common Pleas Judge Richard Frye.

Smith told the judge that growers with certificates of operation would have a huge competitive advantage and insurmountable head start in bringing their product to market if Ohio Releaf were awarded its own provisional license on appeal.

“All we want is our 119 hearing,’’ said Smith, who is also CEO of Arizona-based Pharm LLC, one of the largest marijuana farms in the U.S. “Just give us our chance to prove that we belong in the Top 12.’’

So far, the commerce department has not held appeals hearings for any of the failed Level I applicants who have requested them.

Commerce Department officials told the judge Friday that some hearings were scheduled, then delayed after the department discovered a scoring error on one application that affected the outcome of the final awards.

The department hired Ernst & Young to review the applicants' scores after the error was corrected and decided to postpone the Level 1 hearings until the results were certified by one of the nation’s largest accounting firms.

Smith said the commerce department never told him why his hearing was delayed, leading him to accuse the department of “sitting on the ball.’’

But even if Ohio Releaf had its hearing today, chances are slim that the outcome of their application for a grower's license wouldn't change, according to attorney Heather Stutz, who told the judge Ohio Releaf ranked No. 87 out of 109 Level 1 applicants.

“That’s not even in the ballpark,’’ Stutz told the judge.

In addition, there is no need for licensed growers to wait for certification until the appeals are heard because the law allows the commerce department to correct any mistakes that may have prevented an applicant from securing a license, according to testimony from Mark Hamlin, a senior policy advisor at the Ohio Department of Commerce.

Hamlin told the judge that the commerce department had the option of granting additional licenses to companies that were not scored correctly as an “administrative remedy.’’

The two sides arguing the merits of the lawsuit weren’t the only ones attending the court hearing Friday with a vested interest in the outcome.

“I’ve seen a lot of issues and concerns raised here today that are certainly legitimate,’’ said Ian Schwartz, a Cincinnati resident and U.S. Air Force veteran who suffers from chronic pain and would like to use marijuana legally to treat his condition. “But delaying the program is delaying patient care. And if patient care is delayed because of this lawsuit, the quality of life for our prospective patients here in Ohio will be compromised.’’