Pa. throws out all 8 marijuana research applications, so what’s next?

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Pennsylvania’s ambitious plan to become the national center for medical marijuana research just can’t get off the ground.

In the latest setback for the program, the state Department of Health on Wednesday rejected the applications of all eight marijuana growers who had planned to partner with the state’s medical schools. Regulators said the applications were riddled with mistakes and missing information.

The Wolf administration said it would open a second round of applications in early 2019. A statement issued by the Department of Health said none of the applicants — which include some of the nation’s most successful cannabis cultivators — “met the rigorous requirements of the competitive application review process.”

Several industry experts said the rejections could hold up research indefinitely.

“Eight billionaire groups who have spent the last four years trying to situate themselves as medical marijuana kingpins in the state have just been told ‘No,’” said Andrew Sacks, cochair of the Pennsylvania Bar Association’s Committee on Medical Marijuana and Hemp. “That’s big news.”

The health department previously had delayed the program to rewrite some of the regulations.

If the permits had been awarded, each of the aspiring growers would have won the right to grow cannabis in the state and to open six retail dispensaries.

Last week, Harrisburg lawyer Judith Cassel filed a lawsuit to prevent the Department of Health from granting permits to aspiring research growers. The suit alleged pay-to-play between the already-partnered growers and the medical schools. The filing also claimed that the state would be unconstitutionally abdicating its role if the medical schools were allowed to choose their own partners without scoring by the state. And the suit claimed that the state required only the minimum amount of research. Cassel filed the suit on behalf of several current Pennsylvania medical marijuana growers and dispensaries.

The state said the lawsuit played no role in its decisions.

“Our goal is to ensure that our research program operates at the highest standards,” said Secretary of Health Rachel Levine, a former research scientist. “We are disappointed that awards were not made, but must uphold the standards set out in the regulations.”

The Department of Health’s reasons for rejection varied. The applications were not available for review by the Inquirer and Daily News, but the department provided copies of five denial letters.

Curaleaf Holdings, the Russian-backed company paired with the University of Pennsylvania, “failed to meet the minimum acceptable score for each scoreable section” in key sections of its application. It scored poorly in sections weighing its organization, ownership, capital, and tax status. It was also labeled “below expectations” in its diversity plan and community impact statement. The $4 billion cannabis grower operates in 10 states and was previously known as PalliaTech.

A Curaleaf executive said the company planned to appeal the decision to the department.

“What’s most disappointing in this news is that it will impede our ability to help patients in Pennsylvania and around the country,” said Joseph Lusardi, the company’s CEO. “This research is essential, as it will help identify other ways that medical cannabis can help aid in suffering with conditions like PTSD, chronic pain, epilepsy, and cancer.”

Laurel Harvest Labs, a Lancaster-based firm partnered with Temple University’s Lewis Katz School of Medicine, was strongly criticized for failing to meet minimum acceptable scores on its application. The state gave Laurel Harvest, which has no prior marijuana growing experience, low marks on its diversity plan, community impact statement, and site and facility plan.

“It was a surprise that we were all rejected,” said Laurel Harvest’s managing director, Andrew Dodge. “We’re certainly looking to go forward and reapply. Hopefully, the outcome will be more desirable for the patients of Pennsylvania who deserve to have this up and running.”

Prime Wellness, which is owned by Acreage Holdings, partnered with Drexel University. Though it was among the high scorers last year and granted a grower/processor license by the health department, Prime Wellness was rejected this time because it failed to include a dispensary application and the required fees. Acreage Holdings includes former House Speaker John Boehner on its board of directors and recently added former Canadian Prime Minister Brian Mulroney to its board.

Several growers were denied for more amateur reasons: They did not follow directions.

Franklin Labs, which partnered with Lake Erie College of Osteopathic Medicine, was one of three schools denied for failing to include a valid contractual relationship with a research institution. The schools erred because they had included letters of intent that predated the health department’s certification of the medical school as a valid medical marijuana research center. Other companies that lost out for the same reasons included MLH Explorations, which paired with Thomas Jefferson University; and Cansortium Health Partners, which teamed with Philadelphia College of Osteopathic Medicine.

Cassel applauded the state for not awarding the permits.

“The process was flawed and the outcome confirms this,” Cassel said. “We hope that Health will go on to create a process that is open, transparent and seeks the very best in the state to pursue research and that the research requirement is substantial.

“But as it stands, we won’t withdraw our litigation at this time.”

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