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Two aspiring medical marijuana companies have filed lawsuits against the Pennsylvania Department of Health over its medical cannabis licensing process. And one of them is seeking to take the permit awarded to another licensed grower/processor after its parent company was implicated in a criminal investigation.

In their petitions, filed Sept. 8 in the Commonwealth Court, BrightStar BioMedics and Keystone ReLeaf allege that the permitting process used by the department’s Office of Medical Marijuana was lacking transparency and did not provide an adequate avenue for appeals.

BrightStar’s petition also seeks an injunction to block Pennsylvania Medical Solutions’ development of a grower and processor facility. PMS, a subsidiary of Vireo Health, won one of the two medical marijuana grower/processor licenses for Northeast Pennsylvania that were awarded in June.

Instead, the petition contends that BrightStar should receive the license that the Pennsylvania Department of Health’s Office of Medical Marijuana awarded to PMS. And while its appeal is pending, BrightStar wants to prevent PMS from working toward making its facility operational—which licensees have been tasked with doing under a six-month deadline.

“The OMM is statutorily mandated to award permits to only those entities that can meet the high burden set forth in the Medical Marijuana Act,” Brightstar’s filing argued. “In issuing a permit to PMS, the OMM has plainly and clearly violated that mandate, irreparably harming BrightStar and the citizens of Pennsylvania.”

BrightStar alleges that PMS failed to disclose a criminal investigation into its parent company, and that a Vireo subsidiary’s license was suspended in Maryland when their Pennsylvania application was under review.

Two former officers of a Vireo subsidiary in Minnesota have been charged with illegally transporting $500,000 worth of cannabis oil from Minnesota to New York. They reportedly did so to help Vireo’s New York operation meet a production deadline for one of its medical cannabis products. Both individuals pleaded not guilty.

The Pennsylvania grower/processor applications were considered using a 1,000-point scale. In the Northeast region, PMS got a score of 749 and Brightstar got a score of 746.

The Permitting Process

In its own filing, Keystone ReLeaf took on the OMM’s protocols more generally. Its petition is seeking an injunction on the department’s permitting process for grower/processors and dispensaries, and to keep the licensees from continuing their preparations while the case is pending.

“Petitioner and at least 140 other applicants have already filed administrative appeals,” ReLeaf’s filing said. “However, due to the lack of transparency and secretive, opaque manner in which the [department] has carried out the illusory permitting process, no applicant can obtain fair and meaningful administrative review of a permit application denial.”

ReLeaf also alleged that the department waived criminal background searches and tax screenings for applicants in violation of the state’s Medical Marijuana Act.

Seth Tipton of Florio Perrucci Steinhardt & Fader, who is representing ReLeaf, said in a statement that the application process was “fundamentally flawed,” and that the scoring process was “troubling.”

“Despite being a public agency, the department is absolutely committed to secrecy and has repeatedly refused to disclose essential information to allow unsuccessful permit applicants to understand how or why they earned certain scores,” Tipton said.

BrightStar’s petition also alleges that the OMM “cloaked its entire scoring process in secrecy.” The office has not provided PMS’s application to BrightStar, the petition said, and has withheld the names and credentials of those who scored the applications. The Office of Open Records recently ruled that information should be made public.

BrightStar argues that an injunction is necessary “because the OMM has steadfastly refused to even consider delaying or staying further action on the permit—despite having been advised of the illegal diversion and apparently having confirmed that PMS failed to honestly and fully disclose such disqualifying information as statutorily required.”

BrightStar also argued that the credibility of Pennsylvania’s medical cannabis program is at stake.

“I think this calls into question the integrity of the entire process,” said Brightstar’s lawyer, Mark Sheppard of Montgomery McCracken Walker & Rhoads.

In an emailed statement, a spokeswoman for the Department of Health said, “We are moving forward with a patient-focused medical marijuana program to get Pennsylvanians with serious medical conditions the help they desperately need.”

A spokesman for Vireo Health said BrightStar’s filing is “unfortunate, but not entirely unexpected.”

“We found the process to be thorough, fair and rooted in a commitment to protect and serve the patients of Pennsylvania,” he said. “We participated in the process fully and transparently, just as we have in other states such as Minnesota and New York, where our licenses were recently renewed.”